Purchasing homeowners insurance is the smart thing to do but can be tricky in Alabama due to extreme weather conditions. Known to have one of the highest natural disaster occurrences in the country, tornadoes and hurricanes are commonplace in the Gulf Coast region. Three of the 10 costliest hurricanes in United States hit Alabama – Hurricane Katrina and Rita (2005) and Hurricane Ivan (2004). Devastation hit the state in 2011 with an outbreak of tornadoes that destroyed 5,300 homes. Despite your location or conditions, it’s vital that you shop around and compare quotes. Keep reading or enter Zip below to find the best rates from companies near you.
Alabama home insurance premiums
Insurance Information Institute (III) ranked Alabama as the 12th most expensive state in the country for home insurance. According to their data, residents pay an average of $115.50 per month or $1,386 per year in home insurance premiums. The national median is significantly lower at $1,192 annually. At a glance, homeowners in AL are paying more than the average American on home insurance. There is a positive outlook for Alabama as trends show that rates are getting cheaper. Alabama’s state ranking used to be higher, taking in the 8th spot at being one of the most expensive places to insure a home in the US five years ago.
Average Alabama Home Insurance Premiums
|National annual average||$1,192||$1,173||$1,132|
Alabama home insurance study
We completed a study of homeowners insurance rates in 15 Alabama cities. The study has found that Alabama residents can expect to pay $144.95 per month for their homeowners insurance. This works out to an average annual premium of $1739.38. Overall most Alabama cities have similar average monthly rates ranging between $135 and $145. Prattville and Florence were found to be the cheapest cities out of the ones we tested with average monthly premiums just above $134. Out of 15 cities, two cities, Dothan and Enterprise, had significantly higher home insurance rates. In addition, for each city, we observed a significant difference in rates between the three insurance companies we got quotes from. This shows that is important to shop around, no matter where you live.
Homeowners Insurance Rates in Alabama Cities
To complete this study, we got quotes in 15 Alabama cities from 3 companies: State Farm, Liberty Mutual, and Travelers. As you can see from the table below, Travelers was the cheapest home insurance company in AL out of the three we tested. Travelers got an average monthly rate of $110.61. Liberty Mutual was ranked 2nd with a monthly rate of $149.17. State Farm was significantly more expensive with a $174.84 average. It is important to note that State Farm offers a huge 35% bundling discount if you get car insurance from them as well. But since our study was limited to homeowners insurance, we did not go for this discount, which all three companies are offering.
Alabama Home Insurance Rates by Company
|Company||Average Monthly Rates|
For each city, we used a house that is 1500 sq. ft, valued at $150,000, and was built in 2000. We assumed that it has 2 full bathrooms and that the roof was newly renovated in 2015. For bigger cities, we got quotes for various Zip Code areas. Data for 3 companies and multiple Zip Codes were averaged out to get the average monthly premium in each city. It is important to understand that your rates might vary greatly in Alabama, as there are a large number of variables involved in calculating the rates.
- Population: 4,874,747
- Average value of homes that’s occupied by owners: $128,500
- Households: 1,851,061
- Average household income: $44,758
- High school grad or higher, % of people age 25 years +: 85%
- Average travel time to work: 25 min
The average premium amount was sourced from the latest data of the Insurance Information Institute, and the statistical data from the U.S. Census Bureau.
The best homeowners insurance companies in Alabama
State Farm holds the top spot at being the biggest home insurance provider in the United States for over 50 years. In Alabama, the company holds 28.6% of the market share beating out insurance giants like AllState and USAA. At first glance, we can see that Americans go to State Farm for their home insurance needs. In order to determine if State Farm really is one of the best, we will refer to AM Best, S&P Global Ratings, and JD Power. These organizations rate insurance companies based on their financial strength and ability to pay claims.
AM Best rated A++ (the highest possible) to mirror a strong financial condition and operating performance in the company. S&P gave AA, a very high rating based on State Farms’ reliable claims payout. To determine the level of customer satisfaction, we looked at a study done by JD Power, revealing that State Farm was 1.1% above the study average for customer satisfaction. Keep in mind that the insurance sector is highly competitive. Any small difference may be all that’s needed to know which companies come out on top. State Farm scored a 3 out of 5 (about average) for their price and overall insurance satisfaction but received 4 out of 5 (better than most) in the policy offerings, billing and payment, customer support, and claims.
Headquartered in Montgomery, AL, Alfa has been around since 1946, initially providing fire insurance to farmers. The company has grown since then, now serving 1 million Americans in 11 states. Alfa is one of the leading home insurers in Alabama. Alfa holds 14% of the market share, second only to State Farm. One reason that the company is popular among AL residents is that they offer premium discounts on houses that have been fortified to better withstand hurricanes and other catastrophic windstorm events. This discount is not limited to new homes only, homeowners that already have homes can benefit too. Visit the State’s Department of Insurance website to learn more about eligibility requirements.
Alfa offers their Legacy Discount of savings of up to 20% off to dependents (30 yrs or younger). The discount is available to parents who have car and homeowners insurance with them. Although Alfa is a smaller company compared to some bigger, more well-known providers, the company is putting in great efforts to show its dedication to Alabama homeowners. The Legacy Discount is only available in Alabama. Based on our research, Alfa is a contender for competitive rates and great coverage in AL.
