AL
Alabama House Bill HB8

Alabama 2024 Regular Session

Alabama House Bill HB8 Compare Versions

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55 By Representative Brown
66 RFD: Insurance
7-First Read: 06-Feb-24
8-PFD: 01-Dec-23
7+First Read: 05-Feb-24
8+2024 Regular Session
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14-6 HB8 Engrossed
14+6 K6YQAA-1 09/07/2023 SLU (L)SLU 2023-2689
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16-PFD: 01-Dec-23
16+2024 Regular Session
17+SYNOPSIS:
18+Under existing law, there is no state law
19+generally requiring insurers to provide a person
20+insured under a property insurance policy with prior
21+notice of policy cancellation, nonrenewal, or reduction
22+of coverage.
23+This bill would require insurers to provide
24+persons insured under property insurance polices at
25+least 90 days prior written notice of a policy
26+cancellation, nonrenewal, or coverage restriction.
27+This bill would also deem policy cancellation,
28+nonrenewal, or reduction of coverage by an insurer
29+ineffective under certain limited circumstances.
1730 A BILL
1831 TO BE ENTITLED
1932 AN ACT
20-Relating to cancellation, nonrenewal, or restriction of
33+Relating to cancellation, nonrenewal or reduction of
2134 coverage under a property insurance policy; to require
22-insurers to provide certain persons insured under a property
35+insurers to provide any person insured under a property
2336 insurance policy with certain written notice prior to
2437 cancellation, nonrenewal, or coverage restriction of the
25-policy; and to deem cancellation, nonrenewal, or coverage
26-restriction by an insurer ineffective under certain limited
27-circumstances.
28-BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
29-Section 1. As used in this section, the following terms
30-have the following meanings:
31-(1) AFFILIATE TRANSFER. When an insurer transfers, at
32-renewal or policy expiration, its personal lines property
33-insurance policies or commercial lines property insurance
34-policies to an affiliated licensed insurer that is a member of
35-the same insurance group or same holding company as the
36-transferring insurer. The issuance of a replacement policy
37-form providing the same or substantially similar coverage
38-issued by the same insurer, or the transfer of personal lines
39-property insurance policies or commercial lines property
38+policy; and to deem cancellation, nonrenewal or coverage
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69-property insurance policies or commercial lines property
70-insurance policies to a licensed affiliate insurer that will
71-issue the same or substantially similar policy, is considered
72-a renewal and will not be treated as a cancellation or
73-nonrenewal. The policy transfer must be selected on a
74-nondiscriminatory basis.
75-(2) CANCELLATION. The decision by an insurer in
76-accordance with Section 2 to terminate coverage to a
77-policyholder prior to the expiration of the current term.
78-(3) COVERAGE RESTRICTION. Any imposition of a wind
79-exclusion or hurricane deductible, or increasing an existing
80-hurricane deductible, where the restriction applies to a
81-category or group of policyholders at renewal and is not a
82-result of prior claims history.
83-(4) INSURER. Includes authorized insurers and
84-unauthorized insurers as defined in Section 27-1-2, Code of
85-Alabama 1975, and surplus lines insurers providing property
86-insurance policies on risks located in the state of Alabama.
87-The term shall not apply to a liability self-insurance fund as
88-defined in Section 11-30-1, Code of Alabama 1975.
89-(5) NONPAYMENT OF PREMIUM. The failure of the named
90-insured to, when due, discharge any of his or her obligations
91-in connection with the payment of premiums on a policy of
92-insurance or any installment of such premium, whether the
93-premium is payable directly to the insurer or its agent or
94-indirectly under any premium finance plan or extension of
95-credit.
96-(6) NONRENEWAL. The decision by an insurer to not renew
97-coverage to a policyholder for an additional term.
68+policy; and to deem cancellation, nonrenewal or coverage
69+restriction by an insurer ineffective under certain limited
70+circumstances.
71+BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
72+Section 1. (a) As used in this section, the following
73+terms have the following meanings:
74+(1) COVERAGE RESTRICTION. The imposition of a new wind
75+exclusion, hurricane or named-storm deductible, or increase of
76+an existing hurricane or named-storm deductible.
77+(2) INSURER. The same meaning as defined in Section
78+27-1-2, Code of Alabama 1975.
79+(3) NONRENEWAL OF COVERAGE. Not offering to continue
80+existing coverage.
