Alabama · Insurance Adjuster Sample Interactive Mind Map
Alabama Adjuster Regulations
A visual breakdown of the Alabama rules an adjuster is tested on — including the repealed chapter that still reads like law, the orphaned prelicensing sentence, the statute-versus-regulation split, and the 75 percent that governs only half a sentence.
Alabama does not have one adjuster chapter. It has two — and only one of them is law. Title 27 chapter 9A, “Independent Adjusters,” is the entire live regime, while chapter 9 was repealed effective 1 January 2012 and still circulates online with its own license, its own qualification rules and its own fee schedule, none of which have been law for fourteen years. The defect is at index level: only the individual section pages carry the repeal marker.
From there the state answers one national assumption after another backwards. It licenses no public adjusters at all. It exempts every salaried employee of an insurer by definition, so the carrier’s own claim staff need no license. Its examinations are administered by a university rather than a national testing vendor, and graded on a raw 70 out of 100 — the word “scaled” appears in no Alabama instrument. Prelicensing education was abolished on 1 January 2024, and the same rewrite repealed the three rules defining a prelicensing course while leaving one orphaned sentence in the apprentice rule still requiring one.
On the job the split is the whole story. The unfair claims statute carries a general business practice element and is doubly gated; the claims regulation carries none, states its duties per claim — and makes its own violation inadmissible for any purpose in any civil or criminal court proceeding, which is further than most states go. Denials may be verbal. There is one bad-faith tort, not two. Alabama is a pure contributory negligence state by judicial choice, stacking is capped at three coverages by statute, the guaranty fund has no claimant deductible, and the 75 percent total-loss figure governs only the insurer-payment branch of a disjunctive sentence.
Alabama has TWO adjuster chapters in Title 27 — and one of them was repealed fourteen years ago.
Chapter 9A, “Independent Adjusters,” is the whole live regime. Chapter 9, “Adjusters,” was repealed by Act 2011-637 § 3 effective 1 January 2012 — and its eight sections still circulate online under a current-looking heading. Alabama also licenses no public adjusters at all, and exempts every salaried employee of an insurer by definition.
Chapter 9A, “Independent Adjusters,” is the whole live regime. Chapter 9, “Adjusters,” was repealed by Act 2011-637 § 3 effective 1 January 2012 — and its eight sections still circulate online under a current-looking heading. Alabama also licenses no public adjusters at all, and exempts every salaried employee of an insurer by definition.
| Chapter | Status | What it contains |
|---|---|---|
| Title 27 ch. 9A — Independent Adjusters | LIVE | §§ 27-9A-1 to -18. Created by Act 2011-637; implemented by Regulation 482-1-151 |
| Title 27 ch. 9 — Adjusters | ⚠ REPEALED | §§ 27-9-1 to -8. Repealed by Act 2011-637 § 3, effective 1 January 2012. Contains an adjuster license, qualification rules at § 27-9-3 and a fee schedule at § 27-9-2 — none of it law |
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The repealed chapter still reads like live law — and the defect is at INDEX level
On an individual section page you will see “Repealed by Act 2011-637, §3, effective January 1, 2012” above the text. But on the chapter index — the list you land on first when you browse — all eight appear under a current-looking heading with no repeal marker anywhere.
⚠ Never determine repeal status from a chapter index. Only the section page tells you. If a study aid, compliance memo or exam item cites a section numbered 27-9-something for adjuster licensing, it is citing law repealed before most working Alabama adjusters were licensed.
⚠ Never determine repeal status from a chapter index. Only the section page tells you. If a study aid, compliance memo or exam item cites a section numbered 27-9-something for adjuster licensing, it is citing law repealed before most working Alabama adjusters were licensed.
Alabama does NOT license or recognize public adjusters — and the reason is inside the definitionThe Department says it in terms. But the structural proof is better: Title 27 has 91 chapters and none is a public adjuster chapter; the Department’s regulation index runs from Regulation 3 to Regulation 168 and contains no public adjuster regulation; and § 27-9A-3(a) defines the work as acting “on behalf of an insurer.” A public adjuster acts against the insurer’s valuation, for the insured. The licensing act simply never creates that credential. ⚠ Questions about public adjuster fee caps, contract rescission windows or post-catastrophe solicitation waiting periods have NO Alabama answer. Several neighboring states regulate public adjusters heavily; none of that is Alabama law.
✅ NO LICENSE NEEDED — § 27-9A-3(b)
(b)(2) “A salaried employee of an insurer.” — every carrier staff adjuster in Alabama
(b)(9) Officer, director, manager or employee of an authorized insurer, surplus lines insurer, risk retention group or attorney-in-fact of a reciprocal
(b)(12) Under a self-insured arrangement, an employee adjusting claims for his or her own employer
(b)(11) Anyone handling life, accident and health, annuity or disability claims — outside the license entirely
(b)(8) A person who settles only reinsurance or subrogation claims
(b)(13) A licensed producer appointed to represent the insurer with granted claim authority
⛔ LICENSE REQUIRED — § 27-9A-4
An independent contractor, or an employee of an independent contractor, adjusting for an insurer
On property, casualty or workers’ compensation claims
⚠ Read the exclusions FIRST. § 27-9A-4 says a license is required; § 27-9A-3(b) decides whether you are the kind of person it is talking about. A candidate who reads the chapter in numerical order does the analysis backwards
⚠ Note the word SALARIED. An insurer employee paid purely on commission or per claim does not sit comfortably in (b)(2) — though (b)(9) usually catches them. The carrier exemption is written twice, on two different tests
| Credential | Fee | Term and who applies |
|---|---|---|
| Independent adjuster — individual | $30 + $80 = $110 | Biennial — birth month AND birth-year parity |
| Business entity | $30 + $200 = $230 | Expires 31 December of odd-numbered years |
| Apprentice | $30 + $80 | ≤ 12 months, nonrenewable, ONCE PER LIFETIME. Resident only |
| Emergency registration | $60 — cap is $50 | ≤ 90 days. ⚠ Filed by the INSURER within 5 days of deployment |
| Public adjuster | ⚠ DOES NOT EXIST | Alabama licenses none |
Three lines of authority — but FOUR examinations§ 27-9A-7(a) gives property and casualty, workers’ compensation and crop. But Rule 482-1-151-.06(1)(a) lists four exams, because property and casualty is offered both excluding and including the other two. So the question is not how many exams but which of the four: want all three lines, sit one combined exam; want P&C alone, sit the excluding version — which does not carry comp authority. ⚠ Adding a line later is priced as a NEW APPLICATION under Rule .07(3): another $30 + $80 + $75, about $185 for authority the combined exam would have given you for nothing extra.
