→ Coverage Limits and Their Effect on Premiums in Alabama
In Alabama, the minimum auto insurance liability limits are commonly stated as 25/50/25[1]. This means $25,000 bodily injury liability limit per person, $50,000 maximum for all bodily injuries to be paid for any one accident, and $25,000 maximum for property damage per accident[1]. The larger the coverage limits you choose, the higher your premium will be. However, it’s important to select limits that adequately protect your assets in case of an accident.
→ Bodily Injury Liability Coverage
Bodily injury liability coverage pays for injuries to others if you are found legally liable for an accident. The 25/50 in 25/50/25 refers to the bodily injury liability limits. If you choose higher limits, such as 100/300, your premium will be higher, but you’ll have more protection[1]. In Alabama, the minimum limits may not be enough if you cause a serious accident with multiple injuries.
→ Property Damage Liability Coverage
Property damage liability coverage pays for damage to another person’s vehicle or property if you are found legally liable. The 25 in 25/50/25 refers to the property damage liability limit[1]. Higher limits, such as 100, provide more protection but will increase your premium. If you cause an accident that damages an expensive vehicle or property, the 25,000 minimum limit may not be sufficient.
→ Uninsured/Underinsured Motorist Coverage
Uninsured/underinsured motorist coverage protects you if you are hit by a driver with no insurance or insufficient insurance. In Alabama, this coverage is optional but highly recommended[1]. If you choose higher limits, your premium will be higher. However, if you are seriously injured by an uninsured or underinsured driver, the extra coverage can be invaluable.
→ Collision and Comprehensive Coverage
Collision and comprehensive coverage are optional in Alabama but required if you have a loan on your vehicle[1]. Collision covers damage to your vehicle if you hit another vehicle or object. Comprehensive covers damage from events like theft, vandalism, or natural disasters. Higher coverage limits will increase your premium but provide more protection for your vehicle.
→ Deductibles
Deductibles are the amount you pay out-of-pocket before your insurance coverage kicks in. In Alabama, two common types of deductibles are dollar deductibles (a set amount) and percentage deductibles (a percentage of your home’s insured value)[3]. The higher your deductible, the lower your premium will be. However, make sure to choose a deductible you can afford to pay if you have a claim.
→ Conclusion
In conclusion, coverage limits have a significant effect on insurance premiums in Alabama. Higher limits provide more protection but come with higher costs. It’s important to balance your coverage needs with your budget when selecting limits. Consult with your insurance agent to determine the appropriate coverage levels for your situation. Remember, the minimum limits required by law may not be enough to fully protect you in the event of a serious accident or claim.
Citations:
[1] https://www.aldoi.gov/consumers/AutoFAQ.aspx
[2] https://law.justia.com/codes/alabama/title-6/chapter-5/article-29/section-6-5-549-1/
[3] https://www.smarthomeamerica.org/assets/images/pages/The_Alabama_Coastal_Insurance_Shoppers_Guide_homeowners.pdf
[4] https://riskmgt.alabama.gov/autocoverage
[5] https://csattorneys.com/2023/04/20/alabamas-new-dram-shop-statute-setting-the-restaurant-and-hospitality-industry-up-for-an-increase-in-dram-shop-insurance-premiums/
[6] https://www.swiftcurrie.com/assets/htmldocuments/ALI%20Insurance%20Law%20Guide.pdf
[7] https://riskmgt.alabama.gov/insfund
[8] https://www.aldoi.gov/consumers/TortSystem.aspx