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. The bill also stipulates that cancellation or nonrenewal is ineffective unless based on specific reasons, such as nonpayment of premium or material misrepresentation. Additionally, it defines terms such as "affiliate transfer," "coverage restriction," and "substantially similar," which clarify the conditions under which policy transfers and renewals are treated.

Furthermore, the bill introduces a requirement for insurers to notify the Commissioner of any proposed coverage restrictions or nonrenewals affecting a category or group of policyholders at least 60 days in advance. It also ensures that any replacement policy issued by the same insurer or transfer to a licensed affiliate does not constitute a cancellation or nonrenewal, provided that the coverage remains substantially similar. The act is set to take effect on October 1, 2024, and includes provisions to ensure that if any part of the act is deemed invalid, the remainder will still be enforceable.

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