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When Alabama is the home of your real estate investment portfolio, you have to navigate the risks that come with such a feat. In fact, you must protect the property from earthquakes, severe thunderstorms, and much more. The best way to do that is by getting a homeowners insurance policy, which is often required when you take out a mortgage loan.
There are many homeowners insurance providers in Alabama. This can be good, but it also means you have to find the best option with reasonable insurance coverage and premiums, which can be challenging. We created this guide to make it easier.
In fact, we researched the best homeowners insurance companies in Alabama. This will facilitate your search to find an insurance policy that meets your needs.
Our guide includes key tips for selecting homeowners insurance in Alabama. This state has unique hazards, but you'll be covered.
Then, we will analyze the information gathered on each homeowners insurance company we talk about. Let's get started!
Understanding Alabama Homeowners Insurance
You wish to safeguard your investment as a homeowner, property manager, or landlord in Alabama. Therefore, you require a clear understanding of how homeowners insurance works.
Overall, this coverage is essential and is the safety net against unforeseen problems. You can ensure that your valuable assets and property are protected, even when you're facing unexpected challenges.
Average Home Insurance Costs in Alabama
The average cost of Alabama homeowners insurance is about $1,632/year for a dwelling coverage of $250,000. When you compare that to the national average, which is $1,428, you'll see that you'll pay roughly 14 percent more every year.
Average rates might be higher in Alabama than the national average because the state is so close to the coast. That means it has a large chance of getting hit with some strong storms.
It's also important to note that the average home insurance costs in Alabama are less than in the neighboring states. For example, Florida has an average rate of $1,981/year, and Mississippi homeowners will pay roughly $1,900 per year!
Homeowners Insurance vs. Landlord Insurance
Property managers and landlords have to know the difference between home insurance and landlord insurance. Traditionally, homeowners insurance caters to the home's structure and belongings within. Therefore, it's often not comprehensive for rented properties.
Landlord insurance is specialized coverage designed for a landlord's needs. It extends the protection to focus on potential rental income loss, the property itself, and liability from accidents involving guests and tenants.
Overall, it's crucial to choose the right type of insurance to adequately protect you from the unique risks you face. Likewise, insurance policies often have specific conditions and terms. You shouldn't misrepresent property use to the insurance company because it could lead to policy cancellation or denied claims.
Here are a few times when you might want homeowners insurance and not landlord insurance:
Vacant Property
If the property is vacant and not being rented to a tenant, you might want to maintain homeowners insurance. The coverage protects any personal belongings you've kept there and the property itself.
Temporary Absence
You might decide to move out of the property and rent it to another person for a period of time. If you intend to return, homeowners insurance could be appropriate while you're away. However, make sure you talk to your insurer about this and get the right amount of coverage.
Transition Period
A property owner might live on the property before renting it. During the transitional period, homeowners insurance can be helpful until you convert it fully into a rental property.
Home Sharing
Some of the companies listed below offer home-sharing options, where you rent a portion of the residence. However, it varies, so you should speak directly to the insurer to find out what's covered.
Is Alabama Homeowners Insurance Required?
Alabama law doesn't require anyone to buy homeowners insurance. However, if you mortgage your home, the lender generally wants you to have an Alabama homeowners insurance policy, which is part of the loan conditions. Typically, you have to maintain coverage until the mortgage is paid off. Even after the last payment is made, it's often a good idea to have home insurance.
If you hope to apply for a grant from SAH (Strengthen Alabama Homes), you'll have to get a home insurance policy. This offers funds to residents to strengthen their houses against severe weather.
How to Choose an Alabama Homeowners Insurance Company
If you want home insurance, it's best to get recommendations from your friends and family members. Likewise, you can find local agencies and online carriers.
When you shop for home insurance, make sure the insurer offers a good combination of coverages, prices, financial strength, and discounts. It's wise to check credit rating agencies to get information about these companies. Likewise, you want to look at its claims history to ensure that it pays out quickly and efficiently.
Before you buy a policy, make sure the insurance company and agent have licenses to sell insurance in this state. You can look up that information on the NAIC (National Association of Insurance Commissioners) website.
You don't have to break the bank when searching for home insurance. Here are a few tips to help:
- Get Multiple Quotes - You shouldn't stick with the first option you see. In fact, it's wise to take the time to request multiple quotes to determine which carriers offer low rates. Make sure you check each company's claims history and know what's included with its standard homeowners insurance policies.
- Repair Your Credit - Insurers typically reward people with higher credit ratings, allowing them to get low premiums. If you improve your credit score, you could benefit.
- Repair the Roof - A damaged or aging roof could mean high-cost claims, and insurers might give you a higher premium. Therefore, it might be wise to replace the roof to lower your insurance rates.
