Business Insurance in Alabama

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As an Alabama business owner, you need several different forms of business insurance to protect yourself against hazards related to your daily operations, business property, and employees. Without it, you may have to cover expensive lawsuits and recovery costs yourself.

According to the US Small Business Administration Office of Advocacy, in 2021, Alabama was home to 408,374 companies that qualify as small businesses. These small businesses account for 99.4% of all businesses in Alabama. Businesses with less than 500 employees are considered small businesses. Companies that operate in Alabama have been purchasing business insurance for years.

According to the Alabama Department of labor, in Alabama, the Workers' Compensation statute requires your business to have a Workers’ Compensation policy if a company employs five or more (full- or part-time) employees (other than those contractors and trades engaged in the construction of new single-family, detached dwellings which have a different rule).

In Alabama, for contractors and construction employers, in the business of constructing or assisting on-site in the construction of new single-family, detached residential dwellings, the rules for requiring Workers’ Compensation are different.  These businesses must have a workers’ compensation policy with just one employee.

Employers of domestic workers, farm laborers, casual employees, or located in municipalities designated by the most recent census as having a population of less than 2,000 are exempted from purchasing workers' compensation. However, they can choose to purchase Alabama Workers' Compensation to provide benefits to their employees voluntarily.

From technology companies to construction enterprises in Alabama, business insurance can assist with alleviating expenses for unexpected occurrences for all industries, including:

  • Architects and Engineers
  • Personal Care 
  • Commercial Property Management
  • Consulting
  • Contractors and Construction
  • Medical Professions
  • Hospitality
  • Marketing
  • Wholesalers and Distributors
  • Retail

Business Insurance Recommended in Alabama

Many small and medium-sized companies in Alabama usually buy the following types of insurance policies:

1. General Liability Insurance

This type of liability insurance is a necessity for most companies in Alabama. General liability covers third-party liability, and a lease contract for commercial space will require it. This policy is best for

  • Bodily injuries at your business or job site
  • Damage to property of others from service rendered or product sold
  • Personal and advertising injury liability

Business liability insurance pays legal costs incurred when a client sues you for bodily injury or property damage resulting from your business operations. Personal Injury liability covers accusations of wrongful detention, false arrest, and invasion of privacy.  Advertising Injury includes claims for defamation of character, libel, slander, patent infringement, and copyright infringement.

2. Professional liability insurance

Professional liability insurance, also called errors and omissions insurance, covers the liability arising from your professional mistakes.  For businesses (other than the medical field,) Errors & Omissions will pay damages for financial loss sustained by customers.

The idea for this insurance category was adapted to fulfill the specialized needs of those whose livelihoods depend on their expertise. Professional service providers can still make mistakes even with advanced technological equipment and procedures. Regrettably, your mistakes could cost clients significant time, money, and reputation.

Practitioners in the medical field purchase Malpractice Insurance. This professional liability will pay for bodily injury due to a medical professional's error or omission during treatment.  Professional and Malpractice Liability insurance will provide a defense when sued for covered claims.  

3. Cyber Insurance

Cyber insurance protects small firms from data breaches, phishing, or ransomware attacks. It's crucial for companies handling sensitive private information, credit card details, or bank account numbers in Alabama to obtain this insurance. It can be customized to include first-party incidents (losses incurred by your business) and third-party incidents (liability to others). Some of the coverage that can be included in a Cyber policy include:

  • Customer notification costs
  • Fraud monitoring services
  • Computer forensic support after a data breach.
  • Third-party liability for financial loss, mental anguish
  • Business interruption
  • Restoration of data post-breach
  • PCI fines, penalties, and remediation expenses

The effects of an attack are not just an inconvenience; they may result in catastrophic loss. Cyber coverage can help your company recover from the devastation resulting from an attack. It can pay for credit monitoring, attorney fees, fines, and other expenses.

