Regulations for Homeowners Insurance in Alabama
As of November 2010, Alabamians paid $805 in yearly homeowners insurance premiums, nearly $120 more than the national average for the same month. Whether you're insuring a coastal property or an inland duplex, homeowners insurance is regulated by the state, with various policies put in place to protect consumers.
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Mandatory Coverage
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In Alabama, homeowners insurance is not mandated by any state law, but some bank lenders require coverage on a mortgaged home. If your lender requires insurance, you have the final say in which insurance company insures the home, and you are only required to purchase coverage that is equal to the cost of the mortgage loan.
Types of Coverage
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As an Alabama homeowner, you can choose from a variety of homeowner insurance packages, which include personal possession replacement, liability and medical payment protection, and even temporary housing assistance, which helps cover the cost of relocation and temporary housing expenses after a disaster. Your homeowners insurance policy will also vary based on the type of perils that are covered, such as windstorms, fire or theft. The most popular type of coverage in Alabama is Special Form HO-3, which protects homes against a broad but limited variety of damaging events.
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Exclusions
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If you live on the coast of Alabama or in an area with a strong likelihood of natural disasters, the Alabama Department of Insurance recommends seeking additional coverage for certain homeowner's policy-excluded perils, such as floods and hurricanes. The National Flood Insurance Program, or NFIP, is federally mandated and provides Alabamians with supplemental flood coverage in most areas of the state. For additional wind protection, which may be excluded on some coastal properties in hurricane zones, talk to your insurer about supplemental coverage or a hurricane insurance provider in your area. For a link to the NFIP website, see Resources.
State-Licensed Insurers
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Alabama homeowners are only protected under the state's insurance laws if their homeowners insurance policy is written by a state-licensed insurer. Once you are insured with a licensed homeowners insurance company, you are also protected by the state's "guaranty fund safety net" if the insurer becomes insolvent and cannot pay out your claim. The Alabama Department of Insurance, or ALDOI recommends verifying an insurer's license with the state's listing before signing a contract. For a list of all ALDOI-certified insurance companies in the state, see Resources.
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