Unique Policy Needs for Alabama Homeowners Insurance
Alabama homeowners should be aware that there are specialty home insurance coverages available. You might need more protection than a traditional policy. Though you may rent the house to someone else, they might store artwork, sports equipment, or jewelry on the property. Here are a few unique policy options you could encounter:
Tropical Storms and Hurricanes
Since Alabama is in the Gulf Coast area, it's susceptible to hurricanes and significant property damage. Hurricane Ivan went through the state in 2004, which caused 117 tornadoes in three days because of the high winds.
Review your home insurance policy to determine the coverage amounts you have. It might cover wind damage, but you could have a separate deductible for wind, hurricanes, and hail.
For example, the home insurance policy could have a $1,000 deductible and a separate one percent deductible for wind claims. Therefore, if the property has $200,000 for dwelling coverage, you're responsible for that first $2,000 of the wind damage.
Flood Insurance Coverage
Beyond tropical storms and hurricanes, you might experience flooding because of heavy rains. Standard homeowners policies don't pay for the flood damage, so you may require flood insurance.
It's best to check with the Federal Emergency Management Agency to determine if you're at risk. Likewise, Riskfactor.com can also be helpful. Flooding can happen if it rains hard, so you might consider flood insurance, even if you don't think you'll need it.
Most home insurance companies sell flood insurance through the NFIP (National Flood Insurance Program). However, you can find private options.
Tornados and Earthquakes
The Alabama Emergency Management Agency claims that this state is at risk of earthquakes because of the Southern Appalachian Seismic Zone and the Bahamas Fracture Seismic Zone. Typically, a home insurance policy won't cover earthquake damage, so you might have to ask for this specifically.
Alabama could experience tornado damage since the state is in Dixie Alley, which is the Southeastern part of Tornado Alley. Forceful winds can destroy a house.
Most policies cover tornado damage, but it's crucial to review yours to determine the amount of coverage you have. Likewise, some policies might have a separate deductible, which will raise the cost for you if you must put in a claim.
Other Factors to Consider When Choosing Alabama Insurance Companies
Here are a few other things to consider when choosing Alabama homeowners insurance:
- Your Needs - You should know the coverage you require, the value of the property, the unique risks associated with the location, and more.
- Research Thoroughly - Explore each home insurance company's website, read reviews, and focus on the brand's reputation. You want prompt claims processing, good customer service, and more.
- Compare Rates - When looking at the price you pay, determine what you get. The standard policy might not cover the risks you worry about. Likewise, you might need to add something to make it fit your requirements, and you'll must know the costs associated with them.
Best Home Insurance Companies in Alabama
Are you ready to see the best Alabama homeowners insurance options? Here are the top five:
1. Amica
Amica is one of the best options for homeowners insurance because it offers many coverage options and can help you save money when insuring your home.
The Standard Choice policy offers coverage for the dwelling and other structures on the property. Likewise, it will cover the costs of temporary housing and your personal belongings. It's also possible to add personal property replacement cost and home business coverages. With the premium option, medical expenses are also covered.
Coverage Options and Features
There are two homeowners insurance options for Amica: The Platinum Choice and Standard Choice. Both can be purchased with the dividends option.
With the Standard Choice, you get basic home insurance, which includes your personal property, other structures, the dwelling, liability, and loss of use coverage.
It's also possible to bundle home and auto insurance coverage to save a little more money!
The Platinum Choice offers these perks:
- Dwelling replacement cost
- Liability coverage with medical payment coverage
- Personal property replacement
- Water backup and sump overflow
- Business property coverage
- Extended coverage on valuable items
- Credit card coverage
- Special coverage for computers
- Loss assessment plans
Discounts
If you become an Amica policyholder, you could qualify for these discounts on your insurance policy:
- Claim Free - If you don't file a claim within three years, you can get a discount.
- Autopay - If you pay your premiums automatically, you'll get a discount.
- E-Discount - If you choose electronic documents, you're eligible for a discount.
- Multi-Line - When you bundle home and auto insurance coverage, you can get a discount of up to 30 percent.
- New or Remodeled Home Credit - This applies to remodeled or new homes.
- Automatic Detection Devices - If your house has a water leak detection system, gas leak detection system, or temperature monitoring system, you can get a discount.
- Alarm System - If your house has a fire alarm, burglar alarm, or an automatic sprinkler system, you'll qualify for a discount.
- Loyalty - After you've been with the brand for two years, you'll get a discount
2. Allstate
Allstate is also an excellent choice for home insurance. Customers have many options available, such as adding building codes, home-sharing, earthquake, phone and identity protection, and much more.
