What is homeowners insurance and what does it cover?
Homeowners insurance protects your home, belongings, and liability in one policy. It covers damage from fire, wind, hail, theft, and vandalism—but NOT flooding or earthquakes (those require separate policies). In Alabama, expect to pay $1,200-$2,400/year depending on your home's value, location, and tornado/wind risk. The policy includes dwelling coverage (rebuilds your home), personal property (replaces belongings), liability (protects against lawsuits), and additional living expenses (pays for hotels if your home is uninhabitable).
Understanding Homeowners Insurance Coverage
Pays to rebuild your home after covered damage (fire, tornado, wind, hail, etc.). Must equal full replacement cost, not market value. This is typically 50-60% of your total premium.
Covers furniture, clothing, electronics, and personal items. Typically 50-70% of dwelling coverage. Choose replacement cost coverage, not actual cash value (depreciated).
Pays if someone is injured on your property or you cause damage to others. Minimum: $100K. Recommended: $300K-$500K. High net worth: Add umbrella policy.
Pays for hotel, rental home, and additional living expenses if your home is uninhabitable after covered damage. Typically 20% of dwelling coverage.
Covers detached garage, shed, fence, or other structures. Typically 10% of dwelling coverage. Increase if you have expensive outbuildings.
- • Water backup coverage ($50-$100/year)
- • Equipment breakdown ($30-$60/year)
- • Identity theft coverage ($25-$50/year)
- • Scheduled personal property (jewelry, art)
What TCDS Recommends for Alabama Homeowners
Based on 20+ years serving Alabama families through tornadoes, hail storms, and claims, here's what we recommend:
Alabama's flash flood risk means even homes outside FEMA flood zones need protection. Standard homeowners policies exclude all flood damage. A separate NFIP or private flood policy costs $400-800/year and can save your home. Don't wait for a flood zone designation.
Sewer backup and sump pump failures are common in Alabama storms but excluded from standard policies. A water backup endorsement adds $50-100/year and covers up to $10K-25K in damage. Essential for homes with basements or older plumbing.
If your home is damaged, you may be required to rebuild to current building codes—which can add 20-30% to reconstruction costs. Ordinance or law coverage pays this difference. Costs $30-75/year and prevents massive out-of-pocket expenses after a covered loss.
Alabama carriers vary wildly on roof claims: some pay replacement cost, others pay actual cash value (depreciated). We verify your roof settlement method before you buy so you're not surprised after a hail storm. This single detail can mean a $10K+ difference in claim payouts.
💡 Our Philosophy
We don't sell bare-bones policies. Alabama's weather risks (tornadoes, hail, wind, flood) demand proper coverage. A comprehensive policy with endorsements costs $150-250/month for most homes. Cheap policies save $30-50/month but leave massive gaps that surface only after a claim.
What Home Insurance Does NOT Cover in Alabama
Understanding exclusions prevents claim denial surprises. Here's what standard homeowners policies don't cover:
All flood damage is excluded from standard homeowners policies. This includes rising water from storms, rivers, creeks, or flash floods. You need a separate NFIP or private flood policy. Even homes outside flood zones should consider this—30% of flood claims come from low-risk areas.
Homeowners insurance covers sudden, accidental damage—not gradual deterioration. Roof wear, foundation settling, plumbing corrosion, HVAC failure, and deferred maintenance are never covered. Carriers expect you to maintain your home properly.
Mold from long-term leaks, humidity, or poor ventilation is excluded. Mold is only covered if it results from a sudden covered event (like a burst pipe you immediately reported). Most policies cap mold coverage at $10K even when covered. Alabama's humidity makes this a critical gap.
Water damage from sewer backups, sump pump failures, or drain overflows is excluded unless you add a water backup endorsement. This is common in Alabama storms and can cause $10K-50K in damage. The endorsement costs $50-100/year.
While rare in Alabama, earthquake damage is excluded from standard policies. If you're near the New Madrid fault zone (north Alabama), consider a separate earthquake policy. Most Alabama homeowners skip this due to low risk.
Many carriers exclude liability for specific dog breeds (pit bulls, rottweilers, etc.) or trampolines. If you have either, disclose them when quoting—some carriers will cover them, others won't. Hiding them can result in claim denial.
⚠️ Why This Matters
Most claim denials happen because policyholders didn't understand what their policy excluded. We explain every exclusion and recommend endorsements to fill gaps before you buy—so there are no surprises when you file a claim. Transparency builds trust.
Essential Reading
Alabama-Specific Home Insurance Factors
Alabama ranks #5 nationally for tornado frequency. Central Alabama (Birmingham, Tuscaloosa) is in "Dixie Alley" with high tornado risk. This significantly impacts insurance pricing and coverage.
Critical: Many policies have separate wind/hail deductibles (1-5% of dwelling coverage) instead of your standard deductible.
Standard homeowners insurance does NOT cover flooding. Alabama has significant flood risk from rivers, flash floods, and hurricanes (coastal areas). Separate flood insurance is critical.
Fact: 30% of flood insurance claims come from low/moderate risk areas. "I'm not in a flood zone" doesn't mean you're safe.
Alabama's severe weather makes roof age a critical underwriting factor. Many carriers won't insure homes with roofs over 15-20 years old, or charge 50-100% more.
Your home's claims history (not just yours, but previous owners too) follows the property and impacts pricing. Multiple claims can make your home uninsurable with standard carriers.
Warning: Filing small claims can cost you more in the long run through rate increases and potential non-renewal.
Frequently Asked Questions
Replacement cost pays to rebuild your home at today's prices without depreciation. Actual cash value deducts depreciation, meaning you get less money. Example: A 15-year-old roof damaged in a storm. Replacement cost pays $12,000 to replace it. Actual cash value pays $6,000 (50% depreciation). Always choose replacement cost coverage.
Standard homeowners insurance does NOT cover flooding. If you're in a flood zone (common near rivers, lakes, or low-lying areas), you need separate flood insurance through NFIP or private carriers. Even outside flood zones, consider it—30% of flood claims come from low/moderate risk areas. Cost: $400-$1,200/year depending on elevation and flood zone.
Standard policies exclude: flooding, earthquakes, routine maintenance, wear and tear, mold (unless from covered peril), sewer backup (unless you add coverage), and intentional damage. Many of these can be added as endorsements for $50-$200/year.
Enough to rebuild your home from the ground up at today's construction costs—NOT your home's market value. A $250,000 home might cost $350,000 to rebuild. Your agent should calculate replacement cost based on square footage, construction type, and local building costs. Underinsuring saves money upfront but devastates you after a total loss.
Choose a deductible you can afford to pay tomorrow. $1,000 is the sweet spot for most families—low enough to be manageable, high enough to save 15-20% on premiums vs. $500. Don't choose $2,500+ unless you have that amount in liquid savings. High deductibles save money until you have a claim and can't afford the out-of-pocket cost.
Yes, standard homeowners insurance covers tornado damage (wind, hail, debris impact). However, you may have a separate wind/hail deductible (often 1-5% of dwelling coverage instead of your standard $1,000). Example: $300K dwelling with 2% wind deductible = $6,000 out-of-pocket for tornado damage before insurance pays.
Essential Alabama Home Insurance Resources
Does Your Current Insurance Agent Provide a Written Money Back Guarantee?
TCDS does. We're so confident you'll save money and get better coverage that we guarantee it in writing. If you're not completely satisfied within the first 60 days, we'll refund your premium—no questions asked.
Read Our Written Guarantee