Today, the Alabama Supreme Court released an important opinion in Ex parte State Farm Mutual Automobile Insurance Company, SC-2023-0528 (April 5, 2024). The Court held “that the accrual date for a direct uninsured/underinsured-motorist claim against an insurer is the date of the accident.”Ex Parte State Farm at 16. This holding was in response to the appellee/plaintiff’s argument that the statute of limitations for an underinsured motorist claim does not accrue and begins to run until there is a breach of contract. The Supreme Court directed the trial court to vacate its order denying State Farm’s Motion to Dismiss based upon the statute of limitations and to enter an order consistent with its holding.
The Court made a distinction between a cause of action that is a claim for underinsured motorist benefits (which must be filed within six years of the accident giving rise to the claim) and a breach of the insurance contract itself:
Breach-of-contract and bad-faith claims in fact are not ripe so long as genuine disputes exist as to the uninsured/underinsured motorist’s liability. See Pontius v. State Farm Mut. Auto. Ins. Co., 915 So. 2d 557, 564 (Ala. 2005); LeFevre, 590 So. 2d at 162. Thus, it is correct to tie the accrual of those claims to an actual breach by the insurer. To the contrary, direct uninsured/underinsured motorist claims may be brought while such disputes exist and, thus, must ripen or accrue at some earlier time.
Ex Parte State Farm at 12.
The practical application for counsel is to move to dismiss any “breach of contract” cause of action in a complaint involving an uninsured or underinsured motorist. Additionally, the opinion underscores the right to move to dismiss any bad faith claim filed in the underlying case. Both breach of contract and bad faith are not ripe until a claim has actually been denied.
The full opinion can be found here.
Jim Patillo has nearly 20 years of litigation experience in both state and federal courts in Alabama and more than 70 trials to verdict. He focuses his practice on matters involving insurance coverage and bad faith liability, business and commercial litigation, and professional and product liability. In addition, Mr. Pattillo frequently assists in special investigations involving a variety of fraud involving insurance claims as well as vendor fraud and institutional fraud. He is a frequent speaker and writer in the areas of trial practice and technique, litigation management,
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