Prelicensing was abolished on 1 January 2024 — and the same rewrite left one sentence behind with nothing underneath it.
Act 2023-104 deleted the prelicensing course of study for producers, independent adjusters, apprentice independent adjusters and title agents. On the same effective date, Regulation 482-1-151 was rewritten and rules .03, .04 and .05 — Prelicensing Course, Providers, and Approval and Content — were repealed. Rule .08(2) still requires an apprentice to be “actively engaged in a prelicensing course.”
Act 2023-104 deleted the prelicensing course of study for producers, independent adjusters, apprentice independent adjusters and title agents. On the same effective date, Regulation 482-1-151 was rewritten and rules .03, .04 and .05 — Prelicensing Course, Providers, and Approval and Content — were repealed. Rule .08(2) still requires an apprentice to be “actively engaged in a prelicensing course.”
| Rule | Title | Status from 1 January 2024 |
|---|---|---|
| .02 | Definitions | REPEALED |
| .02-1 | Lines of Authority | NEW |
| .03 | Prelicensing Course | ⚠ REPEALED |
| .04 | Prelicensing Course Providers | ⚠ REPEALED |
| .05 | Approval and Content of Prelicensing Courses | ⚠ REPEALED |
| .08 | Apprentice Independent Adjuster License | ACTIVE — and .08(2) still requires a prelicensing course |
| .15 | Transitory Provisions | REPEALED |
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The orphaned sentence — Alabama’s signature licensing oddity
Rule 482-1-151-.08(2), whose own effective date is 1 January 2024, reads: “The applicant must be actively engaged in a prelicensing course for the line or lines of authority.”
That is the same date on which .03, .04 and .05 were repealed. So the apprentice rule requires enrollment in something that the authorizing statute no longer requires — § 27-9A-11(b) is a closed list of five with no education element — and that has no regulatory definition, no approved providers and no content standard behind it.
⚠ How to answer: Alabama requires no prelicensing education for the independent adjuster license — say that plainly. On the apprentice, the honest answer is that the sentence survives while the rules defining it were repealed. Do not assert flatly that apprentices must complete a course, and do not say Alabama has no prelicensing provision of any kind.
That is the same date on which .03, .04 and .05 were repealed. So the apprentice rule requires enrollment in something that the authorizing statute no longer requires — § 27-9A-11(b) is a closed list of five with no education element — and that has no regulatory definition, no approved providers and no content standard behind it.
⚠ How to answer: Alabama requires no prelicensing education for the independent adjuster license — say that plainly. On the apprentice, the honest answer is that the sentence survives while the rules defining it were repealed. Do not assert flatly that apprentices must complete a course, and do not say Alabama has no prelicensing provision of any kind.
The negative is STRUCTURAL, which is much stronger than a search that found nothing§ 27-9A-6 tells the commissioner what to find before issuing a license, and the list is five items: at least 18; eligible to designate this state as home state; no § 27-9A-12 ground; passed the examination; paid the § 27-4-2 fees. No education element. § 27-9A-8 covers the exam, its scope, the fee, the outside testing service, reapplication and the retake bars — no education element. § 27-9A-11(b) is likewise a closed list of five. Rule .06 covers exams, exemptions, the passing grade, retakes, certificates and the fee — none. And Rule .12(3)(a) firewalls the two apart: the Commissioner may not approve as CE any course “designed to prepare an individual to receive an initial license under Chapters 7 or 9A.”
The exam vendor is a UNIVERSITY, and the passing score is a RAW 70The University of Alabama administers Alabama’s insurance examinations — not Prometric, not PSI, not Pearson VUE. Sites: Birmingham, Huntsville, Mobile, Montgomery, Tuscaloosa. The hook is § 27-9A-8(d): “The commissioner may make arrangements, including contracting with an outside testing service.” ⚠ There is therefore NO national candidate handbook for Alabama — the Department publishes its own content outline, and third-party sites advertising “Alabama exam specs” are usually reproducing another state’s vendor bulletin.
Rule 482-1-151-.06(4): “each question will be valued with the sum of the values equaling 100” and “the sum of the values totaling 70 or more shall constitute a passing grade.” The words scaled, equating, converted and raw score appear in NO Alabama instrument. Several states use a scaled 70, which is a psychometric transformation and may not equal 70% of items. Alabama’s 70 is a percentage.
Rule 482-1-151-.06(4): “each question will be valued with the sum of the values equaling 100” and “the sum of the values totaling 70 or more shall constitute a passing grade.” The words scaled, equating, converted and raw score appear in NO Alabama instrument. Several states use a scaled 70, which is a psychometric transformation and may not equal 70% of items. Alabama’s 70 is a percentage.
| Examination | Questions | To pass | Time |
|---|---|---|---|
| P&C — excluding WC and Crop | 125 | 88 | 150 min |
| Workers’ Compensation | 100 | 70 | 120 min |
| Crop | 100 | 70 | 120 min |
| P&C — including WC and Crop | 150 | 105 | 180 min |
📅 THE LICENSE — Rule .10(2)(a)
🔑 FINGERPRINTS — Reg 482-1-157
Biennial, on birth month AND birth-year PARITY. Born in an odd-numbered year, the license expires at the end of your birth month in every odd-numbered year; born in an even year, every even year. An initial license does not expire within its first 75 days. Business entities instead expire 31 December of every odd-numbered year.
⚠ The Department’s own webpage misstates this, saying renewal is by birth month “whether the individual was born in an EVEN or ODD year” — which reads as though parity is irrelevant. The rule controls.
⚠ The Department’s own webpage misstates this, saying renewal is by birth month “whether the individual was born in an EVEN or ODD year” — which reads as though parity is irrelevant. The rule controls.
