It may seem like car insurance companies pull numbers out of the air when setting your monthly or annual premium, but those rates are actually determined by a list of variables that allow the company to quickly assess the amount of risk that comes with every driver.
The good news is that you can secure the cheapest car insurance in Alabama by learning about those factors and using them to your advantage.
The factors used to determine your car insurance rate include your location, so living in “The Yellowhammer State” gives you certain advantages and disadvantages.
This guide will help you understand how your location and other critical elements determine your rate, allowing you to negotiate lower premiums for your next auto insurance policy.
Use this information to understand the mystery of insurance pricing, and then take the time to research the leading insurance companies operating in Alabama.
Best Cheap Car Insurance in Alabama
Here are the top 4 providers of cheap car insurance in Alabama:
Progressive Car Insurance
After operating for more than 80 years, the Progressive Group of Insurance Companies was the first in the industry to give safe drivers a discount.
It was also the first to start showing car insurance shoppers quotes from competing providers, and it continues to lead the car insurance market with innovative programs like the Name Your Price® initiative.
Allstate Car Insurance
Established in 1931, this insurance giant has grown to serve more than 16 million households throughout the U.S. annually.
It’s well known today for its Safe Driving Bonus® program, which allows safe drivers to save about 25 percent on car insurance.
Customers can also earn deductible rewards.
USAA Auto Insurance
USAA was established more than 90 years ago to serve active, honorably discharged, and retired members of the United States military.
It believes heavily in bundling insurance products and providing steep discounts, which has allowed some drivers to save as much as $700 on their premiums when switching from other companies.
Travelers Auto Insurance
Travelers markets itself as an “insurance company that cares.”
It has been in operation for more than 150 years and employs more than 30,000 people in addition to maintaining a force of more than 13,000 agents.
It is known as a Military Friendly® Employer and brand and was on Fortune’s list of the World’s Most Admired Companies from 2006 to 2018.
How Much Is Car Insurance in Alabama?
While the average car insurance premium in Alabama has increased by close to $100 since 2011, the rates still remain considerably lower than the national average.
When using the Auto Insurance Database Report prepared by the National Association of Insurance Commissioners for 2014/2015, it’s easy to see that Alabama car insurance premiums are a bit lower than most states in this region of the country even with the modest yearly increases.
|Average Cost of Car Insurance in Alabama||$868.48|
|Average Cost of Car Insurance in Tennessee||$871.43|
|Average Cost of Car Insurance in Mississippi||$994.05|
|Average Cost of Car Insurance in Georgia||$1048.40|
|Countrywide Average Cost of Car Insurance||$1009.38|
There are many factors that influence your insurance rates in Alabama.
These include traffic statistics, vehicle theft rates, population density, and disposable income.
When determining the risk associated with drivers in a particular state, insurance companies consider the number of fatal accidents expected per year and the traffic density throughout the state.
Data collected from the Federal Highway Association shows that there are approximately 1.25 fatal accidents in Alabama for every 1,000 vehicle miles traveled by all licensed drivers.
This rate is a bit higher than the national average of 1.08, so it’s a factor that could justify slightly higher insurance premiums for Alabama drivers.
The average registered vehicle in Alabama traveled approximately 12,500 miles in 2014, which was a slight decrease from 2012.
This figure comes in just slightly above the national average, so traffic density shouldn’t cause a significant increase in insurance premiums for the state.
Vehicle Theft Rates
According to the FBI’s 2016 Crime in the United States report, there are approximately 241 annual motor vehicle thefts per 100,000 Alabama inhabitants, which is slightly lower than the national average of about 227 annual thefts.
When shopping for the cheapest car insurance in Alabama, this is a factor that could work in your favor, but insurance companies also consider the car you drive and how likely it is to get stolen.
If you’re driving one of the following vehicles, it’s one of the most popular for Alabama auto thefts and could result in higher insurance quotes:
Population density refers to the number of people inhabiting each square mile of a state.
As population density increases, the number of vehicles typically increases.
Therefore, the risk of auto accidents is believed to go up as well.
With about 95 people per square mile, Alabama’s density is only slightly above the national average of 90 people per square mile, so population density isn’t likely to have a substantial impact on your car insurance rates.
Disposable income is one factor that may work in your favor when shopping for the cheapest car insurance in Alabama.
Insurance companies assume that people with more disposable income invest in more expensive vehicles, which means that the company may need to issue insurance coverage above the state’s required minimum to protect its interests.
Since Alabama’s average disposable income is more than $7,000 below the national average, insurance companies may assume that fewer insured drivers own luxury vehicles.
What Is Mandatory for Car Insurance in Alabama?