Coverage Options and Features
With Allstate homeowners insurance, you'll get dwelling coverage, liability protection, and personal property replacement cost options. Likewise, it will cover medical payments for guests injured while on the property, but it also works for people in the household.
There are additional homeowners insurance options available from Allstate, such as:
- Personal Umbrella Policy - The standard coverage includes liability insurance to protect you from lawsuits when visitors get injured on the property. However, there are limits, and you might come up short. Therefore, it might be best to get a personal umbrella policy to give you more coverage.
- HostAdvantage - This is one of the first insurance companies to include home-sharing insurance. It protects you from damage and theft when you rent the property to others.
- Flood Insurance - Allstate generally covers water damage from burst pipes and washing machines. However, a flood from an overflowing ocean or river isn't covered. You can get a separate policy.
Discounts
You can save money when you bundle your home and auto policies. There are other discounts, as well, such as:
- Early signing discount
- Claim-free discount
- Easy pay plan
- Welcome discount
- Loyalty discount
- Responsible payment discount
- Protective device discount
3. State Farm
State Farm offers many personal property insurance products, including renters, home, rental property, condo, and more. You can find the insurance policy that meets your needs with ease here. Let's learn more!
Coverage Options and Features
With State Farm, you'll get these homeowners insurance options:
- Dwelling
- Other structures
- Medical payments
- Personal property
- ALE (Additional Living Expenses)
- Personal liability coverage
It's also possible to customize the homeowners insurance policy with additional coverages, such as:
- IDR (Identity Restoration Coverage)
- Identity theft, cyber event, and fraud loss coverage
- Law or ordinance to repair or rebuild your home after a covered loss
- Valuable possessions
- Inflation guard
Discounts
You can get various discounts with State Farm insurance:
- Utilities rating plan
- Claims-free
- Automatic sprinkler
- Impact-resistant roofing
- Home security
- Multi-policy
4. Nationwide
Nationwide offers various homeowners insurance products, such as pet insurance, home insurance, and more. It started doing business in 1926 and is now one of the best solutions available.
Coverage Options and Features
You can get homeowners insurance coverage for these things:
- Personal property
- Other structures
- The dwelling
- Law or ordinance insurance
- Guest medical payments
- Personal liability
- Credit card insurance
- Loss of use
Additionally, you can find these homeowners insurance coverages, which cost extra:
- Valuables Plus
- Water backup
- Dwelling replacement cost
- Identity theft
- Better roof replacement
- Brand new belongings
- Flood insurance
- Earthquake insurance
Discounts
There are plenty of discounts available from Nationwide, such as:
- Smart home monitoring systems
- Prior insurance
- New home purchase
- Roof ratings
- Home renovations
- Claims-free
- Protective devices, such as a smoke detector
- Gated community
- Multi-policy
5. Farmers
Farmers is ideal for many people, and it is considered one of the best for homeowners insurance in Alabama. It has three levels, but the standard policy includes money-saving features you'll love.
Coverage Options and Features
It's possible to customize your homeowners insurance policy, and here are the types available:
- Dwelling
- Personal property
- Liability coverage
- Other structures
- Medical payments
- Loss of use
You'll find optional features, such as:
- Declining deductibles
- Claims forgiveness
- Water backup/sump pump failure coverage
- Service line coverage
- Law and ordinance coverage
- Home-share coverage
- Guaranteed replacement coverage
- Equipment breakdown coverage
- Personal injury coverage
- Higher limit coverage
- Identity theft coverage
Discounts
It's easy to save money with a standard policy at Farmers. The deductible automatically declines each year that you're with the brand, and you'll get discounts when you're claim-free for over three years. You can also earn discounts by:
- Not smoking for the last two years
- Making home safety improvements
- Owning a new house that's less than 14 years old
- Going paperless
- Working in/retiring from designated professions (firefighters, doctors, teachers, etc.)
- Bundling policies
- Having a roof made of fiberglass shingles or UL-approved asphalt
- Installing smart home systems
- Consistently paying bills on time
- Signing up for automatic payments and paying in full
Other Notable Alabama Home Insurance Companies
Those five aren't the only homeowners insurance companies available in Alabama, though they are the top picks. Here are a few others:
- USAA Insurance
- Liberty Mutual
- GEICO
- Chubb
- Progressive
Final Thoughts - Is Homeowners Insurance Required, and Which Companies Are the Best?
Protecting your home is crucial. While homeowners insurance in Alabama isn't required, you should still look into it to secure your investment and give you peace of mind.
Navigating the home insurance company world is challenging. Remember to tailor everything to your needs and look beyond the standard policies, especially as a property manager or landlord.
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