If you’re a new homeowner, congratulations! Once the paperwork is signed and you’ve closed on the home, there’s still one hurdle left to clear — finding the right homeowners insurance policy for your home.

Our team took a look at the top insurance companies in Alabama and evaluated them on a couple of key metrics: coverage options, financial reputation, affordability, and customer service. The Yellowhammer State has several providers we highly recommend.  

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The Best Homeowners Insurance in Alabama

Freshome’s Top Recommendations: Amica, Liberty Mutual, State Farm, Nationwide, American Family, Farmers.

It’s important to get quotes from as many companies as possible before selecting an insurance policy. Most insurance agencies offer online quotes to find a policy in Alabama, and that is the best way to get a quick idea of how much your premiums will be. Online quotes are not as accurate as getting a full phone quote with an agent, but they will give you the general ballpark rate.

Our Quotes
State Farm$1,746 Per Year
Liberty Mutual$1,751 Per Year
Amica$2,032 Per Year

To get online quotes, the Freshome research team looked for rates for a 2,000-square-foot, single-family home valued at $200,000. We said we did not have a swimming pool, trampoline, or dog — because those things can raise your property rates — and we opted for water backup/sump pump overflow coverage. We’ll explain all these things in greater detail a little further down the page.

Every homeowners situation is unique. Factors like burglar and fire alarm systems, age of the house, homeowner credit history, age, and claims history play a big part in determining the yearly premium. Because quotes can vary significantly, you should not read this as a firm, inflexible ranking of home insurance companies. Instead, you should treat this as a guide full of suggestions to help you make a well-informed decision about which plan to choose.

When looking for insurance, it is important to considering their financial strength ratings from organizations like J.D. Power, A.M. Best, Moody’s, and Standard & Poor’s. Based on these rankings, we determined you may want to give a shot to Nationwide, American Family, and Farmers.

What You Should Know Before Getting a Quote

Get HO3 Coverage

Freshome recommends that homeowners look for HO3 coverage — the most commonly purchased policy. And HO3 (Homeowners 3) policy is an “open perils” policy that covers any direct damage to your property and other structures on it, unless the language on the insurance specifically excludes it. Coverage for personal property is only available for “named perils” — usually 17 listed in the policy, the most common of which are fire or lightning, windstorm or hail, riots, explosions, and theft.

Rates Will Vary

The average cost of a yearly home insurance premium in Alabama is $1,198 — 26 percent higher than the national average of $952, according to 2016 data from ValuePenguin.

The online quotes received from State Farm were much higher than the state and national average. This could have resulted from a number of factors including the specific neighborhood or age of the house.

“Mortgage lenders require borrowers to have homeowners insurance and if the borrower does not purchase a policy, the lender will get a policy for them and pass the cost of the premiums onto the borrower within their mortgage payment. Borrowers should never defer that choice to the lender — they usually partner with an insurance carrier and there could be a comparable policy out there with a better price. Borrowers have plenty of time to shop and purchase a policy on their own. There’s no reasons they should let that happen and a lot of people do.”

– Michael Thrasher, Research Analyst, ValuePenguin

Be Prepared for Your Quote

Collect as much information about your house as possible before you go into your pricing insurance premiums. This includes construction history, roofing materials, age of the home, size, distance to the nearest fire station, number of smoke detectors, and much more. If a claim has been made on the house in the last five years (by you or the previous owner), your insurance agent needs to know. Always keep your property information handy when you begin pricing.

Your Credit May Affect Your Premiums

Nationally, homeowners whose credit scores dropped from “Excellent” to “Poor” saw an increase of nearly double their previous rates. In Alabama, there is a 126.4 percent increase according to a 2014 report from InsuranceQuotes.com. So be sure to take stock on your credit before you go in for a quote.

Flood Insurance Is Not Included

This is an important factor to consider, especially because flood insurance is not required when purchasing home insurance, nor is it covered by a basic homeowners policy. Flood insurance is available through the federal government. Even if you don’t get a ton of rain, you never know when the worst might happen. Flood damage can uproot you and destroy all your property, so it’s best to have the coverage just in case.

What Does Homeowners Insurance Cover?

Basically if you keep it at your house, it’s covered. But there can be certain restrictions — especially when it comes to personal property. For instance, some policies may only allow $1,000-$2,000 for all your jewelry.