Let’s take a closer look at Alfa by looking at trusted review sources. AM Best, an organization that reviews a company’s ability to stay financially solvent, stay in business, and pay claims, rated Alfa with their third highest of A (Excellent). JD Power has not reviewed Alfa since 2011, most likely because it holds a small market share nationwide. Regardless, it’s important to have a sense of customer satisfaction as it has a large share in the home insurance market in AL. We did some digging and found out that Alfa has excellent performance when dealing with complaints, maintaining an above-average complaint rating every year.
Allstate holds the third-largest home insurance market share in Alabama at 11.4%. In 2017, Allstate insured 146,256 homes in Alabama. AM Best rated Allstate with an A+ (Superior), their second-highest rating. Allstate has been steady over the years maintaining this Superior rating from AM Best revealing that Allstate is a reliable company.
We’ll need to look at customer satisfaction ratings to have a clear picture when it comes to Allstate’s performance in the claims-payout department. Allstate received a 3 (Average) rating from JD Power in their Homeowners Insurance Customer Satisfaction Study. Furthermore, Allstate scored a 3 (Average) in the categories: Initial Notice of Loss, Service Communication, Estimation Process, Repair Process, Settlement and Overall Property Claims Satisfaction, from their 2016 US Property Claims Satisfaction Study.
Alabama Home Insurance Companies: Market Share and Summary of Ratings
|Rank||Company||Market Share %||AM Best||S&P||JD Power|
Source: Insurance Information Institute, AM Best, S&P, JD Power
What is the Alabama Homeowners Bill of Rights Act?
The Alabama Homeowners Bill of Rights Act was created in 2012 by the Alabama state government to outline the rights of AL homeowners in relation to their insurance policies and insurance companies. Insurance agents are required to practice transparency. Agents are regulated to prioritize the needs of the client. This ensures clients have access to competitive rates. Familiarize yourself with the 12 rights as it may prove useful in the event of a dispute with your provider.
A basic homeowners insurance policy in Alabama will extend coverage for:
Personal property – A standard Alabama home insurance policy will cover your personal belongings inside the home. It could be anything from your stereos to your bicycle to your heirloom antique furniture and so on. You will receive replacement assistance from the insurance company if the personal treasures inside your insured home get damaged or stolen somehow.
Other structures on your property – Do you have other physical structures on your property apart from your home? It could be your stand-alone garage or a shed. Well, the good news is, a reliable Alabama home insurance company will certainly provide coverage for these other physical structures on your property as well.
Liability guard – Liability insurance is a major part of Alabama homeowners insurance policy which protects you in case anyone gets injured in your home or property and sues you.
Medical protection for guests – If a guest meets with an injury or accident on your insured property, your Alabama homeowners insurance policy will help you to cover for his/her medical expenses.
Additional coverage – One of the most common examples of additional coverage you may receive here is reimbursement for living expenses. It means, your insurance policy will cover you if you have to stay elsewhere when the home is under repair or renovation after a disaster or accident.
How to choose a reliable Alabama homeowners provider
A licensed name
You should make sure to sign up with a reliable insurance company only. The best tip is to get a comparative survey on at least 4-6 companies before making the final call. Make sure the company you are talking to is a licensed one. You can check out the website of the Alabama Department of Insurance to find out the licensing status, financial stability, and complaint history of your chosen insurer.
No force on choosing a policy
A reliable insurance company will never force you to overpay for coverage that you don’t need. A credible insurer will always time out to understand your specific needs and then guide you to choose the most compatible one accordingly- not the most costly one.
Look for discounts
A trusted homeowners insurance company will generally reward its best customers with multiple discounts and rewards such as bundle-insurance discounts, claim-free rewards, loyalty rewards, and so on.
How to save on home insurance in Alabama
The easiest way to determine if savings are available is to simply call around and see if any other insurers can beat what you are currently paying. You might be surprised at the savings that are available. Even if you don’t find a better price, it doesn’t cost anything to try.
Raise your deductible
Generally speaking, the higher your deductible is, the lower the cost of your insurance will be. Raising your deductible may save you a few dollars each month. Remember that in the event of a loss, you are responsible for paying any amount up to the deductible, so be sure your deductible is not so high that you would suffer financial hardship in the event of a loss.
Many insurers offer discounts to customers who have multiple types of insurance policies with them. Check with the provider of your car insurance (or another type of insurance) and see if they will reduce your premium if you buy Alabama home insurance from them.
Stay with the same insurer
Some insurers offer longevity discounts for long-time customers, so if you have been with your current carrier for a while and are happy with them, ask them if you are eligible for such a discount. Some of these discounts can save you up to 10% on your premiums.
Annual policy review
Over time, your insurance coverage needs may change. It is a good idea to take inventory of your possessions every year or so and make sure you’re not over-insured. If you find that your coverage level is too high, reducing it to an appropriate level could save you some money.
Cost to rebuild vs. price paid for the house
The lot on which your house is built is not at risk for damage from wind, fire, or theft; so, be sure you are not including the value of the land under your home in the amount of coverage you need. Doing so will result in you being over-insured, and paying too much.
Mind your credit
Home insurers are using the insured’s credit score as a determining factor for premium amounts with increasing frequency. By paying attention to your credit score and ensuring it remains high, you could manage to have a lower premium than you would otherwise.
For more assistance, please contact your local state department of insurance:
Alabama Department of Insurance
- Contact: 334-269-3550
- Email: Insdept@insurance.alabama.gov