Getting the best rate for home insurance is a priority for many homeowners and a great way to save money. We evaluated average rates from major home insurance companies in Alabama to help you get started finding the most affordable policy.
Cheap Home Insurance in Alabama Cost Comparison
| Home insurance company | Average annual home insurance cost in Alabama |
|---|---|
|
$607
|
|
|
$1,173
|
|
|
Cincinnati Financial
|
$1,515
|
|
$1,790
|
|
|
Centauri
|
$1,802
|
|
$2,606
|
|
|
$2,615
|
|
|
Alfa
|
$2,794
|
|
$2,958
|
|
|
$3,203
|
|
|
$3,532
|
Comparison shopping with multiple companies is the best way to find the coverage you need at a reasonable rate. But don’t rely on price alone. The best home insurance company for you will also match your homeowner profile with the coverage and discounts that suit your needs.
Alabama Homeowners Insurance Cost Factors
Your ability to obtain cheap home insurance depends on a variety of factors, such as:
- The age of the house structure
- The materials used to build your house
- The cost to rebuild your home at today’s materials and labor prices
- The claims history of your location
- Your personal claims history
- The fire rating of your home’s location
- The coverage amount and limits of your policy
- Your deductible amount
- Your credit
- Your location
When comparing home insurance quotes, all of those factors will play a part in what a company provides as a cost estimate.
What Does Alabama Homeowners Insurance Cover?
A standard home insurance policy (also known as an HO-3) covers your house for problems not explicitly excluded in the policy. Common exclusions include wear and tear, power failure, nuclear hazard, war, sinkholes, earthquakes, vermin and bird and insect infestations.
Your personal property is covered for specific “perils” under a standard home insurance policy. Theft, vandalism, tornadoes, fire and explosions are just some of the issues covered by home insurance.
It’s wise to review how home insurance works to protect you so you can best decide how much home insurance you need.
A standard home insurance policy can be divided into these major coverage types:
- Dwelling/Structure: This portion of the policy pays to repair or rebuild your home if it’s damaged by a covered event. It also covers attached structures, like a deck or garage.
- Other structures: This pays to repair or replace unattached structures, such as a shed, fence or barn.
- Personal property: This coverage pays to repair or replace your personal belongings after a covered issue like theft or fire. Your belongings can include your clothing, furniture, clothing, appliances, electronics, jewelry, and other items.
- Liability: This type of homeowners insurance pays for injuries and property damage you or household members accidentally do to others. For example, let’s say your diseased tree falls on your neighbor’s shed before you can cut it down. In this case, you’d be covered for the damage to the shed. Liability also pays for a settlement or court judgment against you and your legal defense costs if you’re sued.
- Medical payments to others: This covers smaller medical claims made by people not in your household, no matter the fault. For example, if a visiting friend falls on your deck’s steps, medical payments coverage could pay for minor medical expenses. Coverage amounts are relatively small, as little as $1,000.
- Additional living expenses: If you’re unable to live in your home due to a problem covered by your policy (such as a tornado), additional living expenses coverage pays for extra expenses such as a hotel, restaurant meals and other necessary services, like storage.
What’s Not Covered by Homeowners Insurance in Alabama?
Typical exclusions found in a standard home insurance policy include events such as floods, sinkholes, earthquakes, power failure, wear and tear, vermin and insect infestations, war and intentional loss.
It’s wise to carefully read over your policy to understand what is excluded from your home insurance coverage.
Flood Insurance in Alabama
A standard home insurance policy doesn’t cover flood damage. And with flooding an issue in Alabama, you should consider flood insurance if your property is at risk.
Financial help from the government after a flood can be restricted. It’s smart to have your own flood insurance to rely on instead. Most homeowners who have flood insurance buy it through the National Flood Insurance Program (NFIP), a federal program. Private flood insurance is also an option.
FEMA’s Individuals and Households Program (IHP) can provide monetary and direct assistance after a major emergency or disaster, if you qualify. This program helps people find housing after a problem directly related to a disaster, which isn’t covered by insurance or other sources.
