Enter Your ZIP Code

Understanding Auto Insurance Basics


If you are a car owner residing in the state of Alabama, one of the most essential things to consider is knowing your state’s auto insurance regulations and requirements. This article will provide you with basic information for you to get familiar with minimum insurance requirements, proof of insurance and alternative coverage in the state of Alabama.

Minimum Insurance Requirements

All car owners who reside in Alabama must have the minimum amount of liability coverage when driving a car within the state.

The minimum amount of liability coverage is:

$25,000 for individual liability

$50,000 per accident

$25,000 for property damage per accident

This is commonly referred to as the 25/50/25 policy.

Proof of Insurance

You are required to have proof of coverage in your car at all times when driving within Alabama.

The following are acceptable types of proof that you have auto insurance:

1. A permanent or temporary insurance card from your auto insurance provider

2. A receipt or binder

3. Your actual insurance policy coverage or its declarations page

4. Recent proof of purchase of your car within the past 2 months along with an up to date insurance card from your prior car

If your car was made before 1975, you can present the bills of sale as acceptable proofs of purchase. If it was made after 1975, then a copy of your application for title would be an acceptable proof.

If you are driving a rented car, an acceptable proof would be a copy of the rental agreement showing the coverage or policy.

Alabama auto insurance laws impose a serious penalty if you fail to show proof of insurance: your tag registration will be suspended, plus you will have to pay a reinstatement fee of $100. After your initial suspension, if you are caught driving again without proper proof of insurance, your tag registration will face a mandatory four-month suspension and you need to pay a $200 reinstatement fee upon presenting your proof of insurance.

Alternative Coverage

You can also opt for an alternative coverage to liability insurance. You can either get a motor vehicle liability bond or deposit cash. The minimum amount for both is $50,000. The liability bond must be executed by a licensed surety company. The bond will serve as payment for any files against the policyholder with or without his consent as a result of any injury or damage committed by him. You must keep your Motor Vehicle Liability Bond Certificate with you at all times as this will be your proof of insurance.