4. Business Owners Policy (BOP)

Alabama Commercial Property and General Liability coverage are often bundled into one insurance policy, referred to as a Business Owner's Policy (BOP) or a Commercial Package Policy.   General liability coverage in Alabama is often the most affordable type of commercial insurance for companies.  If your business owns any assets, Commercial Property coverage will protect your investment from damage or loss from theft, fire, wind, hail, riot, vandalism, and more.  This policy provides:

  • Business property coverage
  • Business Income and extra expense
  • Third-party bodily injury liability
  • Third-party property damage liability

If you rent an office, you will require General Liability, as the lease will need it. In addition, client contracts require general liability coverage. This insurance gives a solid foundation to companies so they can withstand a storm.

5. Workers’ Compensation (WC)

Employers in Alabama that have more than four employees must have Workers' Compensation insurance. Those businesses involved in the construction of single-family, detached dwellings, regardless of the number of employees, must have Workers’ Compensation. Employers have limited liability as workers’ compensation should be the sole remedy for injured employees. 

Just because you have less than five employees, it is recommended that your company purchase Workers’ Compensation.  If one of your employees gets hurt, and your company is without this coverage, your company would likely be responsible for paying for the injured employee’s medical care and 2/3 of their pay if they cannot perform their job duties.

Medical expenses stemming from workplace injuries and occupational illnesses can escalate rapidly due to the skyrocketing cost of medical care. If your business doesn’t purchase workers' compensation insurance and falls under the requirement, Alabama imposes stiff penalties for not carrying appropriate insurance.

6. Commercial Auto Insurance

Commercial auto and truck insurance pays claims of bodily injury and property damage liability from at-fault accidents and defense costs if sued. Physical damage coverage for business-owned vehicles in case of a collision or comprehensive loss when these options are purchased.

Alabama auto insurance limit requirements are:

  • $25,000 per person for bodily injury liability
  • $50,000 per accident for bodily injury liability
  • $25,000 for each accident for property damage liability

Optional Business Auto coverage:

  • Uninsured or Underinsured Motorists Coverage
  • Medical Payments
  • Comprehensive and Collision
  • Rental reimbursement
  • Towing
  • Hired and Employers’ Non-Owned Auto Liability

It’s recommended to have commercial auto insurance if your company has vehicles titled in the business name.

7. Commercial Umbrella

Umbrella insurance adds a layer of coverage to your general liability, commercial auto liability, and employer's liability insurance when the claims paid on the underlying policy exhaust those limits.  For instance, if your business carries a $1,000,000 limit on the underlying Business Auto policy, and you purchase a $1,000,000 Umbrella, once the $1M on Business Auto is paid out for covered claims, the Umbrella would then participate in the payment of the remaining unpaid claims. Let’s face it, in a severe car accident with more than one person hurt, $1M will not go a long way with the cost of medical care, economic loss, and pain and suffering damages.

Alabama Small Business Insurance Requirements

Workers' compensation law in Alabama mandates that businesses that employ five or more people carry workers' comp insurance. Exempt from this law are employers of domestic and casual employees, while employers of farm laborers can choose to be covered by provisions.

Businesses engaged in construction or those assisting on-site in the construction of new single-family, detached residential dwellings are required to purchase workers’ compensation coverage with only one employee.

Cost of Business Insurance in Alabama

An Alabama business insurance quote depends on your needs and industry, location, and size. For example, Business Property insurance for a building on the beach in Gulf Shores will cost a lot more for the same building inland in Birmingham.

A major premium determination factor for General Liability and Workers’ Compensation coverage is the industry you're in. Businesses are rated based on the risk factors related to the industry and the claims submitted by others in the same industry for the line of coverage being quoted.  Tree trimmers, manufacturers, and roofers are deemed high-risk for employees, and Workers’ Comp costs are much higher than for office or sales employees.   In low-risk categories, small businesses in Alabama spend about $49 each month on general liability insurance.

