Alabama’s Mandatory Liability Insurance Law

In order to protect drivers when they are involved in an accident, the Alabama Mandatory Liability Insurance (MLI) Law provides that no person shall operate, register, or maintain registration of a motor vehicle designed to be used on a public road or highway unless it is covered by a liability insurance policy. Insurers licensed to do business in Alabama must issue policies for no less than:

• $25,000 for death or bodily injury to one person
• $50,000 for death or bodily injury to two or more persons
• $25,000 for damage or destruction of property

Last year, the State of Alabama Online Insurance Verification System was put into effect, enabling license plate-issuing officials and law enforcement officers to immediately verify the insurance status of a vehicle at any point in time. This system is meant to enforce Alabama’s MLI law and stop drivers from operating a vehicle without insurance.

It’s estimated that around 20% of Alabama drivers don’t have insurance (that’s 900,000 vehicles), but with the system, officials can verify whether a motorist is abiding by state law within seconds. County license plate offices can verify insurance when issuing or renewing tags; police can do it when they stop cars for traffic offenses; and the state Revenue Department can do random computer checks to find motorists who have dropped their insurance.

Before the Online Insurance Verification System, motorists could potentially buck the system by purchasing insurance in order to renew their tag, and then stop paying their monthly bill, allowing their insurance to lapse. But they would still have an insurance card to show police if they were stopped for a traffic offense or involved in an accident.

Those found driving without insurance receive a fine of up to $500 for a first offense and $1,000 for a subsequent offense. This act can also result in a suspension of the vehicle’s registration, which will cost $200 to be reinstated for a first violation and $400 for subsequent violations.