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

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, the Alabama Supreme Court has held that for destruction of or injury to property with an ascertainable money value, interest is added to the damages from the date the injury was done. In Roe v. Brown, involving a car damaged in an intersection collision, the court applied that rule and affirmed a judgment slightly above the amount claimed because the difference could properly be treated as interest.

Citation: Roe v. Brown, 249 Ala. 425, 31 So. 2d 599 (1947); Atlanta & Birmingham Air Line Ry. v. Brown, 158 Ala. 607, 48 So. 73 (1908); Nelson v. AmSouth Bank, N.A., 622 So. 2d 894 (Ala. 1993)

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

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 say whether labor may be depreciated. On the labor question, federal courts applying Alabama law have split: 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. held that an undefined ACV term does not clearly permit it. That split turns on policy wording, not on the regulation.

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 or regulation sets a deadline for releasing withheld depreciation. On labor depreciation, federal courts applying Alabama law have split depending on whether the policy defines ACV.

Alabama's claims-settlement regulation, Ala. Admin. Code r. 482-1-125-.09, sets how actual cash value is determined on replacement-cost policies but does not set a time limit for paying held-back depreciation, so the policy terms control the release. On labor depreciation, a federal court applying Alabama law allowed it 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 ACV term clearly permits it. With no statute in play the policy is the whole of the law here, so read three things in it: what proof of completed repairs the insurer can require, how long the insured has to claim the withheld depreciation and whether that period can be extended in writing. Policy deadlines commonly run from 180 days to two years from the date of loss and they are enforced as written. Ask for the extension before the period runs rather than after.

Citation: Ware v. Metropolitan Prop. & Cas. Ins. Co., 220 F. Supp. 3d 1288 (M.D. Ala. 2016); Arnold v. State Farm Fire & Cas. Co., 268 F. Supp. 3d 1297 (S.D. Ala. 2017).

Source: https://www.courtlistener.com/opinion/7326895/arnold-v-state-farm-fire-casualty-co/

“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. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

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 employers pay 2.70% on the first $8,000 of each employee's wages until they qualify for an experience rating.

The Alabama Department of Workforce states that employers newly liable under the Alabama unemployment compensation law pay 2.70% on the first $8,000 of wages for each employee, with no separate new-account rate by industry. Later rates are set each year by experience rating based on the employer's own claims history. The department sends each employer an annual rate notice.

Citation: Alabama Department of Workforce, Unemployment Compensation new account rate

Source: https://workforce.alabama.gov/faqs/what-is-the-new-account-rate/

Last checked: 2026-09-17

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

Comparative / contributory negligence rule

Pure contributory negligence, any fault bars recovery entirely

Any fault attributable to the injured worker, even 1%, defeats the claim. This is the harshest of the four systems and only a handful of jurisdictions still apply it.

Citation: John Cowley & Bros., Inc. v. Brown, 569 So. 2d 375 (Ala. 1990)

Source: https://www.findlaw.com/injury/accident-injury-law/what-is-contributory-negligence.html

Verified against: the rule as stated in the cited decision and confirmed across current secondary surveys of the five contributory jurisdictions

Non-economic damages cap

No general cap on non-economic damages

Most states cap non-economic damages only in medical malpractice actions, which does not reach a third-party construction claim. Economic losses, medical bills, lost wages, future earning capacity, are not capped by these statutes.

OSHA plan

Federal OSHA (no state plan)

Alabama has no OSHA-approved state plan; both public and private employers fall under federal OSHA jurisdiction. Under federal jurisdiction the citation is issued by an OSHA area office and contested before the federal Occupational Safety and Health Review Commission. Federal OSHA does not cover state and local government employees, so a public employee injured on a public job falls outside it. Reporting deadlines are a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

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

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

Weight of an OSHA violation in a negligence case

OSHA violations are evidence of negligence in Alabama, not automatic liability. The Alabama Supreme Court has allowed an OSHA report listing an employer's citations into evidence to show what the employer knew.

A citation against a contractor for a safety violation can be strong evidence of negligence in a third-party lawsuit, but an OSHA violation does not establish liability on its own. In Wyser v. Ray Sumlin Construction Co., 680 So. 2d 235, 238 (Ala. 1996), the Alabama Supreme Court held that an OSHA report detailing citations the employer had received was admissible to show the employer's knowledge. Courts in many other states keep the citation paperwork itself out while allowing the underlying facts to be proven another way, so the form of the evidence is worth checking before trial.

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

Workers' compensation does not bar the injured worker's suit against a negligent party other than the employer. That claim follows ordinary Alabama negligence rules. Contributory negligence can bar recovery outright.

Ala. Code § 25-5-11 preserves the injured worker's right to sue a party other than the employer whose conduct caused the injury, while limiting suits against co-employees to willful conduct. To establish negligence against that third party, the worker must prove a duty to a foreseeable plaintiff, a breach of that duty, proximate cause and damage. Wantonness requires proof that the defendant, with reckless indifference to the consequences, consciously and intentionally did a wrongful act or omitted a known duty. In Martin v. Arnold, the Alabama Supreme Court affirmed summary judgment for a driver because the evidence did not show his conduct proximately caused the fatal collision. Alabama's pure contributory-negligence rule can independently bar recovery.

Citation: Ala. Code § 25-5-11; Martin v. Arnold, 643 So. 2d 564, 567 (Ala. 1994)

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

Injury-severity gate on contribution claims

No intentional-injury exception against the employer for the workplace injury itself. Co-employees can be sued for willful conduct. Separate torts such as fraud or outrage are not barred.

Ala. Code §§ 25-5-52 and 25-5-53 make workers' compensation the exclusive remedy against the employer for an on-the-job injury. Ala. Code § 25-5-11 allows a suit against a co-employee, officer or supervisor only for willful conduct as that section defines it: a purpose, intent or design to injure, or the willful removal of a manufacturer's safety guard with knowledge that injury would likely result. In Reed v. Brunson, the Alabama Supreme Court upheld that limit and held that evidence of negligence or even wantonness is not enough; the worker needs evidence of a reason to injure or that injury was substantially certain to follow. The court has also held that the exclusivity provisions do not shield an employer from intentional torts separate from the injury itself, such as fraud or outrageous conduct. A fraud claim must be supported by clear and convincing proof.

Citation: Ala. Code §§ 25-5-11, 25-5-52, 25-5-53; Reed v. Brunson, 527 So. 2d 102 (Ala. 1988); Lowman v. Piedmont Executive Shirt Mfg. Co., 547 So. 2d 90 (Ala. 1989)

Source: https://www.courtlistener.com/opinion/1861832/lowman-v-piedmont-exec-shirt-mfg-co/

Distinctive state doctrine

The employer itself has no intentional-injury exception; the willful-conduct route runs only against individual co-employees and officers

Under Ala. Code § 25-5-11(a), the employer remains immune from suit for the injury even if it acts intentionally. 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, Alabama is one of the few jurisdictions that keeps pure contributory negligence, which can bar a third-party claim outright.

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/