Alabama Homeowners Pay Some of the Lowest Insurance Costs In The Country

Alabama homeowners are benefiting from some of the lowest homeowners insurance costs in the United States, even as national rates continue to climb.

Newly released data from the Census Bureau and the Realtor.com® 2025 Climate Risk Report show that while many Americans worry about affordability, Alabama households tend to pay less for coverage compared to most neighboring states.

Along with being ranked No. 8 on the list of most affordable states for one-income earners, Alabama is increasingly becoming more desirable given it's affordability.

Alabama’s Insurance Costs Remain Relatively Low

According to newly released American Community Survey (ACS) data from the U.S. Census Bureau, Alabama homeowners with a mortgage typically spent between $1,500 and $1,999 annually on homeowners insurance, while those without a mortgage paid a bit less: $1,000 to $1,499. That puts the state’s average lower than Florida, where mortgaged homeowners often spend $2,000 to $2,499 per year, and more in line with nearby Mississippi and Georgia.

Looking at extremes, the Census data shows that out of roughly 1.46M insured households in Alabama, about 79,712 mortgaged homeowners reported paying less than $100 annually, while more than 44,052 paid $4,000 or more. For those without a mortgage, nearly 196,902 households paid less than $100, while about 29,326 reported paying $4,000 or more.

These ranges highlight how, even in a relatively affordable state, some households are still facing costly premiums, despite being lower that neighboring states.

Climate Risks Still Pose a Threat

Even though insurance costs are lower, Alabama is far from immune to climate-related risks.

The Realtor.com 2025 Climate Risk Report notes that insurance costs weigh most heavily in high-risk, lower-value markets across the South, with Florida and Louisiana leading the way. Alabama is not among the most expensive states, but its Gulf Coast location means hurricanes and flooding remain ongoing concerns.

In fact, many areas of Alabama are still in recovery from previous storms. On Alabama’s Dauphin Island, the coastline has been steadily eroding from not only Hurricane Katrina’s impact, but also ongoing storms, and rising sea levels. Meanwhile, some homeowners are still paying property taxes on homes that literally sunk into the Gulf waters over the last two decades.

But still, nearby major metros like New Orleans and Miami rank among the nation’s highest for insurance burden, where premiums consume 3–4% of home values. While Alabama metros don’t appear at the very top of climate risk rankings, the report underscores that Southern states as a whole face some of the steepest long-term challenges.

A National Affordability Struggle

Nationally, homeowners insurance costs are increasingly viewed as a barrier to stability. The Realtor.com 2025 Insurance Unaffordability Report found that 75% of Americans believe insurance could soon become unaffordable, and nearly half of respondents reported they’ve already struggled with renewing or obtaining coverage.

The financial strain is prompting some to consider cutting back. According to the survey, 58% of homeowners said they would consider dropping coverage entirely if premiums rise further, with younger buyers the most likely to do so.

For Alabama homeowners, relatively modest insurance bills offer some relief compared to their neighbors. But as climate risks mount and affordability concerns spread nationwide, even states with lower costs may see growing pressure in the years ahead.

This article was produced with editorial input from Dina Sartore-Bodo, Gabriella Iannetta, and Allaire Conte.