Alabama Homeowners Insurance

Last Updated on September 29, 2020 by Andrew Lee

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The expenses associated with a home in Alabama doesn’t end with just purchasing it. You need to allot a budget for several other expenditures. Aside from your monthly, quarterly, or yearly mortgage payments, your lender may also require you to purchase home insurance.

With an Alabama homeowners insurance policy, you can have peace of mind, as it provides protection for your home, which is most likely one of the biggest and most expensive investments one makes.

Average premiums for homeowners and renters insurance in Alabama

In a February 2016 National Association of Insurance Commissioners (NAIC) study, it revealed that the median nationwide homeowners insurance premium amounted to $1,096 in 2013.

Homeowners paid an average of $1,323 making Alabama 8th state with the highest insurance premiums

Renters, on the other hand, had a median expenditure of $245 giving the state the 4th place in the same ranking

In another study by finance specialist ValuePenguin, it showed that the monthly homeowners insurance in AL totals to $99.83.

Compared with the national average, this yearly premium average in the state is a little more than 1.20% higher.

Coverage categories in the event of a loss

A typical insurance policy comes with four different major categories. These pertain to what the policy covers and the corresponding maximum amount the insurance company will pay in the event you suffer a loss. Structural losses fall under Coverage A, other structural losses (such as outbuildings, garages, etc.) fall under Coverage B, content losses under Coverage C, and additional living expenses or loss of use under Coverage D. In short, there’s Coverage A (Structure), B (Other structures, garages, outbuildings), C (Contents) and D (Loss of Use/Additional Living Expenses). 

Key Facts and Market Trends in Alabama: Another NAIC survey assessed the major figures and market trends in the State of Alabama. As of 2015, the number of domestic insurance companies has reached 38, while the count for both domestic and licensed foreign insurers totaled to 1,416. 

Insurance company settlements

One of the most common home insurance-related questions asked by a lot of Alabama residents has something to do with the length of time before their insurer settles with them, according to the United Policyholders.

Settlements typically take one to two months but it may get delayed when a discrepancy in the application is found and further investigation is needed.

In AL, insurance companies base this on a variety of factors, including the amount of property damage, the reason for the loss, and if the total loss is eligible for immediate reimbursement, as per the Alabama Valued Policy law. Delays usually happen when there are disputes regarding the loss’ causes and origin. On the other hand, when the damage isn’t as severe and complicated, you can expect to receive the settlement sooner.

In many cases, it doesn’t take more than one to two months. In the event that you really need the settlement as soon as possible, you can make a request (in writing) to your insurer asking them to make the payment to your mortgage company as soon as possible. You may choose to do this to avoid more interest payments associated with your home loan.

Alabama state rules on cash value, replacement cost, and depreciation

In the state of AL, the Actual Cash Value (ACV) is usually defined as the Replacement Cost less Depreciation for the property’s age and condition during the time the loss occurred. This may slightly vary depending on how explicitly your policy defines ACV. 

Replacement cost pertains to the cost associated with replacing items with a new one of the exact same nature or one of similar type and quality. Depreciation, on the other hand, involves the deduction from the cost of the new item (Replacement Cost) to make way for its current condition and age. After deducting these factors, one can determine the item’s Actual Cash Value.

Homeowners insurance plays a major role in ensuring you can continue protecting your home from many different dangers and threats, so make sure you keep yours updated and in compliance with the state’s laws.