An insurer's push to sort out its coverage duties can't be frozen just because the underlying lawsuit is still going, Alabama's top court ruled.
On August 7, 2026, the Supreme Court of Alabama sided with the Association of County Commissions of Alabama Liability Self-Insurance Fund, telling a trial court to lift a stay on the fund's coverage case - but only halfway.
The story starts in February 2020, when a group of Greene County workers sued the Greene County Commission. They said they were hurt by rodent infestations and faulty air-conditioning and roofing while working in a county courthouse, bringing claims of negligence, outrage, trespass and nuisance.
The commission was a member of the association's self-insurance fund, which had a duty to defend it against certain claims. The association says it has been defending the commission under a reservation of rights - keeping up the defense while reserving the right to argue later that it owed no coverage.
In June 2024, the fund filed its own action asking a court to declare it owed nothing, pointing to several exclusions. The agreement defined a covered "occurrence" as "an accident, including continuous or repeated exposure to … substantially the same general harmful conditions or series of related accidents." The fund also cited exclusions for injury "expected or intended from the standpoint of the covered person," for pollutants and contaminants, and for exposure to "asbestos or any other hazardous material or substance."
The workers and the commission moved to throw out the coverage case. In December 2025, the circuit court hit pause instead, staying it until the injury suit finished.
That went too far on one point, the Supreme Court said. Leaning on its earlier ruling in Ex parte Alfa, it held that the duty to defend is a separate question from the injury suit and can be decided now. Courts weigh that duty from "the allegations of the complaint," it noted - not from how the case ends.
But the justices drew a firm line. They declined to lift the stay on the fund's indemnity arguments - questions about coverage limits, such as a single-occurrence cap and a "Fungi or Bacteria" limit - because the association pointed to no precedent for forcing those ahead.
The takeaway for insurers: a duty-to-defend question can move on its own track, even while the claim behind it is still alive.
