Insurance companies are supposed to provide coverage for drivers who sustain injuries or property damage in motor vehicle accidents.
Unfortunately, however, insurers do not always comply with their own coverage requirements.
If you’ve received a wrongful denial of your insurance claim, we want to help.
Give the team at the Fob James Law Firm a call to discuss how we can help you fight for your rights today.
Insurance Bad Faith Law: An Overview
When an insurance company wrongfully denies coverage under your policy, you may have a legal claim for relief.
This is sometimes referred to as a bad faith insurance claim.
Use our guide below to learn more about bad faith insurance in Alabama and what to do if you’ve had your claim wrongfully denied.
What Is Bad Faith Insurance?
According to Alabama Code section 27-12-24, “no insurer shall, without just cause, refuse to pay or settle claims arising under coverages provided by its policies in this state and with such frequency as to indicate a general business practice in this state.”
Evidence of such general business practice can include:
- Substantial increases in the number of complaints against the insurer received by the Insurance Department;
- Substantial increases in the number of lawsuits against the insurer or its insureds by claimants; and
- Any other relevant evidence.
If you’re not sure whether the denial of your claim might give rise to a bad faith insurance claim, give us a call to discuss the facts and circumstances of your case in more detail.
How to Win Your Bad Faith Insurance Claim
To win on a bad faith insurance claim, there are a few elements you must be able to prove.
Specifically, you must be able to show:
- The existence of an insurance contract between the parties and a breach of the contract by the insurer;
- An intentional refusal by the insurer to pay the insured’s claim;
- The absence of any legitimate reason for the denial;
- Actual knowledge of the insurer of the absence of any legitimate reason for the denial; and
- The insurer’s intentional failure to determine whether there was a legitimate or arguable reason for the insurer’s refusal to pay the claim.
Essentially, the plaintiff must do more than simply show nonpayment of the claim by the insurer.
Instead, the plaintiff must be able to prove that the insurer had no factual or legal defense to the insurance claim.
The Five Things You Must Prove
Alabama’s bad faith tort comes from National Security Fire & Casualty Co. v. Bowen, and its elements are a checklist you can test your own denial against: (1) an insurance contract existed and the insurer breached it; (2) the refusal to pay was intentional; (3) the insurer had no reasonably legitimate or arguable reason for refusing; (4) the insurer actually knew it had no such reason; and, where the claim is built on a failure to investigate, (5) the insurer intentionally failed to determine whether a legitimate basis for denial existed. Elements three and four are where these cases live or die.
What Counts as an Arguable Reason — the Defense That Wins Most Cases
A denial that turns out to be wrong is not automatically bad faith. Clients rarely like hearing that, but it is the rule. If the insurer had a genuinely debatable basis at the time it said no — conflicting medical opinions, a real coverage question, a legitimate dispute over cause — the tort claim fails even if you later win the contract claim. Courts judge the reason by what the company knew when it denied, not by what came out later. The claims that survive are the ones where the file shows the reason was hollow: the adjuster never ordered the inspection, never read the records, denied before the investigation finished, or reached for policy language the company itself made ambiguous. Alabama courts call that abnormal bad faith, and it is the pattern we look for first.
Building the Paper Trail
Bad faith cases are won on documents, and most of the useful ones get created in the weeks after denial. Ask the insurer to state every reason for the denial in writing — Alabama insurers generally cannot ambush you with new reasons later. Keep every letter, email, and adjuster voicemail. Note the date of each call and what was said. If you are asked to sit for an examination under oath, treat it as testimony and read our examination under oath guide before you agree to anything. A complaint to the Alabama Department of Insurance creates an independent record of the dispute. And calendar both deadlines the day you are denied: two years for the bad faith tort, six years for the contract claim under Ala. Code § 6-2-34.
When to Stop Writing Letters and Call a Lawyer
If the denial involves real money — a totaled home, a serious injury claim, a death benefit — the letter-writing phase has a short useful life. Once an insurer has committed to its denial in writing, the leverage shifts to what a jury could award: policy benefits, mental anguish, and punitive damages capped at the greater of three times compensatory damages or $500,000. Our Birmingham bad faith insurance attorneys review denials at no charge and take these cases on contingency — you pay nothing unless we win.
Fob James Law Firm: Your Bad Faith Insurance Attorneys
Proving a bad faith insurance claim is never easy.
However, having an experienced team of attorneys in your corner can greatly improve your chances of success.
If you’ve had your Alabama insurance claim wrongfully denied and aren’t sure where to turn, know you don’t have to handle this alone.
With more than 40 years of experience advocating for injury victims in need, you can feel confident knowing you have a knowledgeable and qualified team on your side.
When you’re ready to fight for your rights, we will be too. Give the bad faith insurance attorneys at the Fob James Law Firm a call today.
Fob James, IV
Fob James obtained a B.S., in software engineering from Auburn University and then continued his education by getting his J.D. from Vanderbilt University School of Law. After working for a large national firm for several years, Fob found that his passion was fighting for individuals who have been seriously injured or wronged by others. Fob believes that the jury is the great equalizer to the power and influence that large corporations have in society. Many of Fob’s cases are high profile and have been featured in, among others: Bloomberg News, PlanAdvisor, AL.com, PlanSponsor, InsuranceJournal, and BusinessInsider. For his work in obtaining numerous multi-million dollar outcomes for his clients, Fob has been recognized by: National Trial Lawyers Top 100, SuperLawyers Rising Star (2020-2025), Birmingham Business Journal Who’s Who in Law (2023-2025), and TrustAnalytica – Top Personal Injury Lawyers in Alabama.