What is Required for Birmingham Drivers?
Throughout the state of Alabama, drivers are under a law labeled “Mandatory Liability Insurance,” or MLI. What this means is that no one can register or drive a car that is not insured on any public road or highway in Alabama. In fact, you can’t even allow anyone else to drive your uninsured vehicle. The idea is to prevent someone from being hit on the road by an uninsured driver and left with a lack of compensation for their physical injury, damage, or loss. Any driver that violates the MLI law in the state can expect a fine of up to $1,000 and/or lose their driver's license for six months.
Because of these legalities, it is essential that drivers shop around for the best insurance carrier with the best prices. Drivers can often save a few hundred dollars a year or more by shopping carefully for automobile insurance.
Cheap Auto Insurance in Birmingham
In order to help drivers find a good auto insurance carrier at a reasonable rate, we examined the rate data from multiple carriers in the greater Birmingham, Alabama area. Insurers do not charge one rate across the board for all drivers. Insurance rates are based upon statistical risk factors. Thus, young drivers who are male and unmarried tend to have some of the highest rates in any given area, while people who are retired and have more experience driving often have some of the cheapest insurance rates in a target area.
Our analysis took into account several different demographic scenarios so that drivers can focus upon a few companies that have the best rates for their particular lifestyle. We chose 10 automobile insurance carriers and obtained rate quotes, based upon different driver demographics from all 10 carriers.
A. For Young Newer Drivers, Unmarried Male - Liability/Full Coverage
Our first demographic scenario is the rates charged by the 10 insurance carriers in Birmingham for a younger driver who is male and is a newer driver. The male is 18 years of age and has one minor violation on his driving record. These rates will be different in various cities within the state of Alabama.
Among the major carriers, we found that the cheapest carrier was Allstate at $1,726 per year. The next most affordable rate was provided by Guideone Insurance at $1,944. Progressive came in third cheapest at $2,704; followed by Farmers at $3,053; Safeway Insurance at $3,060; and Nationwide at $3,061 per year. The most expensive carriers were State Automobile Mutual and Infinity at over $4,500 per year. This definitely demonstrates the power in shopping around for automobile insurance. A younger male driver can save about $3,000 per year by shopping around for the best quote.
B. For Young Newer Drivers, Unmarried Female - Liability/Full Coverage
Often, female drivers, even newer drivers that are younger, will find their automobile insurance rates are lower than those charged to young male drivers. It is again important to realize these are the rates 10 major insurance carriers are charging in Birmingham, so the rates that drivers in other Alabama cities will be charged will vary. We sampled from the same 10 insurance carriers for each different driver demographic.
Our target driver in this case is an 18-year-old, unmarried female driver with only one minor violation. In this case, only State Automobile Mutual Insurance charged over $4,500 per year. The cheapest carrier again was Allstate at $1,853 yearly, followed by Farmers at $1,925. It is interesting to note that Allstate is charging around $130 more per year for young, inexperienced female drivers than for a similar male driver. The third cheapest carrier was Safeway at $2,378; followed by Progressive at $2,470; and Nationwide at $2,579. This shows that the middle-range price for young female drivers is around $500 cheaper per year than the rate for young males at $2,500 yearly.
C. Married Couple, 1 Minor Violation - Liability/Full Coverage
Our next driver demographic is a married couple who have one minor driving violation. Married couples tend to garner cheaper auto insurance rates. In Birmingham, our couple was able to find the cheapest rate at Allstate at only $706 per year. Our carrier to consistently charge the highest rate to younger drivers, State Automobile Mutual, seems to favor couples. For the married couple, their yearly rate was the second cheapest in Birmingham of the 10 carriers at $995 yearly.
The next cheapest carriers were Progressive, Nationwide, Safeway, and Guideone at $1,111; $1,280; $1,322; and $1,509 respectively. Infinity was the highest at $2,322 yearly. The difference between the most and least expensive automobile insurance rates for married couples in Birmingham is over $1,500 yearly. Most of us would rather have that money to use in some way that we please, instead of handing it over to an insurance carrier.
