Update: Alabama Governor to Sign Bill Raising Auto Insurance Requirements

May 19, 2008

Some Alabama motorists may need to buy more auto liability insurance in a few months.

Gov. Bob Riley said he intends to sign legislation raising Alabama’s minimum insurance requirements for the first time in 25 years.

The Legislature approved a bill May 8 that would raise Alabama’s minimum limits for mandatory auto liability insurance from $20,000 to $25,000 for a single injury or death; $40,000 to $50,000 for multiple injuries or deaths; and $10,000 to $25,000 for property damage.

The bill, a compromise between plaintiff lawyers and insurance companies, raises limits that haven’t been changed since 1983. The bill’s sponsor, Sen. Roger Bedford, D-Russellville, 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 and insurance companies wouldn’t have time to adjust.

Bedford and Rep. Marc Keahey, D-Grove Hill, redesigned the new bill so it will take effect in three months for new policies and six months for renewals.

“The only thing we had last year was the companies just didn’t have enough time to implement it,” Riley said in an interview Thursday.

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.

By Keahey’s estimates, the higher liability requirements will 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.

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