Home insurance costs in Alabama 2021

Home insurance costs in Alabama

Whether you are buying your first home or relocating to a new one, protecting your building and the properties within should be a priority. Alabama is a beautiful State to live in: you can choose to stay in cities or the countryside, near beaches or mountains, you have hospitality, tasty foods, festivals plus a relaxed style of life overall. But like others, it brings some risks you want to consider.

Alabama cities may differ by several hundred bucks as for homeowners insurance rates: this depends on city-specific variables, including the number of local claims filed, which impact greatly on premiums and it’s directly related to exposure versus natural disasters. For instance, cities like Mobile and Daphne have both areas with wind and without wind, which definitely changes their premiums. Intrinsic characteristics of the house such as its size and materials also contribute to how much you should expect to pay.

The average annual rate for home policies in Alabama is $1,776, according to our analysis*, which is relatively expensive as regards to homeowners insurance; in fact, this is among the most expensive states to get a home insured.

Some places have more affordable premiums. From our findings, Hoover is resulting in the cheaper city to ensure, among the biggest cities: you can expect to spend $1,320 a year, which means just $110 a month. Again, consider this is just an average, and some districts of the town may be more or less pricy; if you have more than a standard house, numbers will be surely higher.

The below table shows how much is home insurance for the ten most populous cities of Alabama. We considered median home values with their average square footage for each city, then got quotes from major insurance companies as Allstate, Amica, Chubb, Farmers, Liberty Mutual, Nationwide, Progressive, StateFarm, Travelers, and USAA: what you see results from averaging the premiums.

City Median home value Square ft Premium
Birmingham
$125,000
1630
$1,590
Montgomery
$120,000
1635
$1,520
Huntsville
$160,000
1300
$1,420
Mobile (with wind)
$110,000
1520
$2,110
Tuscaloosa
$155,000
1875
$1,570
Hoover
$225,000
1570
$1,320
Dothan
$130,000
1635
$1,780
Auburn
$200,000
1505
$1,745
Decatur
$130,000
1575
$1,630
Madison
$200,000
1695
$1,505

Premiums refer to dwelling coverages appropriate for every home value. Mind that your house shouldn’t be insured for its market value, but for replacement cost, and on this, the dwelling coverage is calculated. All premiums are intended for a $1,000 deductible, which is standard but not the minimum you can choose from: most companies either national or local may offer the $500 and $250 deductible options. If instead, you wanted to further lower the annual cost of the policy, you can set greater than one-thousand amounts.

Home insurance factors in Alabama

Due to its position, Alabama is prone to some natural events in particular: tornadoes, hurricanes, snow, floodings derived from windstorms and thunderstorms, not to mention sinkholes.

This exposure is an overall risk factor that impacts heavily on the national insurance rates: the more likely one might file a claim, the higher the premium. Cities and their districts located in high-risk areas, e.g. with a history of natural disasters, or extreme weather, will have their premiums go considerably up.

In particular, you should know that hurricanes are frequent in Alabama, and in the last two decades, they have been quite severe, compared to similar phenomenons in other States.

You will have to choose a deductible to pay if a hurricane hits your house. Typically, it is calculated as between 1 and 5 percent of the home value. So, let’s say that your home is worth $160,000 and that you arranged a 2% deductible: you’d have to pay $3,200 out of pocket before insurance comes into play; if you chose a 5%, you’d have to pay $8,000, but with the advantage of a lower annual premium. A hurricane deductible is specific and stays apart from others; the unique smallest deductible for other perils is $500.

Living especially in the North of Alabama can be risky: you should be aware of the so-called Dixie Alley area where tornadoes originate with a certain strength, bearing with them a load of humidity coming from the Gulf of Mexico. It should also be mentioned that they can form in any period of the year.

You should then adopt safety measures for your home, for instance, reinforced windows, an upgraded roof, a strong basement, and more; insurance companies will compensate for that by applying discounts on your policy. You may want to discuss with an agent, or check your Department of Insurance website for details.

