This bill pertains to the regulation of property insurance policy cancellations, nonrenewals, or coverage restrictions in Alabama. It mandates that insurers provide written notice to insured parties and any named creditor loss payee at least 30 days before the effective date of policy cancellation or nonrenewal, except in cases of nonpayment of premiums, where at least 10 days' notice is required if there is a named creditor loss payee. The bill also stipulates that the cancellation and nonrenewal notice requirements do not apply when a replacement policy form is issued by the same insurer or when an insured is transferred to a licensed affiliate, provided that the coverage remains the same or substantially similar. In such cases, the insurer must still notify the insured of any less favorable terms or conditions at least 30 days before the renewal date.

The bill defines various terms, including "affiliate transfer," "cancellation," "coverage restriction," "insurer," "nonpayment of premium," "nonrenewal," and "property insurance." It also outlines specific reasons that must be cited for a policy cancellation to be effective, such as nonpayment of premium, material misrepresentation, policy violation, fraudulent claims, or substantial increase in risk due to property defects or changes. Insurers are required to notify the Commissioner and policyholders 60 and 30 days in advance, respectively, of any coverage restrictions or nonrenewals that apply to a category or group of policyholders and are not based on prior claims history. The act is set to become effective on October 1, 2024.

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