Alabama Car Insurance
The state of Alabama has a variety of different laws and policies in place regarding car insurance and while many are fairly common there are a few laws which are quite unique. In Alabama, as in most other states, a majority of the laws concerning car insurance establish minimum amounts of coverage that must be obtained in order for a car to be legally driven. The minimum amount of injury liability coverage for instance is set at $25,000 for a single individual and $50,000 for multiple people. The injury liability coverage required by Alabama covers injuries received in an accident caused by the person with the insurance policy and does not typically cover the person with the insurance policy. Alabama state law also dictates that a registered car must also have a minimum of $25,000 in property damage coverage. As with the injury liability coverage, the property damage coverage is meant to pay for damage caused in an accident by the at-fault driver and does not cover the damage done to the at-fault driver’s vehicle. This type of “at-fault” car insurance is common in most states and is intended to make sure that the person that causes an accident is the one that ends up paying for it. Although these are the minimum levels of coverage set by the state of Alabama, insurance on some vehicles, such as those that are purchased new, may have more minimum requirements in addition to those set by the state. The purchase of a new car for instance typically requires that complete coverage be placed on the vehicle for the period of the loan though since this is a minimum requirement set by the loan company and not the state it is not considered to be illegal to carry less than the required coverage even though it may affect the terms of the loan.
In addition to laws concerning minimum coverage the state of Alabama also has a law in place that requires drivers to keep proof of insurance in the vehicle at all times. While this law tends to be a bit dated considering that police officers can access the status of a car’s insurance by running the license plate it is still enforced on occasion. There are a few different types of proof of insurance that will satisfy this requirement by the state, the most common of which is a basic insurance card that most insurance companies issue. In lieu of an insurance car a receipt for the insurance policy, or the insurance policy itself, can be used to satisfy this requirement under Alabama state law.
In order to enforce its car insurance laws concerning minimum coverage the state of Alabama has a variety of penalties in place for those that fail to meet state requirements for car insurance. Being caught without insurance or insurance under the minimum levels in the state of Alabama, which is known as a MLI violation, typically results in the suspension of the license plate registration. First time offenders can get their license plate unsuspended for a fee of $100 but are also required to show the court proof that the car is legally insured before the matter can be resolved. Repeat offenders are penalized a bit more harshly by the state as they are required to wait four months before being able to lift the suspension and the fine is $200 instead of $100. In addition to these penalties drivers caught driving without car insurance in Alabama could also face a separate $500 fine for the first offense and a $1,000 fine and a six month suspension of their license for subsequent offenses.
While the state of Alabama does require that drivers maintain a certain level of insurance coverage on their vehicle there are a few situations where a driver may not have to meet the minimum state car insurance requirement. The main way a driver can avoid having to meet the minimum car insurance requirements is by purchasing a motor vehicle liability bond, which the state of Alabama has set at $50,000, or be able to prove that they have $50,000 in the bank they are willing to use in order to reimburse someone if they are involved in an accident that they caused. Both the vehicle liability bond and the $50,000 in cash, which may need to be turned over to the state treasurer, are essentially forms of self insurance. By purchasing the bond or handing the cash over to the state treasurer a driver is basically setting aside the $50,000 minimum coverage amount required by the state and acting as their own insurer. While this practice is not especially common it is used on occasion by the wealthy and people with tarnished driving records that would make monthly insurance costly over time.