Construction Claim Rules in Alabama

Statutory interest rate

7.5% / year, fixed (unless the contract sets its own rate)

For a judgment based on a contract action, interest runs from the date the cause of action accrued at the rate stated in the contract itself if one is specified (e.g., a construction contract's payment/retainage clause). If the contract is silent, or the claim isn't contractual, the statutory default is a fixed 7.5% per year. This applies to judgments entered on or after September 1, 2011; the rate was 12% before that amendment.

Compounding: Simple

Citation: Ala. Code § 8-8-10; Ala. Code § 8-8-1

Source: https://law.justia.com/codes/alabama/title-8/chapter-8/section-8-8-10

Last checked: 2026-08-23

Confirmed against Justia's 2018, 2022 and 2024 codifications of the Alabama Code, all showing the same 7.5% rate and September 1, 2011 effective date. This corrects a stale 12% figure that reflected the pre-2011 statute. Direct confirmation against the Alabama Legislature's own site was attempted but the fetched page returned only navigation metadata, not operative statutory text; this should be spot-checked against the Legislature's site or a paid legal database when convenient.

Accrual: breach of contract claim

From when the payment or performance was originally due under the contract

Ala. Code § 8-8-8 provides that interest on a contract for the payment of money or performance of a duty runs from the day the money or thing should have been paid, or the act should have been performed, at its money value. In practice, this is the date payment was due under the contract terms.

Citation: Ala. Code § 8-8-8

Source: https://law.justia.com/codes/alabama/title-8/chapter-8/section-8-8-8/

Accrual: property damage / tort claim

From the date of injury, if the property's loss in value is ascertainable

Alabama allows prejudgment interest in non-contract cases where damages can be ascertained by mere computation, or are complete at a given time so as to be determinable by known standards of value. For property damage specifically, Alabama case law runs interest from the date of injury when the destroyed or damaged property has an ascertainable money value.

Citation: Nelson v. AmSouth Bank, N.A., 622 So. 2d 894 (Ala. 1993); Atlanta & Birmingham Air Line Ry. v. Brown, 48 So. 73 (Ala. 1908)

Source: https://calculators.law/caselaw/decisions/X6ORVJG05RPM/nelson-v-amsouth-bank-na

The Atlanta & Birmingham case is an early-1900s opinion whose free-text availability wasn't independently re-confirmed this pass; the Nelson v. AmSouth citation and holding were the ones directly verified via the source linked above.

Actual Cash Value rule

Replacement cost minus depreciation (by insurance regulation)

Alabama's ACV standard comes from a state insurance-department regulation, not the broad evidence rule: insurers must determine ACV as replacement cost at time of loss minus depreciation and must furnish a depreciation worksheet on request. Insurers may deviate only where the property has nominal value or a value disproportionate to replacement cost less depreciation and must explain the deviation in writing. This regulation applies specifically to residential fire/extended-coverage replacement-cost policies, so its reach into commercial construction-defect claims may be narrower.

Citation: Ala. Admin. Code r. 482-1-125-.09

Source: https://aldoi.gov/pdf/legal/125r-2014.pdf

ACV statute or regulation

Alabama regulation defines the ACV calculation method and requires an itemized depreciation worksheet, but does not restrict labor depreciation.

Alabama Department of Insurance Regulation Chapter 482-1-125, Section .09 (Standards for Prompt, Fair and Equitable Settlements Applicable to Fire and Extended Coverage Type Policies with Replacement Costs) requires insurers to determine actual cash value as replacement cost of the property at the time of loss less depreciation, and to provide the insured with a detailed itemization of any depreciation deduction upon request. The regulation does not define depreciation methodology further and does not state whether labor may or may not be depreciated. Alabama case law is split on the labor question outside this regulation: Ware v. Metropolitan Property and Casualty Insurance Co. allowed labor depreciation where the policy defined ACV as replacement cost less an allowance for physical deterioration and depreciation including obsolescence, while Arnold v. State Farm Fire and Casualty Co., 268 F. Supp. 3d 1297 (S.D. Ala. 2017), held that an undefined ACV term does not unambiguously permit labor depreciation. Because that split rests on contract interpretation of undefined terms rather than a statute or regulation resolving the labor question, it is not treated here as part of the statutory layer.

Citation: Ala. Admin. Code r. 482-1-125-.09

Source: https://www.law.cornell.edu/regulations/alabama/Ala-Admin-Code-r-482-1-125-.09

Recoverable depreciation holdback

No Alabama statute sets a holdback release deadline. On the related labor-depreciation question, Alabama courts are split depending on whether the policy defines ACV.

