Code of Alabama
Ala. Code § 27-42-2 (2026)
Purpose of Chapter.
✓ official Alabama Legislature (ALISON) text, current July 2026
The purpose of this chapter is to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payments and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies and to provide an association to assess the cost of such protection among insurers.
(Acts 1980, No. 80-806, p. 1639, §2.)
Notes of Decisions
Cited in 7
cases, 1989–2013 · leading case: Alabama Ins. Guar. Ass'n v. Ass'n of Gen. Contractors Self-Insurer's Fund, 80 So. 3d 188 (Ala. 2010).
Alabama Ins. Guar. Ass'n v. Ass'n of Gen. Contractors Self-Insurer's Fund, 80 So. 3d 188 (Ala. 2010). “" Ala.Code 1975, § 27-42-2. As it existed at the time the claim arose in the present case, the Guaranty Act defined a "covered claim" as "[a]n unpaid claim, including one of unearned premiums, which arises out of, and is within the coverage and not in excess of, the applicable…”
Alabama Ins. Guar. Ass'n v. Mercy Med. Ass'n, 120 So. 3d 1063 (Ala. 2013). “” § 27-42-2, Ala.Code 1975. In October 2001, Reliance was declared insolvent and Keao’s workers’ compensation claim was forwarded to AIGA.”
Alabama Ins. Guar. Ass'n v. Pierce, 551 So. 2d 310 (Ala. 1989). “The purpose of the Act is to provide a mechanism for payment for covered claims under certain insurance policies, § 27-42-2, and a “covered claim” is defined as follows: “An unpaid claim, including one of unearned premiums, which arises out of and is within the coverage and not…”
Com. Union Ins. v. Sepco Corp., 918 F.2d 920 (11th Cir. 1990). “This is clear in light of the Act’s purpose as expressed by Ala.Code § 27-42-2 (Rep.Vol.1986) (emphasis added): The purpose of this chapter is to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payments and to…”
Alabama Ins. Guar. Ass'n v. Hollingsworth, 613 So. 2d 1204 (Ala. 1991). “” § 27-42-2. The Guaranty Association contends that it would be entitled to the setoff because of § 27-42-12(a), which states: “(a) Any person having a claim against an insurer under any provision in an insurance policy other than a policy of an insolvent insurer which is also a…”
Gibson v. Alabama Ins. Guar. Ass'n, 601 So. 2d 416 (Ala. 1992). “” § 27-42-2. In creating the AIGA, the Alabama legislature said that the Act “shall be liberally construed to effect the purpose under § 27-42-2 which will constitute an aid and guide to interpretation.”
Alabama Ins. Guar. Ass'n v. Water Works & Sanitary Sewer Bd. of the City of Montgomery, 93 So. 3d 94 (Ala. 2012). “” § 27-42-2, Ala.Code 1975. In July 2003, Legion was declared insolvent and, pursuant to the AIGA Act, Bat-son’s workers’ compensation claim was forwarded to AIGA.”
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