The bill amends Section 8-37A-4 of the Code of Alabama 1975, which pertains to motor vehicle value protection agreements. It introduces new requirements for providers of these agreements to ensure they can fulfill their obligations to contract holders. Specifically, the bill mandates that providers must insure their agreements under a policy that pays or reimburses obligations in the event of non-performance. The insurance must be issued by a licensed insurer with specific financial criteria, including a minimum surplus and capital requirements. Additionally, the insurer is required to submit annual financial statements to the Commissioner of Insurance.

Furthermore, the bill outlines alternative compliance methods for providers, such as maintaining a funded reserve account and a financial security deposit, or demonstrating a substantial net worth. The reserve account must be at least 40% of gross consideration received, while the financial security deposit must be at least 5% of gross consideration, with a minimum of $25,000. The bill also allows for various forms of security to meet these requirements. Overall, the amendments aim to enhance consumer protection in the sale or lease of motor vehicles by ensuring that providers are financially capable of honoring their agreements.