In effect since 2013, the Alabama Mandatory Liability Insurance (MLI) Law mandates that every Alabama motorist must carry liability auto insurance in the amount of 25/50/25 to legally drive, register, and maintain vehicle registration in the state.
Licensed Alabama insurers are required to enter your insurance information into the Online Insurance Verification System (OIVS). However, in case either the law enforcement officer or Motor Vehicle Division official cannot locate your information, have your insurance ID card with you at all times. A copy of the declarations page of your policy or an insurance binder will suffice as well. If you have one of the alternative proofs of insurance, then you need to present a copy of your certificate as proof.
|Alabama Required Car Insurance Coverage||AL Required Min. Limits|
|Bodily Injury (BI)||$25,000 per person / $50,000 per accident|
|Property Damage (PD)||$25,000 per accident|
Alabama Car Insurance Minimum Requirements
A policy that satisfies the MLI Law will include bodily injury and property damage, which together are called your liability insurance. Liability covers the costs of damage you owe to the other party (and not your own medical care or vehicle repairs). You will need to purchase them at least in the following amount in Alabama:
Bodily Injury (BI): up to $25,000 per person and a total of $50,000 per accident (when there is more than one person injured). BI kicks in when you cause an accident that results in the other party’s injuries. Whatever is beyond your insurance's BI coverage limits will still be your responsibility and financial burden, so you may want to purchase higher BI. Limits vary by insurer in Alabama.
Property Damage (PD): up to $25,000 per accident, PD kicks in when you cause an accident that results in someone else's property damage. Things that your insurer will pay for you include the other driver’s car repair and collateral damage to a fellow Alabamian's property or even municipal buildings. Higher limits of PD are available in AL, varying by insurer.
Optional Coverage in Alabama
Insurance agents and government officials in the Heart of Dixie will tell you that the minimum MLI coverage is not enough to protect you. For example, if you run into a driver who does not have proper insurance (and who caused the accident), you will be left with no one to claim medical bills and car repair from. Here are a couple of optional types of insurance coverage in Alabama that you may want to include into your policy:
Uninsured/Underinsured Motorist Bodily Injury (UM/UIMBI): When an uninsured motorist in Alabama causes a car accident and injures you, your insurer will step in to pay for your medical bills under UM/UIMBI. In the event that the negligent driver’s BI limits are lower than your UM/UIMBI limits, and unable to cover the full costs of your injuries, this coverage will also kick in to reimburse you up to the difference between the two limits. In AL, UM/UIMBI coverage starts from 25/50 to higher limits, but note that it can never be higher than your BI.
Physical Damage: this is the insurance that pays for replacements or repairs to your car, regardless of fault. It comprises collision and comprehensive coverage, and covers most damages from ones incurred in an auto accident to falling tree branch hitting your hood, up to the market value of your insured car. Most AL insurers will ask you to select a deductible amount – the out-of-pocket cost you need to bear before your insurance coverage kicks in for each accident – and the amount you choose will directly influence your premium.
Apart from a liability policy, Alabama's Department of Public Safety will also accept a certificate of compliance issued by the Department of Revenue (DOR). Specifically, you need to fulfill one of the following requirements in order to earn your certificate:
Liability Bond: the DOR will grant you a “Motor Vehicle Liability Bond Certificate” if you apply for a bond issued by a licensed surety company. This bond is only valid if it is made payable for $75,000 - that's the amoung an Alabama insurer would typically provide under a minimum liability policy. This is a bond of promise that indicates the surety company will pay in your place in case you fail to do so for damages you cause in an accident.
Cash Deposit: the DOR will grant you a “Cash Bond Certificate” if you deposit $75,000 in cash with the State Treasurer’s office. At the same time, you must also complete an “Application for Cash Bond Certificate” form and send it to the DOR, after which you should get your certificate. For any damage you cause in an accident, the payments you owe to the other party will come out of this deposit.