No Alabama statute or regulation specifically governing the timing or process for paying withheld recoverable depreciation was found. On the related scope question, a federal court applying Alabama law permitted labor depreciation where the policy defined ACV as replacement cost less an allowance for physical deterioration, depreciation, and obsolescence; a separate federal decision declined to hold that an undefined policy unambiguously permits labor depreciation.

Citation: Ware v. Metropolitan Prop. & Cas. Ins. Co., 220 F. Supp. 3d 1288 (M.D. Ala. 2016); Arnold v. State Farm Fire & Cas. Co., 2017 U.S. Dist. LEXIS 122051 (S.D. Ala. Aug. 3, 2017).

Source: https://www.hkr.law/survey-of-state-law-regarding-depreciation-of-labor-costs-in-determination-of-actual-cash-value/

RESEARCHED from scratch. No holdback-timing statute found; the labor-depreciation material is from a comprehensive, dated (Aug. 2025) 50-state survey, not independently re-verified against the primary opinions in this pass.

“No damages for delay” clause enforceability

Enforceable and strictly construed, with four recognized exceptions

The Alabama Supreme Court enforces a no-damages-for-delay clause strictly according to its terms, while recognizing (drawing on federal and Mississippi precedent) four exceptions: delay not contemplated by the parties under the provision's scope; delay resulting from fraud, misrepresentation, or other bad faith; delay extending for such an unreasonable length of time that it would justify treating the contract as abandoned; and delay involving active, deliberate interference with the work. In the case establishing this framework, none of the four exceptions applied because the parties had specifically anticipated the type of delay at issue and it lasted under 30 days.

Citation: RaCON, Inc. v. Tuscaloosa County, 953 So. 2d 321 (Ala. 2006)

Source: https://law.justia.com/cases/alabama/supreme-court/2006/1031512-5.html

Construction contract filing deadline

6 years for a written contract claim

Alabama's limitations period for actions on a written promise not under seal, or on a simple contract not otherwise specifically enumerated, is 6 years, covering an ordinary written construction-contract claim.

Citation: Ala. Code § 6-2-34

Source: https://law.justia.com/codes/alabama/title-6/chapter-2/article-2/section-6-2-34/

State unemployment insurance (SUTA)

New-employer rate is 2.7%, wage base $8,000. A separate, higher construction new-employer rate (previously stated as 8.2%) could NOT be confirmed as current for 2026 -- treat that figure as unverified rather than relied upon.

Confirmed directly: 2.7% new-employer rate and $8,000 wage base both hold for 2026 across multiple current sources. The '8.2% for construction' figure in the prior entry traces to a source explicitly discussing 2021 data, not 2026. Every current 2026-dated source found this pass describes only a single flat 2.7% new-employer rate with no mention of a separate construction figure, which could mean the construction-specific rate no longer exists, was folded into general rates, or these sources are simply incomplete on this point. This needs a real ADOL rate table check to resolve, not another round of secondary-source searching.

Citation: Alabama Department of Labor (ADOL).

Source: https://adol.alabama.gov/

Last checked: 2026-08-26

FLAGGED, not corrected: the previously stated 8.2% construction new-employer rate could not be independently confirmed as current. Its only traceable source is explicitly labeled 2021 data. Do not present 8.2% as a confirmed current figure until verified directly against ADOL's own current rate notice.

Workers' compensation rating

NCCI advisory rates and class codes apply

Alabama is an NCCI (National Council on Compensation Insurance) state. NCCI files advisory loss costs and maintains the standard workers' compensation classification codes used by private insurers writing coverage in Alabama; the Alabama Department of Insurance regulates rate filings built on those loss costs. There is no state fund and no independent state rating bureau.

Citation: NCCI State Advisory Forum, Alabama

Source: https://www.ncci.com/Articles/Pages/II_StateAdvisoryForumState_AL.aspx?state=Alabama

Prevailing wage law

No state prevailing-wage law (repealed 1980)

Alabama does not have a state-level prevailing wage statute analogous to the federal Davis-Bacon Act; its prior prevailing wage law was repealed in 1980. State and locally funded public construction in Alabama is governed by the Alabama Competitive Bid Law (Ala. Code Title 41, Chapter 16), which sets bidding procedures but imposes no prevailing wage floor. Federal Davis-Bacon requirements still apply automatically whenever a project receives federal funding, regardless of state law.

