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 placing a financial security deposit with the Superintendent of Banks. The reserve must be a minimum percentage of gross consideration received, while the security deposit must be at least five percent of the gross consideration, with a minimum value of $25,000. The bill also stipulates that providers or their parent companies must maintain a net worth of at least $100 million and provide financial documentation upon request. These changes aim to enhance consumer protection in the sale or lease of motor vehicles.