Narrower than most candidates assume. Reaches resident applicants, residents adding a line, and nonresidents who apply by DESIGNATING ALABAMA AS THEIR HOME STATE — who must also sit the Alabama exam. Expressly does NOT apply to emergency independent adjusters or apprentices.
⚠ An ordinary nonresident holding a genuine home-state license elsewhere is OUTSIDE the rule entirely. The trigger is the designated home state, not residency as such. Business entities: officers, directors and any owner of 51% or more of voting securities.
⚠ An ordinary nonresident holding a genuine home-state license elsewhere is OUTSIDE the rule entirely. The trigger is the designated home state, not residency as such. Business entities: officers, directors and any owner of 51% or more of voting securities.
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Two numbers that do not match, and one gap that leaves you unlicensed
1. The fingerprint window is published two ways. Rule 482-1-157-.03 says a check “shall be valid for any applicable application filed within 365 days.” The Department’s pages say results “remain in our system only 30 days.” Both are current and cannot both describe the same thing. Work to the 30 days — the Department advises getting printed after passing the exam and one day before applying. The fee is published NOWHERE, because § 27-9A-17(c) makes it payable directly to the contractor.
2. The retake bars are counted two ways. § 27-9A-8(f) says “three months” and “six months.” Rule .06(5) says 90 days and 180 days. Work from the rule’s day counts — and know the bars themselves expire 24 months after the last failure.
3. ⚠ THE LAPSE LADDER HAS A HOLE IN THE MIDDLE. Renew within 30 days at 1.5× and it is RETROACTIVE to the expiration date. Reinstate after day 30 at 2× and § 27-9A-7(d) makes it effective “as of the reinstatement” — NOT retroactive. That leaves a stretch during which you held no license and were probably adjusting claims anyway. The 30-day line is not a payment deadline; it is the line between continuous licensure and a hole in your record. After 12 months, you reapply and sit the exams again.
2. The retake bars are counted two ways. § 27-9A-8(f) says “three months” and “six months.” Rule .06(5) says 90 days and 180 days. Work from the rule’s day counts — and know the bars themselves expire 24 months after the last failure.
3. ⚠ THE LAPSE LADDER HAS A HOLE IN THE MIDDLE. Renew within 30 days at 1.5× and it is RETROACTIVE to the expiration date. Reinstate after day 30 at 2× and § 27-9A-7(d) makes it effective “as of the reinstatement” — NOT retroactive. That leaves a stretch during which you held no license and were probably adjusting claims anyway. The 30-day line is not a payment deadline; it is the line between continuous licensure and a hole in your record. After 12 months, you reapply and sit the exams again.
Continuing education: 24 hours, 3 ethics, a fifty-minute hour — and NO flood requirement§ 27-9A-13(a) requires 24 hours biennially, of which 3 must be ethics, and the 3 sit inside the 24. ⚠ Ethics is the ONLY named subrequirement — several states attach a flood or NFIP hour to the adjuster license and Alabama does not; both the statute and Rule .11 were read end to end. A classroom hour is at least FIFTY MINUTES, with no more than ten minutes of any sixty for breaks and administration. No credit for the same course twice in a period. Dual licensees do 24 hours TOTAL and producer-approved courses count. Three exemptions: a first partial term; reciprocating nonresidents — a condition, not an automatic pass; and approved equivalent certifications. ⚠ No carry-over — but that rests on a Department webpage alone; neither the statute nor the rule mentions carry-over in either direction.
The emergency fee is $60 against a $50 STATUTORY CAP — and the bridge is a CPI statute§ 27-9A-5(e): the commissioner shall collect from the insurer “a fee set by the commissioner not to exceed fifty dollars ($50)” and deposit it entirely to the Insurance Department Fund. Rule .09 charges $60, saying so expressly: “a registration fee, adjusted according to Ala. Code §41-1-11, of $60.”
§ 41-1-11 lets an agency raise fees “retained by the agency” by the CPI, by rule, capped at two percent per year. The Insurance Department is not among the three agencies that section excludes; the fee is 100% agency-retained; and ten years at that ceiling takes $50 to exactly $60.00. ⚠ The unresolved question is narrower than legality: § 41-1-11 authorizes increasing “the fee”, and § 27-9A-5(e)’s $50 is not a fee — it is a ceiling the Legislature placed on a commissioner-set fee. No Alabama authority resolves whether the power reaches a cap. Pay the $60; know the cap is still in the statute.
§ 41-1-11 lets an agency raise fees “retained by the agency” by the CPI, by rule, capped at two percent per year. The Insurance Department is not among the three agencies that section excludes; the fee is 100% agency-retained; and ten years at that ceiling takes $50 to exactly $60.00. ⚠ The unresolved question is narrower than legality: § 41-1-11 authorizes increasing “the fee”, and § 27-9A-5(e)’s $50 is not a fee — it is a ceiling the Legislature placed on a commissioner-set fee. No Alabama authority resolves whether the power reaches a cap. Pay the $60; know the cap is still in the statute.
Alabama never adopted the NAIC Unfair Claims Settlement Practices Act — and the statute and the regulation do OPPOSITE things.
There is no fourteen-act enumeration anywhere in Title 27 ch. 12. The only claims-settlement provision is one short section, § 27-12-24, which has a general business practice element. The actual standards live in Regulation 482-1-125, which has none — and which makes its own violation inadmissible in any civil or criminal court proceeding.
There is no fourteen-act enumeration anywhere in Title 27 ch. 12. The only claims-settlement provision is one short section, § 27-12-24, which has a general business practice element. The actual standards live in Regulation 482-1-125, which has none — and which makes its own violation inadmissible in any civil or criminal court proceeding.
📜 THE STATUTE — § 27-12-24
HAS a general business practice element — “with such frequency as to indicate a general business practice”
⚠ And it is DOUBLY GATED. It then defines how the practice must be proved: increased complaints, increased lawsuits AND other relevant evidence
A single refusal to pay does NOT violate it, however egregious
Binds “insurers” only
📋 THE REGULATION — 482-1-125
NO frequency element at all. Duties are stated per claim: “Every insurer, upon receiving notification of a first party claim…”
A single act CAN breach it while never touching the statute
Carries all the actual claim-handling deadlines
Does not cover workers’ compensation, fidelity, suretyship or boiler and machinery
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The strongest inversion in Alabama claims law — and the architecture that puts it on YOU
Rule 482-1-125-.02: evidence of a violation “shall be utilized for the purpose of administrative and regulatory proceedings conducted by the Department of Insurance and shall not be utilized for any other purpose or admissible as evidence for any purpose in any civil or criminal court proceeding.”