81+(4) PROPERTY. Real estate used primarily for
82+residential or commercial purposes.
83+(b) A cancellation, nonrenewal, or coverage restriction
84+under a property insurance policy shall not be effective as to
85+any policy issued or renewed on or after the effective date of
86+this act except under the following conditions:
87+ (1) Until the insurer delivers written notice to the
88+named insured and any named creditor loss payee in a manner
89+consistent with any delivery of notice requirements set forth
90+in the policy not less than 90 days prior to the effective
91+date of the proposed cancellation, nonrenewal, or coverage
92+restriction.
93+(2) Until the passage of at least 90 days after
94+completion of repairs to the property, if the damage was a
95+result of a hurricane or wind loss arising from a natural
96+disaster or a public heath emergency pursuant to Section
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127-coverage to a policyholder for an additional term.
128-(7) PROPERTY INSURANCE. The term includes homeowners
129-insurance, condominium insurance, dwelling fire policies that
130-provide dwelling or contents coverage, renters or tenants
131-insurance, mobile home or manufactured home insurance, and
132-commercial lines policies. Creditor placed property insurance
133-and automobile insurance are excluded.
134-(8) SUBSTANTIALLY SIMILAR. A policy that provides the
135-same basic coverages but may add, alter, or eliminate
136-incidental coverages and may provide coverages using different
137-textual language.
138-Section 2. (a) This section shall not apply to property
139-insurance policies issued to any of the following:
140-(1) Any state, county, or local government or any
141-boards, councils, commissions, or committees thereof.
142-(2) Any entity organized under the statutory authority
143-of, and whose members, directors, trustees, or stockholders
144-are selected, appointed, or chosen by, the chief executive
145-officer or governing body of a state, county, or local
146-government.
147-(b)(1) A cancellation or nonrenewal of a property
148-insurance policy is not effective as to any coverage issued or
149-renewed after January 1, 2026, unless notice is mailed or
150-delivered to the insured and to any named creditor loss payee
151-by the insurer not less than 30 days prior to the effective
152-date of the cancellation or nonrenewal. This section shall not
153-apply to nonpayment of premiums unless there is a named
154-creditor loss payee, in which case at least 10 days' notice is
155-required.
126+disaster or a public heath emergency pursuant to Section
127+31-9-8, Code of Alabama 1975.
128+(3) Until the earlier of both of the following if the
129+property is damaged by any covered peril and subdivision (2)
130+does not apply:
131+a. The date that repairs to the property are completed.
132+b. One year after the insurer issues the final claim
133+payment.
134+(c) This section shall not apply to cancellation of a
135+policy for nonpayment of a premium unless there is a named
136+creditor loss payee on the policy, in which case the
137+cancellation shall not be effective until the insurer delivers
138+written notice to the named insured and the creditor loss
139+payee in a manner consistent with any delivery of notice
140+requirements set forth in the policy not less than 10 days
141+prior to the effective date of the proposed cancellation.
142+(d) All property insurance polices issued, revised, or
143+renewed on or after the effective date of this act adding this
144+section shall comply with subsection (b) and shall be deemed
145+implied in any policy in which the requirements in subsection
146+(b) are not expressly stated.
147+Section 2. This act shall become effective on the first
148+day of the third month following its passage and approval by
149+the Governor, or its otherwise becoming law.
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185-required.
186-(2) The cancellation and nonrenewal notice requirements
187-of this section shall not apply when a replacement policy form
188-is issued by the same insurer or when a transfer of an insured
189-to a licensed affiliate of the insurer occurs, so long as the
190-replacement of policy forms or transfer results in the same or
191-substantially similar coverage and the insurer mails or
192-delivers to the insured at least 30 days prior to the renewal
193-effective date notice of any term or condition that is less
194-favorable to the policyholder.
195-(3) The provisions of subdivisions (1) and (2) shall be
196-incorporated into each property insurance policy issued or
197-renewed after January 1, 2026, and if the provisions are not
198-expressly stated in the policy, the provisions shall be deemed
199-to be incorporated in the policy.
200-(c) Whenever a replacement policy form is issued by the
201-same insurer or when transfer of an insured to a licensed
202-affiliate occurs, documents signed by the insured are
203-applicable to the replacement policy form, or the coverage is
204-transferred to the licensed affiliate insurer, or both, and
205-the policy shall remain valid and enforceable.