D. Single Parent, 1 Occasional Operator, No Accidents - Liability/Full Coverage
Our final driver demographic is a single parent who drives only occasionally and has no accidents. Remarkably, State Automobile Mutual, the company that charges the highest rates of the 10 insurers for young drivers, charges the least for a single parent. Their yearly rate is only $622. Progressive is the next cheapest at $804 yearly, followed by Allstate at $977. The middle level of rates was populated by Nationwide, Safeway, Farmers, and Guideone at $1,080; $1110; $1,359; and $1,383 respectively.
Infinity charges the most for our single parent at $1,772 yearly. With our single parent, choosing the least versus the most expensive auto insurance would net her a yearly savings of over $1,100 yearly. Infinity ended up being the carrier that was consistently charging the most for auto insurance, across all driver demographics. Allstate was consistently one of the cheapest auto insurance carriers in Birmingham, but it clearly can still save up to hundreds of dollars or more per year to shop around.
The Difference Between Liability and Full Coverage in Birmingham
What is Liability-Only?
In Alabama, the minimum insurance you are required to purchase each year in order to drive your car and register is $25,000 in insurance coverage for one person's injuries in an accident, $50,000 in coverage when multiple people are injured in an accident and $25,000 in insurance to cover any property damage. If one does more damage than this amount, they are legally obligated to pay for the rest of the damage they have caused out-of-pocket. These amounts were chosen because they cover the expenses for repairs for the vast majority of accidents that occur on the roads.
What is Full Coverage?
Liability-only insurance is the least amount of insurance that one can purchase. This satisfies your legal requirement to drive and register your vehicle in Alabama. For many people, this is not sufficient coverage because it does not cover their losses if they are at fault and do damage to their own vehicle or if they sustain damages in a hit-and-run or from an uninsured driver.
Collision covers when one is at fault and their own vehicle is damaged. If you have a car that is worth more than a few thousand dollars, it is often a wise investment to buy collision insurance each year. However, collision insurance coverage is pricey and will increase your insurance cost per year quite drastically.
Comprehensive covers those oddball things that happen that you cannot control, like damaged windshields and collision with animals on the road. It also covers your loss when someone purposely damages your vehicle in an act of vandalism. In addition, comprehensive covers theft of your vehicle, fire and weather, or acts of nature. An example of the latter would be if your car was crushed under a tree that fell in a wind storm.
Even owners of cars that are no longer worth very much might consider comprehensive insurance, since events like windshield damage are very costly. This is especially true if people live either in rural environments where they might hit a deer or a cow; or, conversely, if they live in high-crime areas where their vehicle might be vandalized or stolen. Comprehensive insurance is usually not very costly and often is a wise investment for most drivers.
Uninsured motorist coverage is for situations when a hit-and-run driver or an uninsured motorist harms you or your vehicle.
All of these different types of insurance, in addition to the legally required insurance, constitute full-coverage insurance. The idea is that, unless you are breaking laws or were grossly negligent, you are covered by your insurance for your losses and repair costs, whether you were at fault or not.
Difference Between Full Coverage and Liability-Only Insurance
In Alabama, the average driver with a good driving record that is not young can find full-coverage automobile insurance for around $100 a month to $150 a month. This amount is variable, based upon other factors, such as the type of vehicle you drive. Vehicles that are a target for thieves or those that have expensive replacement parts tend to cost more to insure. Liability-only coverage in Alabama tends to cost just over $40 a month for people who aren’t too young and have a good driving record.
Ways to Lower Your Auto Insurance Rates in Alabama
Factors That Affect Your Birmingham, AL Car Insurance Rate
Your car insurance rate in Birmingham, Alabama is based upon many factors. You will be charged more or less on your policy based upon your age, marital status, and your number of moving violations and accidents. You will also be charged by the carrier based upon the type of vehicle you drive, whether it is paid for or not, and whether you decide that it is cost effective and prudent to have collision insurance or not. Also, insurance agency rates are highly variable, based upon the company and what area of the country you live in. Those in rural areas often pay less, while people in large, metropolitan cities often pay more. Armed with knowledge and by shopping around, you overcome some of these factors and save substantial money each year on auto insurance.