Bad Faith is back in Alabama

A recent ruling by the United States District Court for the Northern District of Alabama may breathe some life back into the tort of Bad Faith Failure to Pay Insurance Benefits in Alabama. After many years of hefty campaign contributions to Alabama law makers by insurance companies, Alabama policy holders have had little recourse against their insurers if they disagreed with payments received under a home-owners insurance policy. In the past, all an insurer need do to survive a claim of bad faith failure to pay was point to any reasonable basis in fact or law as to why the payment was denied.

However, Arguello Law Firm attorney Adrian Dunning has successfully defended a Motion for Summary Judgment filed by State Farm. The court agreed with Mr. Dunning’s argument that it would be a question for the jury as to whether State Farm properly investigated a claim where it failed to specifically request documentation and failed to timely inspect the damaged property. The court also agreed it is a question for a jury as to whether the reason asserted by an insurer for denying the claim is reasonable. The court noted that if the jury finds State Farm based its refusal of the claim on an improper investigation or on an unreasonable basis, a bad faith verdict would be proper.