Citation: U.S. DOL Wage and Hour Division, State Prevailing Wage summary; Ala. Code Title 41, Ch. 16

Source: https://www.dol.gov/agencies/whd/state/prevailing-wages

OSHA plan

Federal OSHA (no state plan)

Alabama has no OSHA-approved state plan; both public and private employers fall under federal OSHA jurisdiction.

Citation: 29 U.S.C. § 667 (State Plan roster)

Source: https://www.osha.gov/stateplans

Weight of an OSHA violation in a negligence case

Evidence, not automatic; and Alabama is confirmed distinctive in a specific procedural way: it's noted as one of the only states permitting admission of the actual OSHA citation report itself, not just testimony about the underlying facts

A citation against a contractor for a safety violation is powerful evidence of negligence in a third-party lawsuit, but Alabama sources are explicit that OSHA violations don't automatically lead to a lawsuit or establish liability on their own. In Wyser v. Ray Sumlin Construction Co., 680 So. 2d 235, 238 (Ala. 1996), the Alabama Supreme Court held an OSHA report detailing various citations the employer received was admissible to show the employer's knowledge; a national survey source specifically flags Alabama as one of the only states permitting this kind of admission of the underlying citation document itself, where most other states' courts treat the OSHA report/citation paperwork as inadmissible (as irrelevant, unduly prejudicial, or hearsay) even while allowing the underlying facts of a violation to be proven through other evidence.

Citation: Wyser v. Ray Sumlin Construction Co., 680 So. 2d 235, 238 (Ala. 1996)

Source: https://law.justia.com/cases/alabama/supreme-court/1996/1940661-1.html

Third-party contribution against the employer

Statutory-employer defenses are listed as a live issue to check, but the source doesn't detail how Alabama's test works.

Third-party claims otherwise turn on premises possession, creation of the hazard, actual or constructive notice, retained control, active participation, and product defect. Alabama's contributory-negligence rule can independently bar recovery.

Citation: Ala. Code tit. 25, ch. 5; Reed v. Brunson, 527 So.2d 102 (Ala. 1988); Martin v. Arnold, 643 So.2d 564 (Ala. 1994).

Source: https://law.justia.com/cases/alabama/supreme-court/1988/527-so-2d-102-1.html

Source: attorney research manual (Construction Injury Law national volumes), self-marked "Draft; verify current law and citator status." Case citations are representative authorities from that manual, not independently re-verified against a citator by ClaimDuke.

Injury-severity gate on contribution claims

Alabama is one of only about 8 states that has NO intentional-act (or any) exception to workers-comp exclusivity -- confirmed real and current.

Alabama is independently confirmed via a specialty legal-industry 50-state survey (Matthiesen, Wickert & Lehrer) as one of a small handful of states -- alongside Georgia, Colorado, Delaware, Hawaii, Iowa, Rhode Island, and possibly Idaho -- that do not allow an injured employee to sue the employer or a co-employee even where the injury resulted from an intentional act.

Citation: Ala. Code Section25-5-52, Section25-5-53.

Source: https://www.mwl-law.com/workers-compensation-and-the-intentional-act-exception-to-the-exclusive-remedy-rule/

CORRECTED: the prior citation (Haddan v. Norfolk Southern Railway Co., 784 So.2d 1136 (Ala. 2000)) was drawn from a secondary attorney-research manual without independent confirmation and does not appear to be an intentional-tort-exception case on its face (Norfolk Southern Railway is a railroad, suggesting a FELA or different context). Replaced with a confirmed, current finding from an independent specialty survey.

Distinctive state doctrine

Strictest exclusivity rule confirmed in this dataset: no intentional-act exception against the employer entity at all

Under Ala. Code § 25-5-11(a), the employer remains immune from suit even if it acts intentionally; Alabama grants no intentional-tort exception against the employer itself, stricter than every other state in this dataset (including Colorado's narrow judicial exception and Tennessee's actual-intent requirement). Section 25-5-11(b) provides the only individual-liability path: an injured employee may sue a specific officer, director, agent, or co-employee of the same employer personally for willful conduct (but not the employer entity. Separately (not specific to construction, but relevant context for the broader negligence-rule variable), Alabama is one of the small handful of pure contributory-negligence states.)

Citation: Ala. Code § 25-5-11(a)-(b)

Source: https://codes.findlaw.com/al/title-25-industrial-relations-and-labor/al-code-sect-25-5-11/