SB48 Summary

• Amends Alabama Code Section 8-37-2 to expand the definition of GAP (Guaranteed Asset Protection) waivers to include excess wear and use waivers for consumer lease agreements covering excessive wear, mileage, and damage.

• Creates new Chapter 37A establishing a regulatory framework for motor vehicle value protection agreements that provide benefits toward reducing finance agreement deficiency balances or purchasing replacement vehicles based on adverse events like loss, theft, damage, or depreciation.

• Exempts motor vehicle value protection agreements from insurance licensing and regulation requirements if providers comply with one of three financial security options: insurance policy backing, funded reserve accounts with 40% reserves plus 5% security deposit, or net worth of $100 million.

• Requires providers to disclose agreement terms in clear language including eligibility, coverage conditions, exclusions, cancellation procedures, refund methodology, and a minimum 30-day free look period for cancellation without penalty.

• Authorizes the Superintendent of Banks to enforce compliance, issue cease-and-desist orders, and impose penalties up to $500 per violation with $10,000 aggregate maximum for similar violations; becomes effective January 1, 2023.