In most states a claimant who cannot sue under the unfair claims rules can still put a violation before a jury as evidence of bad faith. Alabama forecloses that too. A missed 15-day acknowledgment is not something a plaintiff can wave at an Alabama jury. The identical clause sits in Reg 482-1-124-.02 for life and health, so it is a deliberate position, not a drafting accident.
⚠ BUT DO NOT CONCLUDE THE RULE DOES NOT MATTER TO YOU. Follow the chain: § 27-12-24 binds insurers → Reg 482-1-125 binds insurers and is inadmissible → § 27-9A-15(7) requires you personally to “Comply with Chapter 12 of this title and any regulations implementing that chapter” → § 27-9A-12 lets the commissioner discipline you for violating any rule. The claims regulation is inadmissible in a courtroom and fully admissible in a licensing proceeding against you.
In most states a claimant who cannot sue under the unfair claims rules can still put a violation before a jury as evidence of bad faith. Alabama forecloses that too. A missed 15-day acknowledgment is not something a plaintiff can wave at an Alabama jury. The identical clause sits in Reg 482-1-124-.02 for life and health, so it is a deliberate position, not a drafting accident.
⚠ BUT DO NOT CONCLUDE THE RULE DOES NOT MATTER TO YOU. Follow the chain: § 27-12-24 binds insurers → Reg 482-1-125 binds insurers and is inadmissible → § 27-9A-15(7) requires you personally to “Comply with Chapter 12 of this title and any regulations implementing that chapter” → § 27-9A-12 lets the commissioner discipline you for violating any rule. The claims regulation is inadmissible in a courtroom and fully admissible in a licensing proceeding against you.
BOTH halves, or the answer is wrong“Alabama requires a general business practice” and “Alabama requires no general business practice” are each half right. The statute requires one; the regulation does not. ⚠ A question that asks about “Alabama’s unfair claims rule” without naming the instrument is ambiguous — and the safest answer is the one that distinguishes them. No private right of action exists under either: enforcement runs through §§ 27-12-18, 27-12-20 and 27-12-21, with injunctions only “through the Attorney General of this state.”
Calendar days — the defaultWorking days — ONE clock only
| Clock | Period | Runs from |
|---|---|---|
| Acknowledge a first-party claim | 15 days | Notification — “unless payment is made within that period” |
| Respond to a DEPARTMENT inquiry | ⚠ 10 WORKING days | Receipt — and the response goes “in duplicate” |
| Answer other written communications | 15 days | Receipt, where a response is requested |
| Provide claim forms and instructions | 15 days | Notification |
| Advise status of acceptance or denial | 30 days | Receipt of properly executed proofs of loss, or the policy period |
| Continuing status letters | 45, then every 45 | Initial notification, while investigation is incomplete |
| Tender payment | 30 days | Liability accepted + amount agreed + documents received |
| ⚠ Warn of an expiring limitations period | ~45 days BEFORE | The expiration date — to an unrepresented first-party claimant |
Read the day convention BEFORE you read any numberRule 482-1-125-.03(c): “DAYS. Calendar days calculated as set forth in the Alabama Rules of Civil Procedure.” Every bare day figure is calendar. ⚠ The single business-day clock in the whole rule is the one that protects the REGULATOR — ten working days to answer a Department inquiry. Every deadline protecting the claimant is calendar. That asymmetry is the mnemonic.
⚠ And the accept-or-deny clock is not what it looks like. It runs from properly executed proofs of loss, not from notice of the claim — a claim with no proofs of loss has not started it. And the duty is to advise of the STATUS of acceptance or denial, not necessarily to accept or deny. Read with .07(2), which lets you say you need more time and give reasons, it is a communication obligation, not a decision deadline.
⚠ And the accept-or-deny clock is not what it looks like. It runs from properly executed proofs of loss, not from notice of the claim — a claim with no proofs of loss has not started it. And the duty is to advise of the STATUS of acceptance or denial, not necessarily to accept or deny. Read with .07(2), which lets you say you need more time and give reasons, it is a communication obligation, not a decision deadline.
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A denial does NOT have to be in writing — and Alabama makes you warn a claimant the clock is running
Rule 482-1-125-.07(1): “No insurer shall deny a first party claim on the grounds of a specific policy provision, condition or exclusion unless reference to such provision, condition, or exclusion is included in the denial. The denial may be given … in writing, verbally or electronically (e-mail). … If … the first party claimant requests a written denial, a written denial shall be mailed within a reasonable time.”
Three things are true at once: the denial must cite the provision; it may be verbal; and a written denial is compelled only on request, then only “within a reasonable time” with no day count. ⚠ A verbal denial that names the provision and is documented in the file is COMPLIANT. A written one that does not name it is a VIOLATION. The citation requirement is the duty; the medium is not.
⚠ And Rule .07(5) requires written notice ~45 CALENDAR DAYS BEFORE a limitations period expires, on an unresolved claim where the first-party claimant is not represented. Read with .07(4): “No insurer shall knowingly cease or prolong negotiations … with the intention of allowing the statute of limitations to expire.” Alabama makes running out the clock an affirmative violation and then makes you tell the claimant it is happening. Very few states do the second half.
Three things are true at once: the denial must cite the provision; it may be verbal; and a written denial is compelled only on request, then only “within a reasonable time” with no day count. ⚠ A verbal denial that names the provision and is documented in the file is COMPLIANT. A written one that does not name it is a VIOLATION. The citation requirement is the duty; the medium is not.
⚠ And Rule .07(5) requires written notice ~45 CALENDAR DAYS BEFORE a limitations period expires, on an unresolved claim where the first-party claimant is not represented. Read with .07(4): “No insurer shall knowingly cease or prolong negotiations … with the intention of allowing the statute of limitations to expire.” Alabama makes running out the clock an affirmative violation and then makes you tell the claimant it is happening. Very few states do the second half.
