The Personal Automobile Policy form itself is covered in the national guide. The Alabama law section of the Casualty and Property & Casualty exams includes automobile questions on the state rules around the policy: the fault system, the Mandatory Liability Insurance Act and its 25/50/25 minimums, uninsured motorist coverage, financial responsibility, and the limits on cancelling an auto policy. This guide covers those rules with citations.

Fault: contributory negligence

Alabama is an at-fault (tort) state. It also keeps the common-law rule of contributory negligence. A claimant whose own negligence helped cause the accident is generally barred from recovering anything from the other driver, even at 5% or 10% fault. The Alabama Supreme Court declined to replace the rule with comparative negligence in Williams v. Delta International Machinery Corp., 619 So. 2d 1330 (Ala. 1993).

On the exam, a "damages reduced by your share of fault" answer is the comparative-negligence trap. Because a partly-at-fault insured may collect nothing from the other driver, first-party coverages matter: collision, medical payments, and uninsured motorist coverage.

Alabama has no PIP or no-fault requirement. The compulsory law requires liability security only (Ala. Code 32-7A-4).

Compulsory insurance: the Mandatory Liability Insurance Act

• A vehicle may not be operated or registered in Alabama unless it is covered by one of the following (32-7A-4):
  • a liability policy
  • a motor vehicle liability bond
  • a cash deposit with the State Treasurer in at least the minimum amounts
• The policy must come from an authorized insurer. A compliant surplus lines policy placed through a licensed Alabama surplus lines broker also qualifies.
• Minimum limits are 25/50/25: $25,000 bodily injury per person, $50,000 per accident, and $25,000 property damage (32-7-6(c)).
• The Act is administered by the Alabama Department of Revenue, which verifies coverage through an online insurance verification system and suspends registrations (32-7A-2, -9, -12).
• Exempt vehicles include trailers, government vehicles, implements of husbandry, and self-insured vehicles (32-7A-5). An active-duty service member stationed elsewhere may buy at least Alabama's minimum limits in that state.

Evidence of insurance must be carried in the vehicle (32-7A-6). Acceptable forms:

• an insurance card or temporary card (a temporary card may omit the policy number)
• the current declarations page
• a binder or certificate
• a qualifying rental agreement
• for a newly bought car, proof of purchase within the previous 20 days plus a valid card for the vehicle it replaced

An insurer-issued card shows the vehicle, the insured, the policy number, a term of 12 months or less, and the insurer's NAIC number.

Penalties.

• Driving without required security is a Class C misdemeanor (32-7A-16).
• Failing to show proof on demand is a traffic violation with a fine of up to $200 on first conviction, doubling each time after that.
• On the third violation within a two-year registration period, the vehicle is impounded.
• A first-violation registration suspension ends with proof of insurance and a $200 reinstatement fee, plus one year of proof of financial responsibility. A repeat violation costs $400 (32-7A-12).
• If the state can't verify coverage, the owner has 30 days to respond (32-7A-11).

Motor Vehicle Safety-Responsibility Act

• An accident causing injury, death, or more than $250 of property damage to any one person is reported to the director within 30 days (32-7-5).
• An uninsured driver who isn't released from liability has their license and registrations suspended unless security is posted (32-7-6). The suspension lasts up to three years, or until security is deposited, a release or judgment of nonliability is filed, or two years pass with no lawsuit (32-7-8).
• A policy certified as proof of financial responsibility can't be cancelled until 10 days after notice is filed with the director (32-7-24).
• A certified owner's policy covers the named insured and anyone using the vehicle with express or implied permission, in the U.S. and Canada (32-7-22).

Uninsured motorist coverage (32-7-23)

• Every auto liability policy must include UM coverage at least at 25/50, unless the named insured rejects it. After a rejection, the same insurer need not include UM at renewal unless the insured asks in writing.
• UM pays bodily injury, sickness, disease, or death that the insured is legally entitled to recover from an uninsured owner or operator. It depends on the other driver's legal liability; it does not pay regardless of fault.
• Alabama's definition of uninsured vehicle includes one whose liability limits are less than the injured person's damages. Underinsured coverage is built into the UM statute.
• A vehicle whose insurer becomes insolvent after issuing the policy is also treated as uninsured.
• Stacking. Under one policy, recovery is limited to the primary coverage plus no more than two additional vehicle coverages.

Cancellation (Ala. Code 27-23-20 to -28)

Scope. The cancellation article applies to auto liability policies insuring a natural person and no more than four private passenger-type autos. It excludes assigned risk policies and garage risks. It does not apply to nonrenewal (27-23-28).

Reasons. For a new policy, the reason limits don't apply in the first 60 days (27-23-21(b)). After that, or on a renewal, the insurer may cancel only for listed reasons (27-23-21), including:

• nonpayment of premium
• misrepresentation
• a license suspension or revocation within the past 36 months for the named insured or a household or customary driver
• certain criminal or serious driving convictions
• three or more speeding violations within 36 months
• carrying passengers for hire (a car pool doesn't count as for hire)

Renewing a policy despite a known ground for cancellation is not a waiver of that ground (27-23-22).

Notice (27-23-23):

• If the reason isn't stated, the insured may ask for it in writing at least 15 days before the cancellation date (27-23-26).
• A cancellation for a reason other than nonpayment must tell the insured about possible eligibility for the auto assigned risk plan (27-23-24).
• Proof of mailing to the address in the policy is enough proof of notice (27-23-25).
• The insurer and its agents are immune from liability for statements made in the notice (27-23-27).

Common exam traps

• Alabama keeps contributory negligence. Any fault by the claimant generally bars recovery.
• The minimums are 25/50/25, and there's no PIP.
• UM is included unless rejected, and Alabama's UM definition covers underinsured drivers.
• UM stacking is limited to the primary coverage plus two additional coverages.
• Auto cancellation notice is 20 days, or 10 days for nonpayment with the reason stated.
• The cancellation article doesn't govern nonrenewal.
• The Department of Revenue administers the mandatory insurance law.