Like in other States, wind-related perils include tornadoes and are covered by most insurance companies in Alabama, coming with a standard H03 policy, unless your home is located in a very high-risk zone, that may require some extra coverage, for instance, the one necessary to sustain the roof replacement cost, but there is not actually a “tornado insurance”.

The Alabama Insurance Underwriting Association (AIUA) offers beach and windstorm plans for inhabitants of seaside areas of Alabama, living in single-family houses, condos, business locations, and mobile homes that are situated in the Baldwin and Mobile counties. The Beach Plan provides fire and comprehensive coverage (although more limited compared to a standard HO3, without liability coverage); the Windstorms Plan covers from wind and hail only. The plans will have cheaper rates (by discounts) if your house meets a few standards related to the wind- preparedness.

According to the Insurance Information Institute,  coverage from AIUA is up to $500,000 (2019), comprehensive of dwelling plus contents, for a residential building with a max of four people living in. If the property is vacant, it won’t be covered, as well as cars or other self-propelled vehicles aren’t.

Flood damage is almost certainly excluded at a basic layer of security: it is recommended that you buy flood insurance since flooding is also a major peril that is likely to happen. Alabama has many inland watercourses in the Northern regions; plus, an overload of water can be provoked by heavy storms. Usually, a good practice would be to purchase it from the National Flood Insurance Program backed by FEMA (Federal Emergency Management Agency): on its website, you can see maps of risk to ascertain if you are living in a county or even in a street where more or less danger of flood is involved.

According to relevant statistics, Alabama ranked ninth among all States for the crime rate every 100,000 people (2018), but some cities are significantly more prone than others to perils like theft, riot, and vandalism. According to an analysis from safewise.com, property crime is a relevant issue in Alabama, with crime rates varying across the State. The less safe is the city or district where you live, the higher your premium is likely to be.

Besides Alabama specifics, you should consider the factors being directly under your control, that you can modify to get better rates.

– Home replacement cost: premiums reflect mostly how much you are covered for the size of your house and materials to repair or rebuild it; not the same thing as the home market value. For instance, the median home value in Mobile, in the 36541 ZIP area was $140,000 near the end of 2017, with an average replacement cost of roughly $235,000: this discrepancy is common nationwide, and is due to the costs of labor and materials, which means those are relatively high in the concerned district.

– Age of the house: many residences in Alabama are built before 1980, which are considered old (as it is State-wide), therefore more costly to repair or rebuild, and more susceptible to damages of any type. If you live in a home-like this, you will be charged with higher premiums, since the risk associated is greater.


– Roof maintenance over time or upgrading makes a difference when it comes to insurance premiums. This is especially true if you consider that Alabama faces seasonal snowstorms: a metal roof would be an optimal choice, because of its strength, duration, and to prevent snow accumulation, and lastly causing a crash.


–  Credit Score: the average credit score in Alabama at the second quarter of 2019 was 680 (source: Experian), less than the national average of 703. That means: a value at least equal or higher gives you access to more advantageous premiums or discounts

 

– Claims History: if necessary indeed, you will file a claim, let’s say after a natural calamity, but be aware that it will necessarily make your future premiums go up; that will be also recorded in a database. Alabama has its own claims history that influences the rates at a starting level.

Pets: owning aggressive dogs or kinds of exotic animals will affect the cost of the policy, in some cases making them skyrocket.

 

The most recommended practices to lower your premium are: shopping around for comparison, choosing a higher deductible, having the best credit score possible, and bundling home insurance with a car policy, plus renewing the home policy with the same company.

Now you have knowledge. Use the tool to have a first quick estimation of coverages and premium for your ZIP code, then get quotes from some of the most trustworthy and appreciated insurance companies on the market.

*Methodology: we aggregated and averaged multiple quotes for every city of the State, assuming a 35 years old individual, married, with a good credit score. Our effort is to keep data always updated and the most accurate possible, so as to satisfy at best the consumer’s expectations.