There is ONE bad-faith tort in Alabama, not two — and the case that says so is over a decade old.
For thirty years Alabama material taught a “normal” case and an “abnormal” one as separate torts. Brechbill (2013): “there is only one tort of bad-faith refusal to pay a claim, not two types of bad faith or two separate torts.” And Alabama remains a pure contributory negligence state by judicial choice, not by statute.
For thirty years Alabama material taught a “normal” case and an “abnormal” one as separate torts. Brechbill (2013): “there is only one tort of bad-faith refusal to pay a claim, not two types of bad faith or two separate torts.” And Alabama remains a pure contributory negligence state by judicial choice, not by statute.
| Element of the single bad-faith tort | |
|---|---|
| (a) | An insurance contract between the parties and a breach of it by the defendant |
| (b) | An intentional refusal to pay the insured’s claim |
| (c) | ⚠ The ABSENCE of any reasonably legitimate or arguable reason for the refusal — required on EVERY theory |
| (d) | The insurer’s actual knowledge of the absence of such a reason |
| (e) | (the investigation route) Intentional failure to determine whether a legitimate or arguable reason existed |
The holding that decides real filesBrechbill, Docket 1111117 (Ala. 27 September 2013): “A bad-faith-refusal-to-investigate claim cannot survive where the trial court has expressly found as a matter of law that the insurer had a reasonably legitimate or arguable reason for refusing to pay the claim at the time the claim was denied.”
A poor investigation does not manufacture liability where an arguable reason existed. The investigation theory is not an escape hatch from element (c) — it is a route that still has to get through it. ⚠ And element (c) is measured AT THE TIME OF DENIAL, so a reason reconstructed later for litigation is worth far less than one recorded in the file on the day. Dutton defines it: “an arguable reason, one that is open to dispute or question.”
A poor investigation does not manufacture liability where an arguable reason existed. The investigation theory is not an escape hatch from element (c) — it is a route that still has to get through it. ⚠ And element (c) is measured AT THE TIME OF DENIAL, so a reason reconstructed later for litigation is worth far less than one recorded in the file on the day. Dutton defines it: “an arguable reason, one that is open to dispute or question.”
| Case | Docket · date | What it did |
|---|---|---|
| Chavers v. National Security Fire & Cas. Co. | 79-280 · Ala. 1981 | Created the tort |
| National Savings Life Ins. Co. v. Dutton | 80-897 · 17 Sept. 1982 | Supplied the elements and the directed-verdict framing |
| Thomas v. Principal Financial Group | 88-834 / 88-925 · 3 Aug. 1990 | Opened the abnormal category by noticing Dutton said “In the normal case” |
| State Farm Fire & Cas. Co. v. Slade | 1961769 / 1961770 · 27 Aug. 1999 | Mapped the abnormal routes |
| State Farm Fire & Cas. Co. v. Brechbill | 1111117 · 27 Sept. 2013 | ⚠ Collapsed the two into ONE |
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“Alabama has no third-party bad faith” is imprecise enough to get a question wrong
Alabama does recognize a bad-faith failure to settle and a refusal to defend arising out of third-party liability claims — the policy gives the insurer the exclusive right to settle, and with that right comes a duty. But the plaintiff is the INSURED, not the claimant, and it does not accrue until the claimant obtains a final judgment in excess of the policy limits.
What is true is the narrower proposition: a third-party CLAIMANT cannot sue the carrier for bad faith directly.
⚠ What the claimant gets instead is statutory and comes AFTER judgment. § 27-23-2: where the judgment “is not satisfied within 30 days after the date when it is entered, the judgment creditor may proceed against the defendant and the insurer to reach and apply the insurance money.” Judgment → 30 days → direct action. It is a collection mechanism, not a bad-faith remedy, and it opens up no extracontractual damages.
What is true is the narrower proposition: a third-party CLAIMANT cannot sue the carrier for bad faith directly.
⚠ What the claimant gets instead is statutory and comes AFTER judgment. § 27-23-2: where the judgment “is not satisfied within 30 days after the date when it is entered, the judgment creditor may proceed against the defendant and the insurer to reach and apply the insurance money.” Judgment → 30 days → direct action. It is a collection mechanism, not a bad-faith remedy, and it opens up no extracontractual damages.
Can YOU be personally liable? The honest answer is the structure, not a verdict1. Bad faith does not fit an adjuster. Element (a) is an insurance contract between the parties — and an adjuster is not a party to the policy. An inference from the element rather than a holding, but a strong one.
2. Negligent claims handling does not exist in Alabama against ANYONE. Bevels, Docket 00-A-604-E (M.D. Ala. 20 June 2000), citing Kervin (Ala. 1995).
3. Fraud, fraudulent suppression and outrage have NOT been foreclosed. Federal courts sitting in Alabama have repeatedly declined to hold such claims foreclosed on fraudulent-joinder review.
4. Adjusters do get named. In Ex parte Alfa Mutual and Dimoff, Docket SC-2025-0478 (Ala. 27 Feb. 2026), bad-faith, fraud and suppression claims were pleaded against the carrier and its adjuster by name and resolved on limitations — the court did not reach personal liability.
⚠ The exposure that IS certain is not civil at all: § 27-9A-15(7) plus § 27-9A-12 — a Department action on your license.
2. Negligent claims handling does not exist in Alabama against ANYONE. Bevels, Docket 00-A-604-E (M.D. Ala. 20 June 2000), citing Kervin (Ala. 1995).
3. Fraud, fraudulent suppression and outrage have NOT been foreclosed. Federal courts sitting in Alabama have repeatedly declined to hold such claims foreclosed on fraudulent-joinder review.
4. Adjusters do get named. In Ex parte Alfa Mutual and Dimoff, Docket SC-2025-0478 (Ala. 27 Feb. 2026), bad-faith, fraud and suppression claims were pleaded against the carrier and its adjuster by name and resolved on limitations — the court did not reach personal liability.
⚠ The exposure that IS certain is not civil at all: § 27-9A-15(7) plus § 27-9A-12 — a Department action on your license.
