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The average cost of homeowners insurance in Alabama is $347 per month and $4,164 per year based on Insurify data. Simply put, Alabama homeowners have to look a lot harder for affordable insurance.
Nationwide and Travelers offer some of the most affordable insurance policies in the state and have high customer satisfaction scores. Here’s what you should know about policies from these and other companies, as well as some additional coverages you should consider, including flood insurance.
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Table of contents
- Best home insurance companies in Alabama
- How much is homeowners insurance in Alabama?
- What are the cheapest home insurance companies in Alabama?
- How much homeowners insurance do you need in Alabama?
- What are some of the biggest risks when owning a home in Alabama?
- How can you save money on homeowners insurance in Alabama?
- Average home replacement cost in Alabama
- Alabama home insurance FAQs
Best home insurance companies in Alabama
Many quality home insurance companies serve Alabama. Homeowners in Alabama should consider their individual needs before choosing a policy, including their home’s age, condition, and location.
Here are some of the best insurers in Alabama, based on common needs.
Best large insurer: Nationwide
Nationwide is one of the most trusted home insurance companies in the country and the 10th-largest home insurer by market share. The company has a strong presence in Alabama, with multiple agents in major cities like Birmingham and Tuscaloosa. Nationwide has a customer satisfaction index rating of 816 out of 1,000 from J.D. Power, which is slightly below average.
Low average rate of $233 per month
A+ financial stability grade from A.M. Best
Offers a home and auto bundle
Below-average customer satisfaction
Uses credit-based insurance scores (not ideal for people with low credit)
Mixed customer reviews from Better Business Bureau
Best insurer for cheap rates: Travelers
Travelers offers the lowest average rates in Alabama, at $216 per month. While Travelers is an affordable option, the company has a J.D. Power customer satisfaction rating of 794 out of 1,000, which is below average. Fortunately, Travelers does have high financial stability ratings, with an A++ grade from A.M. Best.
Offers the most affordable rates in the state
High financial stability ratings
Offers bundling discounts
Below-average customer satisfaction score
Discounts are slightly less substantial (12% for bundling)
No small, boutique provider experience
Best insurer for hurricane coverage: Liberty Mutual
Liberty Mutual’s standard policy covers damage to your home in the event of a hurricane. Liberty Mutual has a J.D. Power customer satisfaction rating of 805 out of 1,000, which is below the national average — but the company does offer some of the lowest average rates in the state, at $286 per month.
Average rates are well below the state average
Robust hurricane and windstorm coverage
Financial strength grade of A from A.M. Best
Low customer satisfaction score
Flood insurance sold separately
1.1/5 average score on Better Business Bureau site
Learn More: Hurricane Insurance: What You Need to Know
Best insurer for high-value homes: Hippo
Hippo offers increased coverage limits and additional coverage options for high-value homes. The company also offers discounts for smart home features that are often found in newer, more expensive homes. While J.D. Power hasn’t rated Hippo, A.M. Best gave the company a financial strength rating of A-.
Forward-thinking “insurtech” brand
High financial strength rating
Newer, less established brand
Average rate of $426 per month is higher than state average
Tech-driven focus may not appeal to all policyholders
Keep Reading: High-Value Home Insurance: What Is It?
Best regional insurance company: Midvale Home & Auto
Midvale Home & Auto offers robust homeowners insurance policies in Alabama. While J.D. Power hasn’t calculated a customer satisfaction score for Midvale Home & Auto, the provider has an A financial stability rating from A.M. Best.
Smaller, boutique insurance experience
High financial strength scores
Provides extended coverage of up to 50%
High average rate of $370 per month
Smaller and less established than some national insurers
Not accredited by the Better Business Bureau
Insurify’s team of data scientists analyze millions of home insurance quotes, and weigh publicly available reviews, claims payout rates, complaint indexes, financial strength scores, company reputations, and proprietary quoting data. Our editorial team applies this insight to inform our unbiased reviews and recommendations.
How much is homeowners insurance in Alabama?
Alabama homeowners pay an average of $347 per month for homeowners insurance, which is one of the highest average rates in the country. Several factors affect homeowners insurance rates, including your policy type, your location, and your home’s age and condition.
How your policy choices affect home insurance rates in Alabama
Your policy form
Homeowners insurance policies vary in terms of how many perils they cover. Perils are the causes of damage to a home, such as a fire or windstorm. The most common type of homeowners insurance policy is the special form (or HO-3 policy), which covers the following perils:
Different policy types affect how much you pay for your home insurance policy. For instance, a comprehensive form (or HO-5 policy) costs more because it covers all perils except those specifically excluded in your policy. Meanwhile, an HO-1 policy form covers fewer perils and costs less.
Read your policy closely to make sure it covers all the perils that matter to you. Alabama residents should note that most standard policies don’t cover damage from floods, so they should purchase flood insurance as additional coverage if they need it.
