Alabama Legislature Raises Auto Liability Insurance Minimums

By Phillip Rawls | May 12, 2008

The Alabama Legislature is ready to raise the minimum amount of auto liability insurance that motorists must purchase.

The current limits under Alabama’s mandatory insurance law are $20,000 for a single injury or death, $40,000 for multiple injuries or deaths, and $10,000 for property damage. The House gave final approval May 8 to a bill raising the mandatory minimum limits to $25,000, $50,000 and $25,000.

The bill, sponsored by Sen. Roger Bedford, D-Russellville, passed the Senate 33-0 in February and now goes to Gov. Bob Riley for signing into law.

The bill, a compromise between plaintiff lawyers and insurance companies, raises limits that haven’t been changed since 1983. Bedford said the changes are long overdue to protect motorists who are hit in traffic accidents.

“You certainly can’t buy a new car for $10,000 today,” he said.

The Legislature passed a similar bill last year, but the governor vetoed it because it would have taken effect immediately, rather than allowing insurance companies and customers time to adjust. The new bill would take effect in three months for new policies and six months for renewals.

Jeff Emerson, the governor’s communications director, said the Legislature addressed Riley’s concerns and he will sign the bill into law.

The new minimums bring Alabama in line with the insurance requirements in Arkansas, Georgia, Mississippi, South Carolina and Texas.

Tennessee, Virginia and Kentucky have the same limits for injuries and deaths but smaller amounts for property damage. Florida and Louisiana have lower amounts across the board, and North Carolina’s minimums are higher for injuries and deaths than those planned for Alabama, according to the Insurance Information Institute.

Rep. Marc Keahey, D-Grove Hill, guided the bill through the House. He recently estimated the higher liability requirements would affect less than 10 percent of Alabama’s motorists and cause them to pay $20 to $30 extra per year.

At Alfa Insurance, spokesman Dave Rickey said 6.5 percent of the company’s customers buy the minimum limits and would be affected by the bill.

The bill also raises the minimum amount of uninsured motorist coverage to match liability coverage.

Rickey said about 90 percent of Alfa’s customers buy the minimum amount for uninsured motorist coverage. Alfa estimates the average customer would have to pay an extra $13.20 annually for the higher uninsured motorist coverage.

Uninsured motorist coverage is optional in Alabama. It kicks in when the driver at fault in an accident has no insurance or too little insurance to cover all the damage.

The insurance legislation does not address the punishment for driving without insurance, but Bedford said he wants to tackle that issue in the 2009 legislative session.

A study released last year by the nonprofit Insurance Research Council showed that 25 percent of Alabama drivers lacked insurance between 1999 and 2004. That tied Alabama with California for the second-highest percentage of uninsured drivers. Mississippi was first.
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Associated Press Writer Bob Johnson contributed to this report.

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Latest Comments

  • May 20, 2008 at 7:02 am
    Ernest says:
    You can't have the commision because Gieco doesn't pay commisions!
  • May 12, 2008 at 3:39 am
    Sperm Whale says:
    More commision for me.
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