FAQ Main Page
Q. What is the minimum auto insurance requirements in Alabama?
A. The minimum auto insurance liability limits are commonly stated as 25/50/25. This
means $25,000 bodily injury liability limit per person. $50,000 maximum for all bodily
injuries to be paid for any one accident. $25,000 maximum for property damage per accident.
Q. I was involved in an automobile accident, and
the other party was at fault. My company does not want to subrogate (recover),
the amounts due on my deductible or loss of use. What can I do?
A. If the company does not plan to pursue
subrogation, you can usually file a claim in Small Claims Court to recover the
amounts owed, or you may try to retrieve your deductible by calling the company
of the at-fault party. You may make a claim against the at-fault party's
Q. I was in an accident caused by a vehicle owned by the State of Alabama. How can I resolve my claim?
A. You should contact:
Division of Risk Management
P. O. Box 303250
Montgomery, AL 36130-3250
The Department of Finance handles insurance claims for all State of Alabama agencies.
Q. My producer quoted me one price for my
automobile insurance, but when I received the policy, the premiums were higher.
What can I do?
A. You should first find out why there was a discrepancy in the quote. Sometimes information will be revealed to the company on your Motor
Vehicle Record (MVR) that will require the originally quoted premiums to be changed by the company.
You have three options:
You may pay the increase.
You may request cancellation, but the company is entitled to earned premium.
Do not pay, and the company will cancel your policy for nonpayment of premium.
The producer should be able to give you a satisfactory explanation for the increase
in your premium. If you feel that your premium was intentionally quoted low in order
to obtain your business, you should file a Request for Assistance with the Department.
Please review the Cancellation of Automobile Liability Insurance for the reasons insurance companies
may cancel your insurance. Section 27-23-21. Grounds for policy cancellation. Cancellation of Automobile
Q. How much notice does a company have to give for cancellation of an auto policy?
A. A company must give 10 days notice for nonpayment of premium. For any other reason,
Q. My car is financed through a bank. I could not afford to pay comprehensive and
collision coverage. The bank secured coverage on my vehicle without my knowledge.
Can the bank do this?
A. Yes, a lender has the right to require a borrower to protect the lender's interest
in the collateral. A collateralized loan agreement typically includes a provision
requiring the borrower to keep the collateral insured, and allowing the lending
institution to secure coverage and charge for it; if the borrower fails to obtain
the required insurance. These charges are subject to interest, and the premiums
are often much higher than if you purchased insurance yourself.
Q. The company wants to repair my car with non-factory parts. Can they do this?
A. Yes, as long as the repairs restore the vehicle to its value which existed before
the loss. The parts used do not necessarily have to be original equipment manufacturer
(OEM) parts, but should be of like kind and quality as the parts being replaced.
Ask your company about what guarantees they will give you on these parts.
Q. I was in an automobile accident. The other party was at fault. What should I
A. You have two options: You may file a claim with the at-fault party's insurance
company if they are insured, or if you have collision insurance on your vehicle,
you can have your own insurance company pay for the damages, and they will usually
subrogate against the at-fault party to recover their loss.
Q. My car has been totaled. The company has made payment, but the amount paid will
not cover what I still owe the financial institution. What should I do?
A. Insurance companies are obligated to pay in accordance with their policy provisions,
which is usually the actual cash value of the vehicle at the time of the loss. This
amount does not always cover the loan balance because you may owe more than the
vehicle is actually worth. The borrower of the loan is responsible for paying the
difference to the financial institution.
Q. I was involved in an automobile accident, and my car was totaled. My company
is not offering me a fair settlement on my claim. What can I do?
A. The actual cash value (ACV) of your car is the amount the insurance company will
base the settlement on. You may review the vehicle evaluation report the insurance company
uses along with checking other available sources such as the “blue book” and comparable vehicles
in your area that are for sale. The Alabama Department of Insurance does not have regulatory authority
over the monetary evaluation of your vehicle.
Q. I was involved in a car accident, and was not at fault. The officer gave a ticket
to the other individual. I have contacted the other party's insurance company, and
they refuse to honor my claim because their insured has not given them notice of
the accident. Doesn't the company have an obligation to pay my claim, even if their
insured does not report the accident?
A. The company is obligated to pay claims for which the insured is legally liable,
because of an accident. The fact that the insured did not report the accident appears
to be irrelevant, as long as sufficient documentation substantiating the claim can
be provided to the company.
Q. When is a vehicle considered a total loss?
A. When the damage to a vehicle is equal to or greater than 75% of the value of the vehicle, it can be considered a total loss.
Code of Alabama 32-8-87(d)