Learn More: Understanding the 8 Types of Homeowners Insurance
Your coverage level
The coverage level you choose affects how much you pay for home insurance. On average, HO-5 insurance costs $160 more than a standard HO-3 policy. Enhanced or additional coverages can provide you with better protection but may lead to higher premiums.
A deductible is the amount of money you must pay to cover a claim before your insurance kicks in. Raising your deductible can lower your monthly insurance premiums because you’re taking on more financial risk for yourself. Assess your financial situation before deciding on a deductible, as higher deductibles mean you’ll pay more if you file a claim.
How location affects home insurance rates in Alabama
Insurance companies factor in your ZIP code when determining your insurance rates. Rates differ by location for the following reasons:
Weather: Homes at a greater risk for severe weather damage cost more to insure. In Alabama, cities by the Gulf Coast have a greater chance of flash flooding, which partly explains why Mobile County has such high average insurance rates.
Proximity to emergency services: Homeowners who live closer to certain emergency services, like fire and police stations, pay less on average for homeowners insurance. This explains why insurance rates can vary even within a neighborhood.
Crime rate: Homeowners in areas with a high crime rate pay more on average for homeowners insurance due to the increased risk of theft and vandalism.
Property costs: Homes in more expensive ZIP codes cost more to insure on average. The median sales price of a home in Birmingham is $50,000 higher than that of a home in Decatur, which partly explains the different average quotes.
Here’s a look at how average monthly rates stack up in some of Alabama’s largest cities.
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What are the cheapest home insurance companies in Alabama?
Travelers, Nationwide, and Liberty Mutual offer the cheapest homeowners insurance quotes in Alabama. These companies offer quotes that are significantly lower than the state’s average homeowners insurance rate of $347. Travelers’ and Nationwide’s quotes are more than $100 lower than the state average.
Different homes have different needs. If you’re looking for coverage on a home that’s closer to the coast and at a greater risk for flooding, you may end up paying more for additional coverage. Compare quotes from a wide range of insurance providers to find the policy that meets your needs.
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How much homeowners insurance do you need in Alabama?
If you take out a mortgage in Alabama, your lender will require you to purchase homeowners insurance. Choose a policy that covers you for all relevant perils. For instance, Alabama experiences some of the most severe hurricanes in the country, so homeowners in the state should opt for robust dwelling coverage and flood insurance.
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What home insurance coverages should you buy in Alabama?
Homeowners insurance policies are known as “package policies,” which means they include an array of different coverages. Below is a list of the coverages found in a standard homeowners insurance policy. Several factors affect the price of these coverages, including the replacement cost of the home and the amount of personal property you’re covering.
Dwelling coverage covers any physical damage to the actual structure of your house, which includes attached structures like a garage. For instance, dwelling coverage will reimburse you for the costs of repairs to your roof after a windstorm.
Other structures coverage covers any physical damage to unattached structures on your property, such as a shed. This component of your policy would cover repairs to your fencing after a hurricane, for example.
Personal property coverage covers damage to any personal belongings in your home, such as furniture or electronics. You can add specialty coverage or a coverage rider if you’re looking to protect valuables like fine art or antiques.
Additional living expenses coverage will cover loss of use if you ever have to vacate your home during the course of repairs. For example, this coverage will cover hotel fees if you’re unable to access your home for an extended period.
Personal liability coverage protects you financially in the event of personal injuries to others or property damage that occurs on your property. For instance, personal liability coverage will cover medical bills if someone is injured falling down the stairs in your home.
What optional home insurance coverages should you buy in Alabama?
Alabama homeowners are at increased risk for damage from certain perils, such as wind and floods. Homeowners should consider adding the following optional coverages to their policy:
Flood insurance: Insurance companies don’t include flood insurance in their standard policies. Alabama homeowners should consider purchasing flood insurance, which costs about $700 per year in high-risk areas. You can purchase flood insurance through the National Flood Insurance Program or from a private insurer.
Earthquake coverage: Similar to flood insurance, earthquake coverage is an optional add-on policy. Occasional earthquakes occur in the northeastern corner of Alabama, so homeowners in that area should consider purchasing coverage. Visit the FEMA website for more information about traditional and parametric earthquake insurance.
Water/sewage backup coverage: Many homeowners insurance policies exclude coverage for water or sewer damage. Such coverage is particularly useful to Alabama residents along the Gulf Coast, who experience frequent flooding.
Check Out: How Much Does Flood Insurance Cost?
How much home insurance coverage should you have in Alabama?
Several factors affect how much home insurance you should buy. Your lender will often give you an idea of how much coverage you need based on your mortgage amount. Here are a few other factors to consider before choosing your home insurance policy:
Your home’s value: If your home is more expensive to rebuild, you’ll typically pay more for home insurance. Replacement cost refers to the cost of rebuilding a home using similar materials. Insurance agents often suggest purchasing home insurance worth at least 80% of your home’s replacement value.