⚖ CONTRIBUTORY NEGLIGENCE
💰 PUNITIVE DAMAGES — § 6-11-21
Any contributory fault is a COMPLETE BAR. Not a reduction. And it is judge-made — no statute adopts it. Golden v. McCurry, Docket 79-78 (Ala. 3 Oct. 1980): the Court “should, as a matter of policy, leave any change of the doctrine to the legislature.”
Counterweights: last clear chance, subsequent negligence, and wantonness — contributory negligence is no defense to wanton or willful conduct. That is why Alabama complaints plead wantonness routinely.
⚠ This is a VALUATION fact, not just a defense. In a comparative state 20% claimant fault is a 20% discount. In Alabama it is a defense verdict.
Counterweights: last clear chance, subsequent negligence, and wantonness — contributory negligence is no defense to wanton or willful conduct. That is why Alabama complaints plead wantonness routinely.
⚠ This is a VALUATION fact, not just a defense. In a comparative state 20% claimant fault is a 20% discount. In Alabama it is a defense verdict.
General: 3× compensatory or $500,000, whichever is greater. Physical injury: 3× or $1,500,000. Small business (net worth ≤ $2,000,000): $50,000 or 10% of net worth.
⚠ NO insurer or bad-faith exception. The only carve-outs are small business, class actions, wrongful death and intentional infliction of physical injury. A first-party bad-faith award sits under the general cap.
§ 6-11-21(g): “The jury may neither be instructed nor informed as to the provisions of this section.”
⚠ Two cautions: (f) escalates the figures by CPI every three years since 2003, so those are base numbers; and the 1987 flat $250,000 cap was held unconstitutional in Henderson (Ala. 25 June 1993) before the tiered caps were re-enacted.
⚠ NO insurer or bad-faith exception. The only carve-outs are small business, class actions, wrongful death and intentional infliction of physical injury. A first-party bad-faith award sits under the general cap.
§ 6-11-21(g): “The jury may neither be instructed nor informed as to the provisions of this section.”
⚠ Two cautions: (f) escalates the figures by CPI every three years since 2003, so those are base numbers; and the 1987 flat $250,000 cap was held unconstitutional in Henderson (Ala. 25 June 1993) before the tiered caps were re-enacted.
Alabama’s 75% total-loss figure is genuine, is in the statute — and is still described wrongly by nearly every summary.
It governs one half of a disjunctive sentence. The other branch carries no percentage at all, and a theft payout is a total loss regardless of percentage. Confirming that a number exists in a statute is necessary and not sufficient — read the clause that switches it on.
It governs one half of a disjunctive sentence. The other branch carries no percentage at all, and a theft payout is a total loss regardless of percentage. Confirming that a number exists in a statute is necessary and not sufficient — read the clause that switches it on.
| Branch | Trigger — § 32-8-87(b)(1)a. | Percentage? |
|---|---|---|
| 1 | Frame or engine removed and not immediately replaced by another | ⚠ NONE AT ALL |
| 2 | An insurance company has paid money or made other monetary settlement as compensation for a total loss | The 75% definition applies — and it is CONJUNCTIVE |
| ⚠ | Theft payout | Total loss REGARDLESS of percentage — unless the damage is minor, § 32-8-87(d)(2) |
“Alabama’s total loss threshold is 75%” misdescribes the statute — three ways§ 32-8-87(d)(1): “a total loss occurs when an insurance company or any other person pays or makes other monetary settlement … and the damage … is greater than or equal to 75 percent of the fair retail value of the vehicle prior to damage.”
1. Branch 1 carries no percentage. 2. Branch 2 is conjunctive — it needs both a payment and the threshold. It is not the insurer’s unilateral declaration and not a bare damage test. 3. Theft overrides the percentage entirely.
⚠ And what does NOT count toward the calculation: “payments … for medical care, bodily injury, vehicle rental, or for anything other than the amount paid for the actual damage to the motor vehicle.” Clocks: salvage certificate within 72 hours; a person acquiring a qualifying damaged vehicle applies within 30 days. Act 2025-120 (eff. 1 Oct. 2025) added applications where the vehicle was declared a loss in any state — the 75% definition survived unchanged.
1. Branch 1 carries no percentage. 2. Branch 2 is conjunctive — it needs both a payment and the threshold. It is not the insurer’s unilateral declaration and not a bare damage test. 3. Theft overrides the percentage entirely.
⚠ And what does NOT count toward the calculation: “payments … for medical care, bodily injury, vehicle rental, or for anything other than the amount paid for the actual damage to the motor vehicle.” Clocks: salvage certificate within 72 hours; a person acquiring a qualifying damaged vehicle applies within 30 days. Act 2025-120 (eff. 1 Oct. 2025) added applications where the vehicle was declared a loss in any state — the 75% definition survived unchanged.
🚗 AUTO — THREE INVERSIONS IN ONE SECTION
The writing runs BACKWARDS. § 32-7-23(a) does not require the rejection to be written — the writing is required to ADD coverage back on renewal after a prior rejection
UIM is DAMAGES-BASED. (b)(4) compares available limits to “the damages which the injured person is legally entitled to recover” — not to the UM limit. The same tortfeasor is underinsured or not depending on how big the claim is
Stacking is CAPPED AT THREE. (c): primary “but not to exceed two additional coverages” within one contract. Travelers, Docket 86-672 (Ala. 24 June 1988) extended it beyond the named insured — and expressly RESERVED inter-policy stacking
25/50/25, § 32-7-6(c). Pure tort — no PIP. And “legally entitled to recover” is a real gate: Ex parte Carlton (Ala. 2003) — comp exclusivity upstream defeats the UM claim downstream
🏠 PROPERTY — THREE THINGS ALABAMA DOES NOT HAVE
NO standard fire policy. 91 chapters, ch. 14’s 35 sections and every section of ch. 22 enumerated — none prescribes a form. Alabama is file-and-approve (§§ 27-14-8, 27-14-9)
⚠ A multi-state form is NOT a state adoption. Forms captioned for several southeastern states circulate here. A suit-limitation clause binds as CONTRACT, not as an Alabama-prescribed minimum
NO valued policy law. Alabama is an actual cash value indemnity state — a total fire loss is adjusted, not automatically paid at the limit
NO matching rule. The nearest provision, Rule .09(1), covers consequential damage from the repair operation — tear-out and access damage — not continuous appearance
⚠ Whether LABOR may be depreciated has no Alabama authority in either direction. Rule .09(2) defines ACV as replacement cost less depreciation and is silent on the base
The auto physical damage rule is more prescriptive than the general standardsRule 482-1-125-.08 gives three methods on a first-party total loss: a comparable replacement automobile (“same manufacturer, same or newer year, similar body style, similar options and mileage”); a cash settlement on a comparable vehicle; or a documented deviation.