If another driver hits your vehicle and they don’t have insurance, or the financial ability to pay for your damages, auto repair or replacement bills and possibly medical expenses can significantly impact your financial stability.
According to the Alabama Department of Revenue, more than 20 percent of the state’s residents drive without car insurance.
Those drivers are at risk for registration suspensions and fines of up to $400 if they’re caught driving without the legally mandated liability insurance.
The following list reflects the minimum mandatory insurance coverage that every driver must carry to own and drive a registered vehicle in Alabama:
- $25,000 death or bodily injury for one person
- $50,000 death or bodily injury for multiple people
- $25,000 damage or destruction of property
Additional insurance is needed to cover your expenses after an accident or damages due to other circumstances.
Law enforcement officials are now using the State of Alabama Online Insurance Verification System to verify car insurance coverage for every driver.
If a police officer checks this database after pulling you over for a traffic stop, or you try to renew your registration and he doesn’t find your insurance coverage listed, you will need to provide proof of insurance before you can continue driving your vehicle in Alabama.
How to Reduce the Cost of Car Insurance in Alabama
Due to these mandated minimum requirements for liability insurance, there is no way to eliminate car insurance from your budget.
The best you can do is use the information presented here to negotiate for the cheapest car insurance in Alabama.
Securing a basic liability policy that meets state requirements can minimize your expense, but that is only an option if you own your vehicle outright and are not paying off a car loan with a financial institution.
Securing at least three quotes from competitive insurance carriers licensed to issue Alabama policies is a start, but there are other money-saving strategies you can also use when attempting to negotiate your premium.
Bundle car insurance with other insurance products.
If you have ever bundled Internet, phone, and cable services with a telecommunications company, you have a good idea of how insurance bundling works.
When you agree to maintain multiple policies with one company, it’s often willing to give you a discount on all the included products.
In the insurance market, your options often include renter’s or homeowner’s insurance and life insurance.
Increase your deductible.
The deductible is the amount that you must pay out of pocket before your insurance starts covering expenses for accidents and other incidents that damage property or cause harm.
The cost of your premium goes up as the deductible amount goes down.
It may give you more peace of mind to know that you only have to pay $250 or $500 out of pocket if you’re ever in an accident, but you have to decide how much money that peace of mind is worth.
Improve your credit score.
One 2018 study found that Alabama drivers with no credit will pay about 71 percent more for car insurance than drivers with credit.
Your exact credit score at the time you apply for insurance or renew your policy may impact how much you pay as well.
Take every discount you qualify to receive.
One of the best ways to secure the cheapest car insurance in Alabama is provider-sponsored discounts because each driver has unique opportunities.
You may qualify for a discount for serving in the military or for affiliations with certain organizations.
Insuring multiple cars or selecting vehicles that are less than five years old and are considered safe may give you even more discounts.
If you’re a safe driver and can show you haven’t had any recent accidents or speeding tickets, your premium may drop even more.
Don’t forget to check if you’re eligible for new discounts each time your policy comes up for renewal.
What Can Increase the Cost of Your Car Insurance in Alabama?
While you’re negotiating for the most affordable car insurance premium in Alabama, it’s important to acknowledge certain other factors that could increase your quoted rates.
- Marital Status: Married people often receive the lowest car insurance rates because they tend to have fewer accidents than single people, according to statistics. If you have an outstanding driving record, it could help you overcome your single status.
- Gender: Statistics show that men tend to have more accidents. If you’re a male under the age of 21, you may see your rate go up even more when compared to older men or women.
- Vehicle Safety Rating: Do you know how your current vehicle scores in safety ratings? If not, you may want to check before contacting an insurance company to secure auto insurance. It could make a significant difference in what you pay annually.
Shopping for Car Insurance in Alabama
Your goal when shopping for the cheapest car insurance in Alabama is to secure at least three quotes from different insurance companies.
By shopping around for competitive quotes, you’ll have some leverage to negotiate for the lowest possible premium, but only if those quotes are from reputable companies.
You’ll also need to understand how much car insurance you need legally and for personal comfort.
You can learn about the integrity of any insurance company by reading reviews and researching the history and financial standing of the company.
For starters, all quotes should come from companies registered in Alabama with high ratings from official insurance rating agencies.
Whether you’re shopping for your first car insurance policy or you need to lower your current car insurance rate for the sake of comfortable budgeting, it is possible to pay less for auto insurance.
Use the information in this guide to make sure you have the upper hand with insurance agents who may assume you aren’t aware of industry standards and practices.*While we make every effort to keep our site updated, please be aware that "timely" information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Huntley Wealth & Insurance Services and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser.