The proposed bill aims to enhance consumer protections regarding property insurance policies in Alabama by establishing new requirements for insurers related to cancellation, nonrenewal, or coverage restrictions. Key provisions include a mandate for insurers to provide written notice to policyholders and any named creditor loss payees at least 30 days prior to the effective date of cancellation or nonrenewal, with a shorter notice period of 10 days applicable in cases of nonpayment of premiums. Additionally, the bill stipulates that cancellation or nonrenewal is ineffective unless based on specific reasons, such as nonpayment of premium or material misrepresentation. Insurers are also required to notify the Commissioner of any proposed coverage restrictions affecting a group of policyholders at least 60 days in advance.

The bill introduces definitions for terms such as "affiliate transfer," "cancellation," "coverage restriction," and "nonrenewal," while also clarifying that the transfer of policies to an affiliated insurer will not be treated as a cancellation or nonrenewal if the coverage remains substantially similar. Furthermore, it specifies that the provisions regarding notice requirements must be incorporated into property insurance policies issued or renewed after January 1, 2026. The act is set to take effect on October 1, 2024, and includes a clause ensuring that if any part of the act is deemed invalid, the remaining provisions will still apply.

Statutes affected:
Introduced: 27-1-2
Engrossed: 27-1-2, 11-30-1