On June 20, 2025, the Alabama Supreme Court handed State Farm Mutual Automobile Insurance Company a clear victory in a dispute over underinsured motorist (UIM) coverage, affirming that the insurer was within its rights to deny a claim filed outside the contractual time limit.
At the center of the case was Eric Jackson, a commercial tractor-trailer driver based in Kentucky, who was injured in a crash with another tractor-trailer in Morgan County, Alabama, in December 2020. Jackson held personal auto insurance with State Farm. Although the accident happened in Alabama, his policies were issued in Kentucky and delivered to his Kentucky address.
Those policies included UIM coverage, but also a crucial clause: claims for bodily injury under UIM had to be filed within the timeframe set by Kentucky law. Specifically, they cited a two-year limitation period established under the Kentucky Motor Vehicle Reparations Act. Another provision in the policies stated that “without regard to choice of law rules,” Kentucky law would govern any legal action under the policy.
Jackson waited nearly three years before attempting to bring State Farm into his lawsuit, which he filed in Alabama in 2022 against the at-fault driver. By October 2023, he amended his complaint to add State Farm and make a UIM claim - well past Kentucky’s two-year window.
State Farm denied the claim, pointing to the policy’s language and the governing Kentucky statute. Jackson argued that since he filed the suit in Alabama, the state’s six-year statute of limitations for contract claims should apply instead. He cited Alabama’s general policy of applying its own procedural rules to lawsuits filed within the state and claimed the contractual two-year limit was void under Alabama law.
But the Alabama Supreme Court saw it differently. The justices ruled that Jackson was bound by the contract he entered into in Kentucky. The policy language was not vague, the court said—it clearly incorporated Kentucky’s two-year statute for personal injury claims, and the choice-of-law provision made it enforceable. Since Jackson had agreed to those terms, the court found, his claim was barred by the limitation period.
“This case involves Kentucky parties who negotiated, in Kentucky, contracts... to which the parties agreed that Kentucky law - including a specific statute of limitations applicable in that state - would apply,” the court wrote in its unanimous decision.
The court also emphasized that this wasn’t a case of trying to get around Alabama’s public policy. Instead, it was a case of respecting a contractual agreement made in another state and applying it as written.
For insurance professionals, the case is a sharp reminder of the power of well-drafted policy 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.
While this was a personal auto policy, the principles at stake are equally relevant to commercial auto, fleet, and other cross-border risk lines. Carriers that issue policies across multiple jurisdictions should take note: incorporating local legal standards into policy language can serve as a powerful defense tool when claims arise in unexpected venues.
In this case, it also meant that a potential UIM payout never made it to the negotiating table—simply because the clock ran out.
