Alabama Homeowners Insurance Guide
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The Yellowhammer State isn’t just known for its dominance in college football. Alabama is also rich with historic sites that help contextualize American history. Nestled on the southeastern tip of the U.S., Alabama enjoys but a small piece of coastal land. Its neighbors, Florida to the east and Mississippi to the west, eat up most of the available Gulf of Mexico shores. As a result, The Yellowhammer State does in fact have some catastrophic loss exposure, but not nearly as much as its neighbors. Alabama’s catastrophic peril exposure is driven by its 3rd largest city, Mobile; which is located on Mobile Bay. A bay that feeds directly into the Gulf of Mexico.
Alabamans on average pay significantly more for homeowners and renters insurance when compared to the rest of the country. This elevated premium is not driven by the state’s inherent nature-driven catastrophic exposure, but rather by other perils. For example, Alabama has the 9th highest property crime rate within the United States.(1)
Average Homeowners and Renters Insurance Premium
Source: Insurance Information Institute (2017)
Thus, although Alabama does have an alternative market for catastrophic perils, such as flood, wind and tornado, the higher pricing Alabamans pay for property insurance is due to perils covered by the standard policy, such as theft, vandalism and fire.
The relatively high cost of property insurance places extra emphasis on comparing coverage, price and overall package amongst potential carriers in Alabama. Typically, financial stability is a key component of comparison when choosing a carrier. However, it takes on less importance, given the probability of a carrier going bankrupt because of a natural disaster in Alabama is low. As a result, most insurance carriers, both regional and national, should be able to provide sufficient coverage for the average Alabaman’s property exposure.
Top 5 Home Insurance Carriers in Alabama
|Alfa Mutual Group||13.7%|
|USAA Insurance Corp.||8.8%|
|Travelers Companies Inc.||4.6%|
Source: Insurance Information Institute (2019)
The property insurance market in the Yellowhammer State is fairly concentrated, with the top 3 homeowners insurance carriers controlling over 52% of the market. Even though the market is concentrated, there are still several players to choose to from. In addition to the standard market, Alabamans that cannot find adequate coverage, also have the option to approach the Alabama Insurance Underwriting Association (AIUA); an association formed in the 1970’s to serve as a market of last resort.
Although Alabama lacks miles and miles of coastal property, it is extraordinarily rich in history. Alabamans and those that own property in the Yellowhammer State pay more on average for homeowners and renters insurance, but are usually adequately covered with a standard policy, given the perils that impact the region are not too complex.
Alabama Department of Insurance
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