Key Takeaways
- Alabama uses standard ISO homeowners policy forms (HO-2, HO-3, HO-5, etc.) with state-specific endorsements
- The Alabama Insurance Underwriting Association (AIUA) provides coverage for high-risk properties as the residual market
- Alabama requires 30 days notice for cancellation and 45 days for non-renewal of homeowners policies
- Wind and hail deductibles are common due to hurricane exposure along the Gulf Coast
- Alabama law prohibits unfair discrimination in property insurance underwriting
Alabama Homeowners Insurance Requirements
Alabama has specific property insurance regulations and requirements that producers must understand.
Alabama Homeowners Policy Forms
Alabama uses standard ISO policy forms with state-specific endorsements:
Common Policy Forms
| Form | Coverage Type | Dwelling | Personal Property |
|---|---|---|---|
| HO-2 | Broad | Named perils | Named perils |
| HO-3 | Special | Open perils | Named perils |
| HO-5 | Comprehensive | Open perils | Open perils |
| HO-4 | Renters | N/A | Named perils |
| HO-6 | Condo | Named perils | Named perils |
Exam Tip: Alabama uses standard ISO forms. HO-3 is the most common homeowners policy, providing open perils on the dwelling.
Alabama-Specific Considerations
- Hurricane and windstorm exposure on Gulf Coast
- Tornado coverage (Alabama is in "Tornado Alley")
- Flood insurance often needed (separate NFIP policy)
- State-specific endorsements available
Alabama Insurance Underwriting Association (AIUA)
The AIUA is Alabama's residual market for property insurance:
AIUA Overview
| Feature | Details |
|---|---|
| Purpose | Coverage for hard-to-place risks |
| Coverage | Property insurance |
| Eligibility | Declined by voluntary market |
| Territory | All of Alabama |
| Funding | Assessments on insurers |
Eligibility Requirements
- Must be declined by at least 2 admitted insurers
- Property must meet minimum standards
- Coverage available for residential and commercial
Cancellation and Non-Renewal Requirements
Alabama has strict requirements for canceling or non-renewing property insurance:
Cancellation Notice Requirements
| Reason for Cancellation | Notice Required |
|---|---|
| Non-payment of premium | 10 days |
| Fraud or misrepresentation | 30 days |
| Material increase in hazard | 30 days |
| Policy in effect < 60 days | 30 days |
| Other reasons | 30 days |
Non-Renewal Notice Requirements
| Timeframe | Requirement |
|---|---|
| Standard Non-Renewal | 45 days before expiration |
| Reason Required | Must provide reason upon request |
| Prohibited | Cannot non-renew solely for filing claims |
Alabama Consumer Protections
- Cannot cancel/non-renew for filing one claim in 3 years
- Must provide specific reason for non-renewal upon request
- Right to appeal to ALDOI
- Protection against unfair discrimination
Wind and Hail Deductibles
Alabama allows separate deductibles for wind and hail due to hurricane exposure:
Deductible Options
| Type | Amount |
|---|---|
| Percentage Deductible | 1%, 2%, 5% of dwelling coverage |
| Dollar Deductible | Fixed amount |
| Application | Hurricanes and named tropical storms |
Disclosure Requirements
- Must clearly disclose hurricane/windstorm deductible
- Separate from standard deductible
- Consumer must acknowledge in writing
Flood Insurance
- Standard property policies exclude flood damage
- National Flood Insurance Program (NFIP) available
- Many Alabama properties in flood zones (coastal and river areas)
- Agents must disclose flood exclusion
How many days notice must an Alabama insurer provide for non-renewal of a homeowners policy?
What is the purpose of the Alabama Insurance Underwriting Association (AIUA)?
Which homeowners policy form provides open perils coverage on the dwelling?