⚠ The sentence that decides most disputes: “Any deductions from such cost, including deduction for salvage, must be measurable, discernible, itemized and specified as to dollar amount.” Four adjectives, all doing work — a lump-sum salvage deduction with no arithmetic behind it does not comply. Betterment under .08(8) is a two-part test and BOTH limbs must be met: a measurable decrease in market value from poorer condition or prior damage, and general overall condition for age — with missing parts “limited to no more of a deduction than the replacement costs.”
First-party diminished value is NOT recoverable — Pritchett, Docket 2000850 (Ala. Civ. App. 22 Feb. 2002): repair “does not discuss the concept of value.” ⚠ But do not over-read the regulation: .08(6)’s disclaimer says “This Paragraph is not intended to…” — it is scoped to that paragraph, not a freestanding declaration that DV is never owed. Third-party DV has no Alabama authority either way.
⚠ The sentence that decides most disputes: “Any deductions from such cost, including deduction for salvage, must be measurable, discernible, itemized and specified as to dollar amount.” Four adjectives, all doing work — a lump-sum salvage deduction with no arithmetic behind it does not comply. Betterment under .08(8) is a two-part test and BOTH limbs must be met: a measurable decrease in market value from poorer condition or prior damage, and general overall condition for age — with missing parts “limited to no more of a deduction than the replacement costs.”
First-party diminished value is NOT recoverable — Pritchett, Docket 2000850 (Ala. Civ. App. 22 Feb. 2002): repair “does not discuss the concept of value.” ⚠ But do not over-read the regulation: .08(6)’s disclaimer says “This Paragraph is not intended to…” — it is scoped to that paragraph, not a freestanding declaration that DV is never owed. Third-party DV has no Alabama authority either way.
| Guaranty association — § 27-42-8(a) | Limit |
|---|---|
| Workers’ compensation covered claims | ⚠ THE FULL AMOUNT — no cap |
| Return of unearned premium | $10,000 per policy |
| All other covered claims | $300,000 or the policy limits, whichever is LESS, per claim |
| ⚠ Claimant deductible | NONE — Alabama does not have the NAIC $100 |
| Insolvency trigger | After 1 January 1981 |
The single-claim rule changes the arithmetic on a serious file§ 27-42-8(a): “For purposes of this limitation, all claims of any kind whatsoever arising out of, or related to, bodily injury or death to any one person shall constitute a single claim, regardless of the number of claims made or the number of claimants.”
A derivative loss-of-consortium claim by a spouse, or a wrongful death claim brought by multiple survivors, does not buy a second $300,000. One injured person, one claim, one cap — however many plaintiffs there are. And § 27-42-8(b) caps the association at the insolvent insurer’s own obligation. ⚠ If an answer offers “$300,000 less a $100 deductible,” the deductible half is wrong.
A derivative loss-of-consortium claim by a spouse, or a wrongful death claim brought by multiple survivors, does not buy a second $300,000. One injured person, one claim, one cap — however many plaintiffs there are. And § 27-42-8(b) caps the association at the insolvent insurer’s own obligation. ⚠ If an answer offers “$300,000 less a $100 deductible,” the deductible half is wrong.
| Workers’ compensation | Alabama |
|---|---|
| Credential | A line of authority, not a separate license |
| Maximum — injuries on/after 1 July 2026 | $1,219.00/wk |
| Minimum | $335.00/wk |
| State average weekly wage (CY2025) | $1,219.14 |
| ⚠ Permanent partial disability cap | $220/wk — FLAT and UNINDEXED |
| Waiting period | 3 days, retroactive at 21 days |
| Late installment penalty | 15% after 30 days |
| Notice to employer | 5 days SOFT / 90 days HARD |
| Limitations | 2 years — from the LAST payment where payments were made |
| Accept-or-deny deadline | ⚠ NONE — pay-or-explain instead: 30 days, then a reason within 10 |
| Who picks the doctor | The EMPLOYER — panel of four on dissatisfaction |
| Comp bad faith | CHANNELLED by exclusivity — narrow outrage escape |
🚫
The PPD cap most summaries miss — and where NOT to get the rate from
§ 25-5-68(a) sets the maximum at 100 percent of the state average weekly wage and the minimum at 27 1/2 percent — then adds: “Notwithstanding the foregoing, the maximum compensation payable for permanent partial disability shall be no more than the lesser of two hundred twenty dollars ($220) per week or 100 percent of the average weekly wage.”
The $220 is flat and unindexed. It has not moved while the headline maximum climbed past $1,200. ⚠ On a PPD file the operative cap is $220, not $1,219 — a difference of nearly a thousand dollars a week.
⚠ And watch where you get the rate from. The agency publishes the rate letter at a stable, obvious address that currently serves a letter dated 31 May 2024 with the 1 July 2024 figures. The current letter is a differently named file reached from the division’s documents index, sitting in an upload folder labeled with the wrong year. Read the date printed INSIDE the document — never the filename, never the folder path. An adjuster who reserves a 2026 injury on the 2024 figures is low by $89 a week. Note too that the agency is now the Department of Workforce.
The $220 is flat and unindexed. It has not moved while the headline maximum climbed past $1,200. ⚠ On a PPD file the operative cap is $220, not $1,219 — a difference of nearly a thousand dollars a week.
⚠ And watch where you get the rate from. The agency publishes the rate letter at a stable, obvious address that currently serves a letter dated 31 May 2024 with the 1 July 2024 figures. The current letter is a differently named file reached from the division’s documents index, sitting in an upload folder labeled with the wrong year. Read the date printed INSIDE the document — never the filename, never the folder path. An adjuster who reserves a 2026 injury on the 2024 figures is low by $89 a week. Note too that the agency is now the Department of Workforce.
