Best Center, a Texas-based limited liability company, purchased a commercial insurance policy from Steadfast to cover a former Walmart Supercenter property in Alabama. The policy was effective from October 28, 2016, to October 28, 2017, and was later renewed but subsequently canceled in March 2018 due to nonpayment.
Best Center claimed that its property was subjected to two separate incidents of vandalism and theft in 2017, including damage to the building and the theft of copper wiring and industrial equipment. The company estimated its losses at approximately $3 million. However, despite its awareness of the incidents, Best Center did not submit a formal claim to Steadfast until January 2019 - more than a year after the alleged damage occurred.
Upon receiving the claim, Steadfast conducted a multi-year investigation, which included emails, phone calls, site visits, and document requests. Ultimately, the insurer denied coverage in August 2021, citing a failure to comply with the policy's requirement for “prompt notice” of loss or damage.
The central issue in the case was whether Best Center had complied with the policy’s requirement that the insured must provide:
Best Center conceded that it had not provided official written notice of the loss until January 2019 but argued that the delay was unintentional and did not prejudice Steadfast. It cited various reasons for the late reporting, including the declining health of its principal owner, Robin Parsley, and the terminal illness of his assistant, who allegedly held key documentation related to the claim.
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The court, however, found these explanations insufficient. It noted that there was no evidence that the assistant’s illness, which was diagnosed in 2019, could have prevented the timely reporting of incidents that occurred in 2017. Similarly, while Mr. Parsley was hospitalized in 2024 and had ongoing health issues, the court found no evidence that his condition prevented him from reporting the claim earlier.
Under Alabama law, failure to provide prompt notice of an insurance claim is a condition precedent that can bar coverage, regardless of whether the delay prejudiced the insurer. The court cited precedent holding that even a five-month delay in reporting a loss could be considered unreasonable. Since Best Center waited over a year to report the theft and vandalism, the court found the delay to be “sufficiently protracted” to preclude recovery.
Based on these findings, the court granted Steadfast’s motion for summary judgment, ruling that Best Center’s failure to provide timely notice of the claim rendered its lawsuit invalid.
Best Center had also brought multiple claims against Steadfast, including breach of contract, bad faith, and violations of the Texas Insurance Code. However, because the court determined that Best Center failed to meet a fundamental policy condition, all of its claims were dismissed.
Additionally, the court addressed a dispute over whether Texas or Alabama law applied to the case. Because the insurance policy contained multiple references to Alabama law - including provisions stating that the contract was “registered and delivered” under Alabama surplus lines insurance law - the court ruled that Alabama law governed the dispute.
The decision underscores the importance of timely reporting in commercial insurance claims. Under Alabama law, an insured party’s failure to comply with prompt notice provisions can be fatal to a claim, even if the delay does not demonstrably harm the insurer.
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For business clients, the case serves as a cautionary tale about the need to document and report losses promptly. It also highlights the risks of relying on verbal notifications or assumptions that third parties, such as insurance agents, will file claims on their behalf. In this case Best Center tried to claim they believed that their agent would claim on their behalf.
For insurers, the ruling reaffirms the enforceability of policy conditions related to notice and demonstrates the courts’ willingness to uphold these provisions strictly.
Best Center now faces a significant setback, as its multimillion-dollar claim will not be covered. The ruling reinforces the principle that failure to adhere to an insurance policy’s procedural requirements can result in the loss of coverage, regardless of the legitimacy of the underlying claim.
