How Car Insurance Works in Alabama
We have represented a lot of intelligent people, including engineers, school teachers, nurses, and even three rocket scientists. None of them fully understood how car insurance works in Alabama.
If you’re like them, it’s nothing to be ashamed of. Most agents don’t bother to explain how different coverages work and, even if they do, most people don’t listen. Most consumers are focused on getting a low rate and most agents are focused on closing the sale. Plus, it’s a boring commodity only made interesting by the silly commercials.
So it’s understandable that intelligent people can be clueless about how car insurance works in Alabama. But not understanding coverages on the front-end can be financially devastating after a serious car accident.
In this blog post, we will cover what everyone must know about how car insurance works in Alabama.
There are five primary different coverages offered for Alabama car insurance policies. If you can afford it, you need all five. Let’s discuss each of the five coverages so you understand why each is important.
How Liability Insurance Coverage Works in Alabama
🚗 Liability coverage – this is legally required and you will never see a penny of this coverage. No fun, huh? But it’s so important for high-income earners to have significant liability limits. Liability coverage protects you up to the limits if someone else makes a claim against you. If your net worth is seven figures and you have $25k in liability coverage and kill someone in a wreck, you’re in big, big financial trouble.
Even for those who do not have a significant net worth, if they have a decent equity in their home, it is worth purchasing at least $100,000 in liability coverage. If you live paycheck to paycheck like many in Alabama, you are probably fine to just carry the minimum limits of $25,000.
How Collision Coverage Works in Alabama
🚗 Collision coverage – this is a must have. It pays for the damage to your vehicle arising from a collision, regardless of fault. If your car is totaled, you get the fair market value less your deductible. If your vehicle is repairable, it covers repair costs less the deductible.
To better understand how collision coverage works, read our blog post about determining whether the insurance company is making you a fair offer for your damaged vehicle.
How Comprehensive Coverage Works in Alabama
🚗 Comprehensive coverage – this covers damage to your vehicle arising from incidents other than collisions. This can include a tree falling on your car, vandalism, hail damage, etc. Don’t expect collision coverage to cover you if a tornado carries away your F-150 from a mall parking lot (We’ve seen it happen). That’s what comprehensive coverage is for.
How UM/UIM Insurance Coverage Works in Alabama
🚗 Uninsured/underinsured motorist coverage (“UM/UIM”) – no one knows how important this is. 19.5% of drivers in Alabama are completely uninsured. Another 30+% have the state minimum liability limits of $25,000.
If someone hits you and has no insurance or insufficient liability coverage, you can make a claim under your own UM/UIM coverage for medical bills, pain, mental anguish, and loss of income.
This is extremely important. We once represented an engineer who didn’t have this coverage and we were limited to $25,000 in his case when his leg was shattered by an unemployed drunk driver.
How Medical Payments Coverage Works in Alabama
🚗 Medical payments coverage – this is worth adding, especially if you have a high health insurance deductible. It pays for medical costs regardless of who caused the accident.
That’s the big five of the coverages you need to understand. If you can afford it, we recommend having all of these types of coverages with six-figure limits.
Confused About How Car Insurance Works After an Alabama Accident?
If you have questions about how car insurance works after an Alabama car accident, reach out to our law firm for a free consultation. The claims process can be confusing and difficult without legal assistance from our Huntsville car accident lawyers!
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