Your location: If you live in an area prone to severe weather, you may want to purchase additional coverages. For instance, many Alabama residents buy flood insurance given the state’s frequent hurricanes and coastal location.
Your personal belongings: Homeowners with expensive personal belongings, such as fine art or antiques, should consider adding more personal property insurance. Many opt for umbrella insurance, which adds an extra layer of coverage but costs more.
All homeowners should compare policies from at least three different insurance companies before making a final decision. Read each policy closely and be aware of any exclusions. Alabama residents should be particularly wary of policies that exclude water or storm damage.
What are some of the biggest risks when owning a home in Alabama?
Alabama homeowners must keep certain risks in mind when buying a home insurance policy, including:
Hurricanes: Three of the 10 costliest hurricanes in U.S. history have impacted Alabama, making it one of the country’s most hurricane-prone states. Almost all standard homeowners insurance policies cover damage from windstorms. Owners of older or wood-frame homes should make sure they have robust dwelling coverage.
Flooding: Alabama receives 56 inches of rainfall annually. Standard homeowners insurance policies exclude coverage from flood damage, so Alabama homeowners should buy flood insurance through the National Flood Insurance Program or a private insurer.
Water damage: Alabama experiences a flood every 12 days on average, with many occurring along the state’s small coastline. Between hurricanes and flooding, the likelihood of water damage is high. Luckily, most standard home insurance policies include water damage coverage.
How can you save money on homeowners insurance in Alabama?
Alabama homeowners don’t always have an easy time finding affordable home insurance. Fortunately, some proven strategies can reduce your homeowners insurance costs:
Bundle home and auto insurance
Many insurance providers offer discounts when you buy both home insurance and car insurance from them. The size of the discount varies from company to company, so shop around to find the best bundling offers.
Invest in home repairs
If your home is older and has a shaky foundation or an aging HVAC system, you’re at greater risk for damage. Repairing these features can qualify you for discounts on home insurance.
Increase your deductible
Your deductible is the amount you pay out of pocket before insurance coverage kicks in. If you raise your deductible, your monthly premiums will be lower. Just note that a higher deductible means you may end up paying more if you have to file a claim.
Comparing home insurance quotes side by side from a wide range of insurance companies can help you find the best deal. Several factors affect insurance prices, so comparison shopping makes it easier to find the coverage you need at a price that fits your budget.
The type of company you work with also makes a difference.
“Purchasing insurance from a large provider may allow you to buy multiple policies, such as auto, home, and life insurance, and receive a bundling discount,” explains financial expert Laura Adams. “However, regional carriers may offer lower rates to compete with larger companies.”
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Average home replacement cost in Alabama
Replacement cost is the cost of rebuilding your home using the same type of building materials. This amount doesn’t account for your home’s depreciation in value over time. Most insurance agents recommend insuring your home to 80% of its replacement cost, which is why homes with higher replacement costs are more expensive to insure.
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Alabama home insurance FAQs
Here are answers to some commonly asked questions about homeowners insurance in Alabama.
Alabama homeowners pay an average of $347 per month for home insurance. Alabama residents should consider adding flood insurance to their policies, which will cost about $700 per year in high-risk areas.
Alabama has the third-highest average homeowners insurance rates in the country, trailing only its Gulf Coast neighbors, Florida and Mississippi. Much like those states, Alabama experiences severe hurricanes, which explains why rates are higher than average.
A homeowners insurance policy has three key components: dwelling coverage, personal property coverage, and liability coverage. Respectively, these cover the structure of your home, what’s inside your home, and medical expenses if an injury occurs at your home.
Your policy may cover the actual cash value of your home, which is the cost of rebuilding your home, accounting for depreciation. Or it may cover replacement cost, which is how much it costs to replace your home without deducting for depreciation. The latter results in higher payouts but may also cost more per month.
Alabama doesn’t require homeowners insurance by law, but your lender will require coverage if you take out a mortgage. Homeowners insurance protects you financially in the event of severe damage to your home. Alabama homes are at particular risk for hurricanes and flooding, which makes homeowners insurance essential, even though it’s not required.
State Farm is the largest home insurance company in Alabama by market share. Liberty Mutual, Nationwide, and Travelers are other major national insurance companies with a strong footprint in Alabama.
- Insurance Information Institute. "Homeowners Insurance Basics." Accessed February 23, 2023
- NPR.org. "Floods are getting more common. Do you know your risk?." Accessed February 23, 2023
- National Association of Insurance Commissioners. "Homeowners Insurance." Accessed February 23, 2023
- Geological Survey of Alabama. "Earthquakes in Alabama." Accessed February 23, 2023
- Alabama Flood Insurance. "Alabama Flood Facts." Accessed February 23, 2023