206-(d) A transferring insurer shall provide the
207-policyholder written notice of the policy transfer at least 30
208-days prior to expiration of the policy term. The notice must
209-be provided to the policyholder with the notice of renewal
210-premium at least 30 days before the effective date of the
211-transfer.
212-(e) No notice of cancellation of a property insurance
213-policy shall be effective unless it is based on one or more of
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243-policy shall be effective unless it is based on one or more of
244-the following reasons:
245-(1) Nonpayment of premium.
246-(2) The policy was obtained through a material
247-misrepresentation.
248-(3) An insured violated any of the terms and conditions
249-of the policy.
250-(4) An insured made a false or fraudulent claim or
251-knowingly aided or abetted another in the presentation of such
252-a claim.
253-(5) Failure to maintain membership in any group or
254-organization when such membership is a prerequisite to the
255-purchase of the insurance.
256-(6) The insured property is so mechanically or
257-structurally defective or changed in shape or condition during
258-the policy period so as to increase the risk substantially.
259-(f)(1) Every insurer selling property insurance shall
260-provide written notice of a coverage restriction or
261-nonrenewal, where the nonrenewal applies to a category or
262-group of policyholders at renewal and is not a result of prior
263-claims history, to the Commissioner no less than 60 days prior
264-to the effective date of the proposed coverage restriction or
265-category or group nonrenewal. The notice shall include the
266-type of policies, the type of coverage restrictions, the
267-category or group of policyholders to be affected, the number
268-of policyholders to be affected, and the names of the Alabama
269-counties in which policyholders to be affected reside.
270-(2) Every insurer selling property insurance shall
271-provide written notice of a coverage restriction or
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301-provide written notice of a coverage restriction or
302-nonrenewal, where the nonrenewal applies to a category or
303-group of policyholders at renewal and is not a result of prior
304-claims history, to the policyholder no less than 30 days prior
305-to the effective date of the proposed coverage restriction or
306-category or group nonrenewal.
307-(g)(1) Subsections (e) and (f) shall not apply to any
308-property insurance policy which has been in effect less than
309-60 days at the time notice of cancellation is mailed or
310-delivered by the insurer unless it is a renewal policy.
311-(2) Renewal of a property insurance policy shall not
312-constitute a waiver or estoppel with respect to grounds for
313-cancellation which existed before the effective date of the
314-renewal.
315-(3) Proof of mailing or delivery of notice of
316-cancellation, coverage restriction, nonrenewal, or of reasons
317-for cancellation to the policyholder shown in the policy shall
318-be sufficient proof of notice.
319-(4) Where the reason or reasons for cancellation do not
320-accompany or are not included in the notice of cancellation,
321-the insurer, upon written request of the policyholder, shall
322-mail or deliver notice to the policyholder not less than 15
323-days prior to the effective date of cancellation and specify
324-in writing the reason or reasons for the cancellation. The
325-reasons shall be mailed or delivered to the named insured
326-within five days after nonpayment of the premium. This
327-subdivision shall apply only to a cancellation.
328-(h) There shall be no liability on the part of and no
329-cause of action of any nature shall arise against any insurer,
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359-cause of action of any nature shall arise against any insurer,
360-its authorized representative, its agents, its employees, or
361-any person furnishing to the policyholder any information as
362-to cancellation, coverage restriction, or nonrenewal, for any
363-statement made by any of them in any written notice of
364-cancellation, coverage restriction, or nonrenewal, or for the
365-providing of information pertaining thereto, or for statements
366-made or evidence submitted at the hearings conducted in
367-connection therewith.
368-(i) If any portion of this act or its applicability to
369-any person or circumstance is held invalid by a court, the
370-remainder of the act or the applicability of the provision to
371-other persons or circumstances shall not be affected.
372-Section 3. This act shall become effective on October
373-1, 2024.
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389-1, 2024.
390-House of Representatives
391-Read for the first time and referred
392-to the House of Representatives
393-committee on Insurance
394-................06-Feb-23
395-Read for the second time and placed
396-on the calendar:
397- 0 amendments
398-................06-Mar-24
399-Read for the third time and passed
400-as amended
401-Yeas 102
402-Nays 0
403-Abstains 0
404-................04-Apr-24
405-John Treadwell
406-Clerk
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