Key Takeaways
- Alabama commercial property insurance uses file and use rate regulation
- Commercial policies must disclose terrorism coverage options under TRIA
- Alabama allows surplus lines placement after diligent search of admitted insurers
- Surplus lines tax in Alabama is 6% of premium
- Business interruption and extra expense coverage follow standard commercial forms
Last updated: January 2026
Alabama Commercial Property Insurance
Alabama regulates commercial property insurance with specific requirements for rates, surplus lines, and coverage availability.
Rate Regulation
Under Alabama's file and use system for commercial property, insurance rates:
- May be used immediately upon filing
- Subject to ALDOI review after implementation
- Must not be excessive, inadequate, or unfairly discriminatory
- Can be disapproved if ALDOI finds violations
Commercial Rate Filing
| Requirement | Details |
|---|---|
| Filing | Required before use |
| Approval | Not required before use |
| Review | ALDOI reviews after implementation |
| Disapproval | ALDOI can disapprove after review |
Terrorism Insurance
TRIA (Terrorism Risk Insurance Act)
- Federal program providing terrorism insurance backstop
- Alabama insurers must offer terrorism coverage
- Policyholder can accept or reject terrorism coverage
- Disclosure of coverage terms required
Required Disclosures
- Coverage limits for terrorism
- Premium for terrorism coverage
- Right to accept or reject
- Exclusions and limitations
Commercial Property Coverage
Alabama commercial property follows standard forms:
Coverage Types
| Coverage | Description |
|---|---|
| Building | Structure and permanently attached items |
| Business Personal Property | Contents, inventory, equipment |
| Business Income | Lost income during restoration |
| Extra Expense | Additional costs to continue operations |
Surplus Lines Insurance
Alabama allows surplus lines insurance for risks not available in the admitted market:
Surplus Lines Requirements
| Requirement | Details |
|---|---|
| Diligent Search | Must attempt placement with admitted insurers |
| Surplus Lines Agent | Must use licensed SL agent |
| Surplus Lines Tax | 6% of premium |
| Stamping Fee | Additional fee may apply |
| Disclosure | Must disclose SL status to insured |
Surplus Lines Tax
Alabama charges 6% surplus lines tax on premiums:
- Collected by surplus lines agent
- Remitted to Alabama Department of Revenue
- Higher than many other states
- No guaranty fund protection for surplus lines
Business Interruption Insurance
Alabama commercial policies include business interruption provisions:
Key Provisions
- Coverage for lost income during restoration period
- Waiting/deductible period typically 72 hours
- Period of restoration clearly defined
- Extended period of indemnity available
- Civil authority coverage for government-ordered closures
Extra Expense Coverage
- Covers costs to continue operations during restoration
- Separate limit from business interruption
- Examples: temporary location, expedited repairs
Builders Risk
Alabama builders risk insurance:
- Covers buildings under construction
- Available on completed value or reporting form
- Theft coverage may require endorsement
- Transit coverage for materials available
Test Your Knowledge
What is the Alabama surplus lines tax rate?
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Test Your Knowledge
What rate system does Alabama use for commercial property insurance?
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Test Your Knowledge
What federal program provides a backstop for terrorism insurance?
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