The Insurance Information Institute suggests homeowners go room to room and complete an inventory of their items to make the claims process easier in the event of a loss. Take photos or videos, and store the information in a fireproof box. The Institute adds that 50 to 70 percent of insurance consists of personal belongings.

Generally, coverage for personal belongings also covers items stored off-premise, meaning you can be away from Alabama and still be able to file a claim on any of your possessions damaged on the trip, anywhere in the world.

“A homeowners policy will cover legal fees for a libel suit in the event someone sues you for libel or defamation of character. Your liability insurance will cover the cost of your defense and any court awards up to the limits of your policy. This can be a financial lifesaver as legal fees can quickly add up, even if the claims made against you turn out to be false.”

-Mark Vallet, Home Insurance King

Why Are Alabama Rates Higher Than Average?

It’s not just Alabama, but all Atlantic and Gulf Coast states have experienced a sharp increase in home insurance premium rates. As tropical storms become more brutal, the risk to properties in the areas becomes higher — forcing insurance companies to increase their rates to ensure they can honor their coverage. Compared to Florida — who is 109 percent higher than the national average — Alabama has it a lot better with only a 26 percent hike.

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FAQs

What are common coverage gaps?

There are a few incidents most homeowners think are automatically covered under homeowners insurance but are usually not. The biggest is water backup/sump pump overflow coverage. A sump pump is a piece of equipment often found in the basement of houses that removes water in an area where it collects. Water backup/sump pump overflow coverage has to be added to your home insurance plan. Most companies will offer it at the time of purchase for a little additional cost to your premium. Decide if it’s worth it to you in the long run, and remember that water damage can be expensive.

In the event that your pipes freeze and burst, there may be a chance your insurance won’t cover that. Be sure you take proper precautions — such as draining the pipes — before those record-breaking nights happen next winter.

How much should my deductible be?

That depends on a lot of different factors. In reality, it should be a number you can afford in the event something should happen to your property. Can you shell out $2,500 should you sustain major roof damage? If so, then that’s the deductible for you. Really, the deductible should be commensurate with your income. If you raise your deductible, you’ll likely pay a lower premium, and vice versa.

How can I lower my premiums?

When it comes to insurance, it can seem like, “The higher the fun, the higher the premium.” It certainly applies to common backyard toys like swimming pools, diving boards, trampolines, and tree houses. These are known in the industry as “attractive nuisances.” Formally, attractive nuisances are defined as objects that will likely attract the attention of unassuming children — or worse, the neighbors’ children. The last thing you want is an innocent trespasser slipping on your pool deck when you’re not home.

So if you opt to keep your attractive nuisances separate from the actual structure or property, you’ll do yourself a favor and lower your premium. Unless you decide a pool is worth the extra fee.

Another way to lower your premium is to pay yearly rather than monthly. While a $1,700 premium may seem like a lot, it’s a lot cheaper than paying $190 for 12 months. When getting your quote, be sure to double check the yearly rate knocks off a couple hundred from your premium.

I already have a home warranty; do I still need home insurance?

Yes. A home warranty is not the same as home insurance. A good home warranty will ease your pocketbook worries in the event your refrigerator goes on the fritz. Home warranties cover your large appliances — like the fridge or the dryer — that aren’t necessarily included in your homeowners insurance.

But you don’t need to have a home warranty. Read our rundown of home warranty coverage to get an idea if it’s right for you.

Take Action

Home insurance companies don’t have to do much of the heavy lifting when it comes to convincing people to cover their property. Heck, the bank basically serves them business on a silver platter since they require coverage to approve homeowners for a mortgage loan. But because shopping for home insurance can be a little confusing and tedious, that doesn’t mean you can’t be prepared.

With our guide, we hope you’ll walk away with the tools to know what to look for in an homeowners insurance policy, what gaps to look for, and where to start when considering companies. The best way to get the best rate and best plan possible is to get as many quotes as you can so you can make an educated and enjoy that new house!

Freshome’s Top Recommendations: Amica, Liberty Mutual, State Farm, Nationwide, American Family, Farmers

Compare Homeowners Insurance Rates

To quickly find and compare rates in your area, enter your ZIP code below.

Enter Your ZIP Code: