The proposed bill aims to enhance consumer protections regarding property insurance policies in Alabama by establishing new requirements for insurers concerning 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 it is based on specific reasons, such as nonpayment of premium or material misrepresentation. Additionally, it allows for the transfer of policies to affiliated insurers without being classified as a cancellation or nonrenewal, provided that the new policy offers substantially similar coverage.

The bill introduces several definitions, including "affiliate transfer," "coverage restriction," and "substantially similar," to clarify the terms used throughout the legislation. It also outlines the responsibilities of insurers to notify the Commissioner of any proposed coverage restrictions affecting groups of policyholders at least 60 days in advance. Furthermore, the bill includes provisions to protect insurers from liability for statements made in written notices regarding cancellations or coverage restrictions. The act is set to take effect on October 1, 2024, and includes a severability clause 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