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Alabama Automobile Insurance Law

Guide to Alabama Auto Insurance Law

Car Wreck 12-28-12Alabama auto insurance law has evolved over the years and continues to experience changes.  The most notable recent evolution is the Car Wreck 12-28-12Car Wreck 12-28-12mandatory minimum liability insurance limits applicable to all drivers and registered vehicles in Alabama.  However, other optional insurance coverage is available in Alabama that can be just as important to protect you and your family members.

Mandatory Liability Coverage:

If you are responsible for causing a wreck, liability insurance pays for the damages you caused to another person.  For example, if you are driving a car, and run through a red light and hit another car, it is your fault.  Your liability insurance will primarily apply to any damages claimed against you for the damage caused by your negligence.  Without liability insurance coverage, more often than not, at-fault drivers are not capable of paying for the damages they cause. This inability to pay often results in innocent injured victims left with no compensation for the damages the at-fault driver has caused, and ultimately, can end in bankruptcy for the victim.  Consequently, liability insurance is very important— so much so— the state has determined that this coverage is mandatory for any registered motor vehicle and licensed driver in the state.

Alabama ranks as the 6th worst state in the nation for uninsured motorists operating motor vehicles on public roadways.  According to current estimates, up to 22% of motorists are operating uninsured vehicles on our roadways.  The Alabama Mandatory Liability Insurance Law is intended to address this problem.  The Law provides that “no person shall operate, register, or maintain registration of a motor vehicle designed to be used on a public road or highway unless it is covered by a liability insurance policy.”  Only insurance companies licensed to do business in Alabama may sell or issue vehicle insurance policies to Alabama residents, and any policy issued by one of these companies must provide liability coverage for a minimum of:

  • $25,000 for death or bodily injury to one person;
  • $50,000 for death or bodily injury to two or more persons per incident; and
  • $25,000 for damage or destruction of property.
  • $25,000 per person (or $50,000 per incident) UM/UIM coverage unless it is rejected in writing by the policy holder (quasi-optional, discussed in more detail below)

Enforcement of the minimum coverage requirements under Alabama law has been the weak link in the law.  However, as of January 1, 2013, law enforcement officers and license plate issuing officials have been using the Alabama Online Insurance Verification System (OIVS) to instantly verify the status of vehicles.  Generally, verification of coverage is still enforced by:

  • Verification of insurance by law enforcement during traffic stops or accidents;
  • Verification of insurance by county license plate-issuing officials before vehicle registration or renewal;
  • Verification of insurance by the Department of Revenue  through requests for insurance information to vehicle owners:
    • Whose registration has been suspended;
    • Who have been convicted of mandatory liability insurance violations; or
    • Whose driving privileges have been suspended or revoked.

Before the OIVS system came into common use in January 2013, it was relatively easy for a driver to circumvent the verification requirement at traffic stops or accidents simply by providing an insurance information card, when in fact the insurance was no longer in effect due to customer cancellation. The OIVS instant online verification has closed that significant loop hole.

For those convicted of violating the minimum coverage requirements penalties include:

  • A fine of $500 upon your first violation;
  • A fine of $1,000 upon your second or subsequent violation;
  • 6-month suspension of your driver’s license;
  • Suspension of your car registration;
  • For a second or subsequent violation, registration suspension for mandatory 4 months.

If your vehicle registration is suspended due to a minimum insurance coverage violation you will have to pay the following fees to have it reinstated:

  • $200 for your first offense.
  • $400 for your second and subsequent offenses.

Optional Coverage:

In addition to the mandatory liability insurance, optional coverage is available in Alabama, including:

  • Collision – This will help pay for accident-related damages to your car.
  • Comprehensive – This will help pay for damages to your car that are out of your control, such as those caused by inclement weather.
  • Medical and funeral – This will help cover medical bills or funeral costs after an accident.
  • Uninsured  or Underinsured (UM/UIM) motorists coverage –This coverage will help protect you, your family members, or passengers in your car after accidents caused by drivers who don’t have liability insurance or who have policies with inadequate limits of coverage for your damages.

Special Note on UM/UIM coverage: 

Probably the most important optional coverage you can buy is UM/UIM insurance.  UM/UIM coverage was mentioned earlier under the Mandatory Liability Coverage section above, although technically, this coverage can be waived by the policy holder.  Waiver of the coverage must be in writing signed by the policy holder.  Without this waiver, any policy sold in Alabama should have at least the minimum limits of UM/UIM coverage.

Many people choose to waive this coverage, but in most instances they should instead consider purchasing as much UM/UIM coverage as economically possible.  Why?  Uninsured motorist insurance is an easy way to give yourself some extra peace of mind while you’re on the road.  As mentioned previously, a large percentage of drivers in the state of Alabama still do not have the required minimum liability coverage that would cover personal injury damages caused through their negligent driving.  In effect, UM/UIM coverage is liability insurance that the policy holder buys to cover damages suffered by the insured but caused through the negligence or fault of some other driver who is insufficiently insured.

In Alabama, Uninsured/Underinsured motorist insurance kicks in where the at-fault driver’s insurance ends.   It is quite common in the state of Alabama for a driver to carry only the minimum liability coverage of $25,000 to $50,000; should any of these drivers cause an accident, only this minimum amount will be available to cover the damages suffered by the other driver and his/her passengers.

Furthermore, compared to the overall expenses of car insurance, UM/UIM coverage is very affordable.  For example, $250,000 worth of UM coverage can typically be purchased for about $75 every six months.  While the minimum liability coverage of $25,000 to $50,000 might be enough to cover damages caused in a relatively minor car accident, it is not likely to be nearly enough for a driver who causes a multiple-vehicle pileup on the freeway.  And if you or your family member happens to be a victim in any such crash, without UM/UIM coverage, sufficient coverage for your damages is unlikely.

Another feature of UM/UIM coverage in Alabama is the “stacking” option (in the absence of clear language in the policy to the contrary). If the policy holder has more than one insured vehicle, and each vehicle has a policy with UM/UIM coverage, the total amount of UM coverage applicable to each vehicle can be added together, or “stacked,” for the maximum limits that are applicable to the damages claimed.  Typically, up to three vehicles’ coverages can be stacked for one incident, and some policies will allow even greater numbers of vehicle stacking.

Generally, UM/UIM coverage in Alabama can apply to any damages that liability insurance coverage would apply to including, but not limited to:

  • Medical expenses.
  • Lost wages.
  • Pain and suffering from the auto accident injuries.


It is only a very good idea to have car insurance in the state of Alabama:  it is the law.  In spite of this legal requirement, many drivers continue to operate on our roadways without liability insurance coverage.  Considering Alabama’s relatively low minimum-required liability insurance coverage and the high percentage of Alabama drivers who are not even insured for liability to the minimum amount, UM/UIM insurance coverage could be the most important component of your auto insurance policy.  It is the best way to ensure that in the event you or a family member or a passenger in your car is injured through someone else’s negligence, sufficient coverage will be available to apply to those damages.  Without it, many people find themselves with insurmountable financial obligations and losses with no real hope of recovery—through no fault of their own.  Be responsible.  Don’t drive without complying with Alabama’s minimum liability insurance coverage, and ask your insurance agent about the benefits and costs of UM/UIM coverage.