ALABAMA—First Party Hurricane Coverage
The Alabama Supreme Court has ruled in Farr v. The Gulf Agency (Ala., June 17, 2011) that tort claims brought by an aggrieved insured for damage to his house in Hurricane Ivan were barred by Alabama's two-year statute of limitations. The court rejected the insured's argument that the statute of limitations was tolled by Lexington's agreement to make a partial payment to him or by ongoing discussions in the interim. Further, the Supreme Court affirmed a lower court's dismissal of the insured's claims for breach of contract, as there was no evidence to support his assertion that the insurers agreed to increase his policy limits before his house was completely destroyed. On the other hand, the Supreme Court reversed the lower court's entry of summary judgment for Lexington with respect to the insured's claim for $20,000 in contents coverage, finding that Lexington had not opposed this issue on appeal and that it must therefore be remanded for resolution.
ALABAMA—First Party Property/Bad Faith
The Alabama Supreme Court has ruled that a trial court erred in awarding bad faith damages against a property insurer based upon its refusal to pay a theft claim where the undisputed evidence was that the policy in question had been cancelled for underwriting reasons prior to the loss and that the insured had received statutory notice of the cancellation within the required period of time. In Nationwide Mut. Ins. Co. v. J-Mar Machine & Pump, Inc., 1090685 (Ala., June 17, 2011), the Supreme Court further ruled that the insurer had not waived its right to assert cancellation by accepting a belated check from the insured for the premium due, as the undisputed evidence was that the insurer had only kept a portion of the check for the premium due through the date of cancellation and had refunded the rest.