This article discusses auto insurance requirements in Alabama and how they affect drivers who are involved in car accidents. We'll take a look at what kind of insurance is required, what proof of insurance needs to be submitted, and how Alabama insurance rules and injury laws affect the options of drivers who have been injured in a car accident.
Alabama is a "Fault" Insurance State
State insurance laws in the U.S. typically come in one of two flavors: "no-fault" and "fault" (a “fault” system is also known as an "at-fault" or "tort" system in some states). Alabama is a "fault" state when it comes to car accidents and insurance coverage. This means that the fault (or legal responsibility) of the drivers involved in the crash will affect how and in what way compensation is paid to those who are injured -- or whose property is damaged -- as a result of the accident.
It also means that Alabama drivers have multiple options when it comes to deciding how to proceed with a claim for compensation after an accident. These options include:
filing a claim with one’s own insurance company, according to the terms of the policy
filing a claim with the other driver's insurance (sometimes called a “third party claim”) and
filing a personal injury lawsuit against the other driver.
In a "no-fault" state, on the other hand, drivers file their claims with their own insurance carriers, regardless of who was at fault in the accident. If you’re in Alabama, you probably don’t need to worry about how no-fault rules work, but if you’d like more information see No-Fault Car Insurance and State Laws: The Basics.
Minimum Car Insurance Requirements in Alabama
Alabama requires drivers to have a minimum amount of liability insurance on their vehicles, set by Alabama law. This insurance pays for medical bills, property damage, and other costs in an accident if you are found to be at fault. As of 2011, the minimum auto insurance requirements in Alabama are:
$25,000 for one person injured in an accident
$50,000 for each accident in which more than one person is injured, and
$25,000 for each accident that causes property damage.
This “liability” insurance does not pay your medical bills or cover the cost to repair or replace your vehicle. However, you can purchase additional insurance coverage in Alabama to cover those kinds of losses. And you can buy liability insurance with higher limits than those listed here, if you wish. (Learn more about Car Accidents and Insurance Coverage.)
Drivers in Alabama do not have to prove they have insurance in order to register their vehicles. However, if you are stopped by a police officer in Alabama and cannot show proof of insurance, you may face fines of up to $1,000, a six-month suspension of your drivers' license, or both. Getting your license reinstated after an insurance-related suspension will cost an extra $200, and you will have to show proof of insurance in order to get your license back.
Uninsured/Underinsured Motorist Insurance in Alabama
Alabama does not require drivers to have uninsured/underinsured motorist insurance. However, this insurance can help protect you if you’re in a crash where the at-fault driver turns out to have no car insurance altogether, or not enough coverage to compensate you for your injuries and other losses caused by the accident. See Underinsured Motorist Coverage: How It Works or Uninsured Motorist Coverage: The Basics to learn more.
Additional Resources on Alabama Auto Insurance Rules
More information on Alabama's "fault" system of insurance is available from the Alabama Department of Insurance. The Alabama Motor Vehicle Division also publishes a brochure explaining Alabama's mandatory liability insurance laws.