Earthquake Insurance in Alabama
Alabama is not known for earthquakes, and it averages only about three a year. The earthquakes it experiences are typically minor; time will only tell if they will become a more significant issue for homeowners.
Alabama has two fault lines. The Southern Appalachian Seismic Zone affects the northern part of the state, and the Bahamas Facture Seismic Zone affects the southwest portion.
If you want coverage for earthquake damage to your home, you’ll need to buy a separate earthquake insurance policy. Your standard home insurance policy doesn’t cover earthquakes.
Earthquake insurance typically covers:
- Dwelling
- Personal property
- Other structures
- Additional living expenses
Earthquake insurance usually has a separate deductible from your homeowners insurance, generally between 10% to 25% of the dwelling’s policy limit.
Catastrophe Savings Accounts Can Help You Save for Disasters in Alabama
If you live in Alabama, there’s a way to save money tax-free in case disaster hits your home. A Catastrophe Savings Account (CSA) lets you save money to help pay for damage caused by a disaster like a catastrophic storm or flood.
A CSA, which is available only in three states, including Alabama, is a separate savings or money market account that’s solely used to pay for catastrophic damage to your principal residence.
You can set up a CSA in a financial institution and label the account as “catastrophic savings.” That account must be segregated from other savings and you’re only able to have one CSA.
Alabama homeowners can deduct CSA contributions from their taxes, but there are restrictions. You must have insurance coverage that covers hurricanes, rising floodwaters or other catastrophic windstorms to deduct CSA contributions from your taxes. And also:
- If the policy deductible is less than or equal to $1,000, you can contribute up to $2,000.
- If the qualified deductible is more than $1,000, you can put in the lesser amount of $15,000 or twice the amount of the person’s qualified deductible for the first contribution.
- If the taxpayer is self-insured and doesn’t have property and casualty insurance on their primary home, they can contribute the lesser of $250,000 or the fair market value of the principal residence when making the first contribution to the CSA.
A CSA’s earned interest isn’t taxable unless you contribute more than the maximum account amount. At that point, the account’s interest that exceeds the limit is deemed taxable income.
Find out more about Alabama’s Catastrophe Savings Account regulations.
Tips for Buying Alabama Homeowners Insurance
Whether you’re looking to switch insurance companies or about to close on your first house, you want to obtain a home policy at an affordable price without sacrificing coverage. Here are guidelines for both longtime homeowners and first timers:
- Evaluate your rebuilding costs. Ask your insurance agent or a trusted contractor about the prices to rebuild your home with equitable materials and labor costs in your area. You want your dwelling coverage at least equal to this estimate, if not more.
- Consider add-on coverage for your belongings. If you have high-value personal property, such as antiques or pricey electronics, sports or musical equipment, you might want to consider scheduling personal property for these pricey possessions. That way they can be covered for their full value.
- Review benefits of replacement cost instead of actual cash value. Consider replacement cost coverage for your home and belongings—you will get the amount you need to replace your home and items with new versions. With actual cash value, you will get a depreciated amount.
- Determine how much liability coverage you need. You should choose an amount that covers the value of what could be taken from you in a lawsuit, or at least $300,000.
- Look for coverage gaps. Some home insurance companies offer add-on benefits, for instance, to help pay for damage from water or sewer backups, or provide higher limits for landscaping such as trees and shrubs if harmed in a covered event.
- Research financial ratings. Check financial strength ratings from companies such as A.M. Best or Standard & Poor’s. Some financial institutions may not offer you a mortgage unless your insurance company has at least an “A” financial strength rating.
- Compare quotes from multiple insurance companies. The same home insurance policy can vary significantly in price among insurance companies. If you don’t shop around, you won’t know how much you can potentially save.
- Ask for discounts. Make sure you’re getting all the discounts that you’re eligible to obtain. For example, you may get a discount for certain home safety or security features, or for buying car and home insurance from the same company.
Methodology
Average home insurance rates were calculated using data from Quadrant Information Services. Rates are based on a policy with dwelling coverage of $300,000 and liability coverage of $100,000.
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