In times when insurance coverage rulings may appear to be trending in favor of insureds, it can be helpful to focus on those tried-and-true coverage principles that continue to be applied in favor of carriers. In Alabama, this includes case law responding to bad faith claims against insurers. Recent case law demonstrates that Alabama courts continue to apply strict standards to claims against insurers for bad faith and to dismiss those claims on dispositive motions where an insured is unable to satisfy the onerous burden of proof to establish bad faith under Alabama law.

In a recent 2026 decision, the court in Calvin D. Wells, Jr. v. Nationwide Agribusiness Ins. Co. granted summary judgment for an insurer on a claim against it for bad faith failure to pay and investigate an insurance claim. 2026 WL 401199 (N.D. Ala. Feb. 12, 2026). In Wells, an insured filed a claim under a commercial property insurance policy for windstorm damage to multiple insured buildings on a poultry farm. The insured claimed, in part, that it was entitled to policy limits on two of the insured buildings as a result of covered damage caused by the storm. The insurer acted promptly in its adjustment and coverage investigation, timely issued payment for damages that unquestionably were covered, and kept the insured apprised and involved in its ongoing coverage investigation for the remainder of the claim. In the context of that investigation, the insurer retained an independent adjuster and independent engineer to evaluate the cause of the claimed damage, and included the insured on all property inspections. The insurer ultimately denied coverage for a portion of the insured’s claim on the basis the damage was caused by historical wear and tear, corrosion, and prior storms, rather than the reported windstorm. After reaching this conclusion, the insurer invited the insured on a number of occasions to submit additional information supporting its claim and coverage position. The insured responded by providing correspondence from various of its representatives and contractors stating they had not observed damage to the buildings prior to the storm, but no other support or analysis from its contractors. The insured then filed suit against the insurer for breach of contract and bad faith.

The insurer moved for summary judgment as to the bad faith claim. After considering all evidentiary submissions, the court held that the carrier’s motion was due to be granted. The court emphasized that under settled Alabama law, an insured “‘has a heavy burden of proof,’ and ‘the remedy [of bad faith] will be afforded in only extreme cases.’” Id., quoting Snell v. United Specialty Ins. Co., 102 F.4th 1208 (11th Cir. 2024) (additional citations omitted). The court also noted that under Alabama law, “all bad-faith claims fail on summary judgment ‘where the trial court… expressly [finds] 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.’” Id., citing Walker v. Life Ins. Co. of N. Am., 59 F.4th 1176, 1187 (11th Cir. 2023) (addition citations omitted). An “adequate reason” has been described by Alabama courts as one that is “legitimate,” “arguable,” “debatable,” or “lawful.” Id. “[U]nder Alabama law, “‘[i]f any one reason for denial of coverage is at least ‘arguable,’ [a] court need not look any further,’ and a claim for bad faith refusal to pay will not lie.” Id., citing Weaver v. Allstate Ins. Co., 574 So. 2d 771 (Ala. 1990) (additional citations omitted).  Applied to the case before it, the court held the insurer could not be liable for bad faith in any respect as it had a legitimate reason to deny coverage, i.e., a comprehensive engineering report completed by an independent engineer after an exhaustive investigation.  The court found that while the insured clearly disagreed with the denial, “he failed to establish a genuine dispute as to the existence of this arguable reason, and thus his bad faith claim fails.” Id.

The Wells court is not alone in its decision to dismiss a bad faith claim against an insurer at the summary judgment stage. A number of courts applying Alabama law have done the same in recent opinions. See, e.g., Thomas Bonds v. State Farm Ins. Co., 5:22-CV-00618-LCB, 2024 WL 4895714 (N.D. Ala. Nov. 26, 2024) (granting summary judgment for insurer on insured’s bad faith claim as carrier had an arguable basis to deny coverage); Harris v. Universal Prop. & Cas. Ins. Co., No. 5:21-CV-00344-NAD, 2023 WL 2468959 (N.D. Ala. Mar. 10, 2023) (dismissing claim against insurer for bad faith failure to pay and investigate an insurance claim with prejudice as insurer had a debatable reason for denying the claim and reasonable grounds for disputing coverage).

The Wells decision is not ground breaking. It does not create new law in Alabama or represent any departure from settled Alabama principles on bad faith. What it does provide, however, is yet another solid, unwavering example of an Alabama court applying bad faith law strictly and dismissing an unwarranted bad faith claim against an insurer at the summary judgment stage when it is not supported by the underlying facts. Alabama insureds undoubtedly will continue to use the threat of bad faith litigation and excess exposure against carriers to challenge coverage denials and to try to negotiate a change in an insurer’s position. However, such threats can ring relatively hollow under Alabama law when carriers have employed fair and prompt claims handling practices and have based their coverage decisions on reasonably legitimate and arguable bases after a thorough and impartial claim investigation.