Get a Quote for Alabama Business Insurance 

If you need a quote for your Alabama Company, please visit us at InsuranceAdvisor.com. Choose your state, then choose from General Liability, Commercial Property, Business Auto, and Workers’ Compensation insurance to answer the application questions.  Once we receive your request, we will provide you with a quote as quickly as possible.  Some businesses can get an instant Workers’ Compensation quote right online!

Why Choose Insurance Advisor for Alabama Business Insurance?

Instead of making an appointment to meet with an agent in person to request an Alabama business insurance quote, go to  InsuranceAdvisor.com from the comfort of your home or anywhere when it’s convenient for you. Once you create an account, your business information is stored safely on our site. You can come back anytime to request quotes for other types of insurance or at your next renewal so that you can compare your options. You can keep your past and current insurance records on file and at your fingertips at InsuranceAdvisor.com.    

We also make it easy to get your certificates of insurance for clients.  You can enter certificate detail in your account and get instant certificates (when no coverage changes are needed.) We want to make managing your business insurance easy! 

Frequently Asked Questions (FAQ) about Alabama

1. How much is business insurance in Alabama?

Smaller, low-risk companies in Alabama tend to spend about $49 each month on general liability insurance. But premium costs vary based on several factors, such as:

Your industry: Certain industries are more likely to have unpredictable consequences. If your business is involved in a high-risk industry, you'll likely fork over more than $49 for general liability insurance coverage every month.

Location: Although the location of your business has a minor effect on Business Auto and Commercial Liability premiums, on Business Property insurance, it has a major impact on the premium, as in the example of being closer to the beach.

Annual Sales: The higher your sales, the more exposure there is to something going wrong.

Coverage type and limits: Adding one form of insurance coverage or choosing a low deductible will mean you pay less each month. However, you may be forced to pay more out of pocket for repairs if an unexpected incident happens.

Business payroll: Workers’ compensation coverage is based on your company’s payroll and the job duties of each employee. The more employees=more payroll=more premium

2. Where can I get inexpensive business insurance in Alabama?

The cheapest insurance in Alabama is not the best insurance for your business. If you want broader coverage, meaning more losses are covered, that translates into paying more for insurance.

Shopping insurance by getting more than one quote from the same or different agents is recommended to see how one Alabama insurance company’s rates compare to another’s.  Insurance carriers have different rates because each insurance company’s loss experience in a particular industry for a line of coverage will differ. That means the premiums charged will also vary among various insurers.

Always read the exclusions in the policy. If the main thing that keeps you up at night is excluded, how happy will you be with that inexpensive policy?   Get an affordable option with the most likely occurrences to happen to your business insured and not listed under exclusions. The old saying, “You get what you pay for,” is true with all types of insurance.

3. What types of business insurance are required for businesses in Alabama?

Businesses in Alabama regularly buy multiple types of insurance plans in bundles. Common types of coverage include:

  • General liability insurance
  • Workers’ Compensation Insurance
  • Commercial auto insurance
  • Commercial Property insurance
  • Flood Insurance
  • Cyber insurance
  • Business owners’ policy
  • Professional liability insurance
  • Commercial umbrella insurance

4. Which insurance companies are best in Alabama?

An Alabama commercial insurance agent determines the best insurance company for your business.  Insurance companies often specialize in specific business industries, varying from state to state. An independent insurance agent licensed in Alabama matches your business with carriers that know your industry and company's insurance needs. Visit us at InsuranceAdvisor.com to request a quote for General Liability, Workers’ Compensation, Business Property, Business Auto, or Umbrella insurance.

5. How to find out if a business has liability insurance in Alabama?

Make an appointment with your vendor to request a copy of their public liability certificate, which will provide the policy number with information and documentation related to this insurance. Call the insurance provider and request confirmation of the insurance's validity by calling the phone number given on the certificate.

6. What is the cost of essential business liability insurance in Alabama?

For small businesses, the average annual cost of essential business liability insurance ranges from $42 to $49 monthly.

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