Alabama State Specific Guide
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Alabama Overview |
| Time Zone | Underwriting, Cancellation and Non-Renewal Periods |
| Central Time Zone | The state's new policy underwriting period is 90 days. •New polices may be cancelled for any valid reason. •Non-Renewal: 30 days •Cancellation: 10 days |
| Prorate or Short-Rate Cancellation (Mid-Term) | Premium Increase Notices |
| If the carrier cancels the policy, the premium is refunded on a prorated basis, if the Insured requests the cancellation; this is done usually on a short rate basis. | The carrier must give a 30-day notice of increase in premium. |
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Homeowners Line of Business |
| Special State-Specific Considerations | Over and Under Insurance |
| •There are many areas that have higher uranium concentrations. Mitigation is the technique used to remove the radon in a home from uranium, however, because it is not a sudden event or the result of an accident, homeowner’s insurance normally does not pay for damages or for mitigation costs. •Alabama records the second highest number of annual sinkholes in the United States. Morgan, Madison and Limestone Counties record new, known active sinkholes each year causing property damage. The peril of sinkhole is a standard exclusion from most Homeowners policies, so an Insured should consider a sinkhole endorsement or supplemental policy. |
No Current Regulations |
| Mortgagee-Bill Grace Period | State-Specific Homeowners Documents and Discounts |
| Lenders are required by law to make escrow account disbursements in a timely manner, on or before the due date to avoid a penalty, if the borrower’s payment isn’t over 30 days late. | •Wind Mitigation: Mandates that insurers provide the Department of Insurance (DOI) with an actuarially justified rating plan containing appropriate discounts for wind mitigation initiatives within Mobile and Baldwin counties. •Strength Alabama Homes Program: Provides grants to homeowners in Alabama to retrofit their homes to make them more resistant to severe wind damage. Residents can register to receive electronic updates regarding Alabama grant programs at www.aldoi.gov/SAH. Grants will be issued initially to residents in Mobile and Baldwin Counties to mitigate their homes using the IBHS FORTIFIED Home–Hurricane building standard. |
| Valued Policy State or Non-Valued Policy State | Unique Home Construction |
| Non-Valued Policy State | None |
| Residual Plans | Deductibles |
| Alabama Insurance Underwriting Association (Beach Plan): Provides two types of policies: fire and extended coverage (not as comprehensive as standard homeowners policies and provides no liability coverage); and a wind and hail only policy for homes, condominiums, mobile homes and commercial businesses located in the Beach, Seacoast and Gulf Front territories of Baldwin and Mobile Counties. | Coastal counties in Alabama can have named storm and hurricane deductibles which are commonly a percentage of the dwelling coverage. |
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Auto Line of Business |
| Special State-Specific Considerations | Unique State Coverages and Laws |
| Drivers can cover themselves with cash deposit - not less than $50,000 – or a vehicle liability bond filed with the Alabama DMV. | Tort State: Alabama is a Tort state meaning that the driver at fault must pay a victim’s medical expenses. Further, the victim can also pursue compensation for additional lost wages as well as pain and suffering. |
| Required State Limits | Special Automobile Insurance Policies |
| 25/50/25 | Alabama Automobile Insurance Plan (AL AIP): A voluntary agreement between the insurance companies in Alabama and the state of Alabama to share the costs of insuring high-risk drivers in an equitable way. |
| Financial Responsibility | State-Specific Auto Documents, Discounts and Fees |
| With a SR22, the Insured will be required to maintain limits of 25/50/25 for a minimum of 3 years. | None |
| Stacking of UM Coverages | Suspension Period |
| Stacking allowed | Insurance is required immediately, before driving the vehicle. There is no grace period for proof of insurance. According to the Alabama Insurance Code Section 32-7A-4, driving without insurance within the state is a Mandatory Liability Insurance Act (MLI) violation. It’s considered a misdemeanor and therefore, punishable by law. If your conviction is final, the consequences can range from fines of $500 to $1,000, imprisonment from 3 months to 6 months, and license and registration suspension for up to half a year. |