The Alabama Supreme Court has affirmed a lower court’s decision that State Farm was right to deny an underinsured motorist (UIM) claim based on a policy that used Kentucky law. 

Eric Jackson, a commercial truck driver, was in a collision in 2020 in Alabama, according to court documents. As a resident of Kentucky, his State Farm insurance policies, including UIM coverage, were issued in Kentucky. 

Jackson sued the alleged at-fault driver in Alabama in 2022. He filed a motion seeking leave from the trial court to amend his original complaint to add State Farm as a defendant in 2023. In the amendment, Jackson sought to recover UIM benefits under his State Farm policies. 

State Farm responded that Jackson didn’t submit a valid and timely claim for the UIM benefits as prescribed by Kentucky law under the Motor Vehicle Reparations Act, or within the time allotted in his policies. Both Kentucky law and Jackson’s policy have a two-year time limit. 

However, Alabama has a six-year statute of limitations.

Jackson’s policy also includes a “Choice of Law” provision, which indicates that in all relevant circumstances, without regard to choice of law rules, the law of the state of Kentucky will control, the court documents say. 

According to the Supreme Court, the language of Jackson’s State Farm policies is specific and expressly states, in clear and unambiguous language, that Jackson and State Farm agreed Kentucky’s two-year statutory period for filing accident-related tort claims applied to UIM claims. 

“It is undisputed that State Farm and Jackson, an acknowledged Kentucky resident, agreed not only that Kentucky law would control, but also that this Kentucky law would control,” the Alabama Supreme Court decision says. 

The Alabama Supreme Court adds that the contracts were not an attempt to modify Alabama’s statute of limitations but to explicitly incorporate procedural elements consistent with the forum of the contracts. 

“Alabama law might void as prohibited an Alabama contract reducing a plaintiff’s procedural remedies, such as a statute of limitations,” the decision says. “However, that is not the case here.”

Insurance Business, a trade publication for the insurance industry, notes the case is a “sharp reminder of the power of well-drafted language and the importance of jurisdictional clarity. It underscores how a properly written choice-of-law clause can hold up even when a claim crosses state lines, and how enforcing clear procedural limits can protect insurers from exposure to untimely litigation.”

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