Fortified — § 27-31D-2
Insurers shall provide a windstorm mitigation discount — but (g) sets the amount by “actuarially justified rating plans”. ⚠ There is NO statutory percentage. Any figure quoted as “the Alabama fortified discount” is one carrier’s filing.
§ 27-31D-2.1 — the adjuster-facing one
Insurers shall OFFER a fortified bronze roof endorsement “when the insured incurs damage covered by the policy requiring the roof to be replaced.” ⚠ That is a CLAIM event, not an underwriting event.
Disaster mediation — Reg 482-1-135
$500 threshold; requestable 21 days after the mediation notice; insurer pays $350. ⚠ The insurer “failed to appear” if its representative lacks authority to settle AND to disburse at the conclusion. 30 minutes late = failure to appear.
Beach Area — § 27-1-24(f)
The Alabama Insurance Underwriting Association’s territory: “the gulf front, beach, and seacoast areas of Baldwin and Mobile Counties.” Two counties — a much narrower footprint than most coastal pools.
Cancellation — Reg 482-1-136
150 days to the Commissioner, 120 days to the insured. ⚠ But it is a BOOK-OF-BUSINESS PROPERTY rule — it names counties and policyholder counts, and does not reach personal auto. Do not answer “120 days for personal auto.”
Fraud warning — § 27-12A-20
Mandatory — but on “at least ONE of” six document types, not all six, and “substantially similar” wording is allowed. ⚠ (b): omission “shall not constitute a defense in any prosecution.”
Fraud reporting — § 27-12A-21
Mandatory for insurers, permissive for everyone else — and ⚠ NO number of days appears anywhere in the section. Timing is delegated to the Department. Immunity under § 27-12A-22 covers the act of reporting and falls away for actual malice.
The Fraud Unit — § 27-12A-40
Power to issue subpoenas, administer oaths, execute arrest warrants, and arrest on probable cause without a warrant. Investigators have “all the powers vested in law enforcement officers of the State of Alabama” and must meet peace-officer training standards.
Record retention — § 27-9A-14
⚠ NO period for the adjuster — “comply with the record retention policy as agreed to in that contract.” Contrast the insurer, whose claim files run the current year plus five under Rule 482-1-125-.04.
🎯
Top Exam Tips — Alabama Adjuster Regulations
1. TWO ADJUSTER CHAPTERS, ONE REPEALED — ch. 9A is live; ch. 9 died 1 Jan 2012. Never read repeal status off a chapter index.
2. NO PUBLIC ADJUSTERS AT ALL, and salaried staff adjusters are exempt by definition.
3. THREE LINES, FOUR EXAMS — and adding a line later costs $185 again.
4. RAW 70, not scaled, and the vendor is a university.
5. NO PRELICENSING — abolished 1 Jan 2024 — but Rule .08(2) is an orphan.
6. $60 EMERGENCY FEE against a $50 CAP, bridged by § 41-1-11 CPI authority. The INSURER files it, in 5 days.
7. NO ADJUSTER RECORD RETENTION PERIOD — it is whatever the contract says.
8. STATUTE has the frequency element; REGULATION has none — and the regulation is INADMISSIBLE in any court proceeding.
9. CALENDAR days, except 10 WORKING days for a Department inquiry.
10. DENIALS MAY BE VERBAL — but must cite the provision. And you must warn an unrepresented claimant ~45 days before the limitations period runs.
11. ONE bad-faith tort after Brechbill, and element (c) governs every theory.
12. PURE CONTRIBUTORY NEGLIGENCE, judge-made — and the seat-belt statute also says non-use “shall not limit the liability of an insurer.”
13. STACKING CAPPED AT THREE; UIM measured against DAMAGES; the UM writing runs backwards.
14. 75% GOVERNS ONLY THE INSURER-PAYMENT BRANCH; frame/engine carries none; theft overrides it.
15. GUARANTY: $300,000, NO $100 DEDUCTIBLE, workers’ comp paid in FULL, and all BI claims for one person are ONE claim.
16. COMP PPD CAP IS $220 FLAT, and comp bad faith is channelled, not abolished and not available.
2. NO PUBLIC ADJUSTERS AT ALL, and salaried staff adjusters are exempt by definition.
3. THREE LINES, FOUR EXAMS — and adding a line later costs $185 again.
4. RAW 70, not scaled, and the vendor is a university.
5. NO PRELICENSING — abolished 1 Jan 2024 — but Rule .08(2) is an orphan.
6. $60 EMERGENCY FEE against a $50 CAP, bridged by § 41-1-11 CPI authority. The INSURER files it, in 5 days.
7. NO ADJUSTER RECORD RETENTION PERIOD — it is whatever the contract says.
8. STATUTE has the frequency element; REGULATION has none — and the regulation is INADMISSIBLE in any court proceeding.
9. CALENDAR days, except 10 WORKING days for a Department inquiry.
10. DENIALS MAY BE VERBAL — but must cite the provision. And you must warn an unrepresented claimant ~45 days before the limitations period runs.
11. ONE bad-faith tort after Brechbill, and element (c) governs every theory.
12. PURE CONTRIBUTORY NEGLIGENCE, judge-made — and the seat-belt statute also says non-use “shall not limit the liability of an insurer.”
13. STACKING CAPPED AT THREE; UIM measured against DAMAGES; the UM writing runs backwards.
14. 75% GOVERNS ONLY THE INSURER-PAYMENT BRANCH; frame/engine carries none; theft overrides it.
15. GUARANTY: $300,000, NO $100 DEDUCTIBLE, workers’ comp paid in FULL, and all BI claims for one person are ONE claim.
16. COMP PPD CAP IS $220 FLAT, and comp bad faith is channelled, not abolished and not available.
Scenario Quiz — ten fact patterns.
Ten situations drawn from the places Alabama puts a rule in an unexpected instrument, states a number that governs only half a sentence, or answers a national assumption backwards. Each explanation names the trap and says why the plausible wrong answer is wrong.
Ten situations drawn from the places Alabama puts a rule in an unexpected instrument, states a number that governs only half a sentence, or answers a national assumption backwards. Each explanation names the trap and says why the plausible wrong answer is wrong.
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