If your driving record includes accidents, motor vehicle violations, or less than 3 years of driving experience, then you may be excluded from the voluntary insurance market – which is the industry term for the collective standard auto insurance providers who provide the vast majority of Alabama drivers coverage. If you fall into one of those three categories and are determined a high risk driver, you can still find coverage through the Alabama Automobile Insurance Plan (AL AIP).
What is the Alabama Automobile Insurance Plan (AL AIP)?
The Alabama Automobile Insurance Plan has been around since 1948. It’s a voluntary agreement between the insurance companies in Alabama and the state of Alabama to share the costs of insuring high risk drivers in an equitable way. ALAIP is not an insurance company itself, but rather an organization that assigns drivers to existing Alabama auto insurers.
High risk drivers are assigned to insurers based on the market share of that auto insurer in Alabama. So for example, if Allstate has 8% of the auto insurance market overall in Alabama, then Allstate must cover 8% of Alabama’s high risk drivers. You may not be covered by your insurer of choice, but you will get auto insurance coverage as the law requires. Just speak to any insurance agent holding a valid Property & Casualty license for the state of Alabama, and they'll be able to walk you through the process. Just bear in mind that these rates are going to be higher than the standard policy for auto insurance in Alabama.
Alabama AIP Eligibility
All you need to be eligible for insurance assigned through the ALAIP is a valid Alabama driver’s license and a car that is registered in the state. However, you must attest in your application that you’ve tried to find insurance coverage in the voluntary market in the last 60 days, and been unsuccessful. Remember that even if one company turns you down, another may take you – so its worth it to ask several.
You can still be turned DOWN for insurance, even through the ALAIP, for several reasons:
- You have failed to pay an auto insurance premium in the last 12 months
- Your auto insurance has been cancelled in the last 12 months because you didn’t bring your vehicle for inspection, or
- If you refuse to cooperate with the assigned insurer as they verify the information on your application
The good news is, as soon as you correct these circumstances – e.g. pay the bill, present the car, provide the information – you can become eligible to the ALAIP again.
Alabama AIP Coverage
In the Cotton State, all drivers must carry automobile insurance in order to be on the road legally. The minimum coverage requirements are 25/50 for Bodily Injury and $15,000 per accident for Property Damage. You can obtain higher limits if you wish, and that may be appropriate depending on your financial situation. You may boost your coverage to the limits shown if you prefer a higher level of protection, but your premium will rise accordingly.
|Mandatory Coverage||Alabama Min. Required Limits||AL AIP Max. Limits|
|Bodily Injury (BI)||$25,000 per person / $50,000 per accident||$100,000 per person / $300,000 per accident|
|Property Damage (PD)||$15,000 per accident||$50,000 per accident|
Your insurer may offer you the optional coverages shown below, with the following exceptions. Basically, your insurer does NOT have to cover you for Physical Damage if (1) your car is an antique older than 25 years, (2) your car has an actual cash value greater than $50,000 or (3) if your vehicle is considered “specially built.”
|Optional Coverage||AL AIP Min. Limits||AL AIP Max. Limits|
|Uninsured/Underinsured Motorist Bodily Injury (UM/UIMBI)||$25,000 per person / $50,000 per accident||Can match but not exceed your BI coverage limits|
|Physical Damage (collision and comprehensive)||Actual cash value of your car||Up to a max of $50,000|
|Medical Payments (MED)||$1,000 per person per accident||No higher limit|
Once you are assigned an insurer through the ALAIP, your coverage will last for 3 years. That’s ideally the time to improve your driving record, so that you are considered a safe driver who is eligible for policies and premiums in the voluntary insurance market when your ALAIP policy is up. If you find coverage at a better rate during the 3 years, you can cancel your assigned policy through ALAIP with no penalty. Just be sure to notify your assigned insurer who your new insurance company is.
At the end of 3 years, your coverage through the ALAIP will NOT be automatically renewed. However, if you still cannot find auto coverage through the voluntary market at that time, you may re-apply to the ALAIP. They will consider you a new applicant, and that means you will be assigned to whichever insurance company is “up” to cover a high risk driver.
Alabama AIP Premiums and Payments
As a general rule, high risk drivers pay higher insurance premiums than safer drivers. But there is no “hard-and-fast” rule for how much higher those premiums might be. The many auto insurance companies in Alabama have their own underwriting criteria – these are the factors that insurers consider when evaluating you as a risk and rating your policy. The more you know about those factors the more effectively you can take action over time to leave your “high risk driver” label behind.
There are 3 ways to pay for your auto insurance in Alabama. Depending on your situation (and how much of a payment risk you appear to be), you can:
- Pay 100% of the annual premium with your application
- Pay a deposit of 30% of the estimated annual premium with your insurance application, and the remainder within 30 days of receiving the policy.
- Pay a deposit of 25% of the estimated annual premium up front, and the balance of the premium in 5 monthly installments. These installments come with a $4 service charge, and are completed within 6 months of the start of your policy.
Talk with your insurance agent about which payment method you prefer. Regardless of the method, you’ll want to pay your auto insurance premiums on time. Miss your installment payment for two periods and your policy may be cancelled automatically. Avoid this hassle and stay current!
How to Apply to the Alabama Auto Insurance Plan?
Since all licensed auto insurers in Alabama know about the ALAIP, you can ask any insurance agent about your eligibility. Make sure to first shop around for other Alabama insurers before checking out the AL AIP.
For more information about Alabama’s AIP, call the Alabama Department of Insurance at 334-241-4141.