Alabama HB 466: Service contracts; terms defined; certain disclosures in advertising required; disclosures of limitations of contracts further provided for

Bill Text

HB466 INTRODUCED
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HB466
CXX1GJJ-1
By Representative McCampbell
RFD: Commerce and Small Business
First Read: 20-Mar-25
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CXX1GJJ-1 03/13/2025 ZAK (L)ZAK 2025-920
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First Read: 20-Mar-25
SYNOPSIS:
Generally, pursuant to the terms of a service
contract, a provider agrees to repair, replace, or
provide a refund for covered property that is
operationally or functionally failing.
This bill would require that when advertising a
service contract, the advertisement must disclose any
right to refund a contract holder in an amount less
than the provider's cost to repair or replace covered
property.
This bill would further provide for the
limitations, exceptions, and exclusions of service
contracts that must be disclosed.
This bill would also make nonsubstantive,
technical revisions to update the existing code
language to current style.
A BILL
TO BE ENTITLED
AN ACT
Relating to service contracts; to amend Sections
8-32-2, 8-32-3, and 8-32-5, Code of Alabama 1975, to require
certain disclosure when advertising contracts; to further
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certain disclosure when advertising contracts; to further
provide for the limitations, exceptions, and exclusions of
contracts that must be disclosed; and to make nonsubstantive,
technical revisions to update the existing code language to
current style.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 8-32-2, 8-32-3, and 8-32-5, Code of
Alabama 1975, are amended to read as follows:
"§8-32-2
As used in this chapter, the following terms shall have
the following meanings:
(1) ADMINISTRATOR. The person designated by a provider
to be responsible for the administration of service contracts
or the service contracts plan or to make the filings required
by this chapter.
(2) COMMISSIONER. The Commissioner of Insurance of this
state.
(3) CONSUMER. A natural person who buys, primarily for
personal, family, or household purposes, and not for resale,
any tangible personal property normally used for personal,
family, or household purposes and not for commercial or
research purposes.
(4) MAINTENANCE AGREEMENT. A contract of limited
duration that provides for scheduled maintenance only.
(5) MANUFACTURER. A person that is one of the
following:
a. A manufacturer or producer of property that sells
the property under its own name or label.
b. A subsidiary of the person who manufactures or
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b. A subsidiary of the person who manufactures or
produces the property.
c. A corporation which that owns at least 80 percent of
the person who that manufactures or produces the property.
d. A person who that manufactures or produces the
property even though the property is sold under the trade name
or label of another person.
(6) MECHANICAL BREAKDOWN INSURANCE. For purposes of
this chapter, a policy, contract, or agreement issued by an
authorized insurance company directly to a consumer or other
owner of property that provides for, among other coverages,
the repair, replacement, or maintenance of property or
indemnification for repair, replacement, or maintenance, for
the operational or structural failure of the property due to a
defect in materials or workmanship or due to normal wear and
tear.
(7) NON-ORIGINAL MANUFACTURER'S PARTS. Replacement
parts not made for or by the original manufacturer of the
property, commonly referred to as "after market parts."
(8) PERSON. An individual, partnership, corporation,
incorporated or unincorporated association, joint stock
company, reciprocal, syndicate, or any other entity, or
combination of persons acting in concert.
(9) PREMIUM. The consideration paid to an insurer for a
reimbursement insurance policy.
(10) PROVIDER. A person who administers, makes,
provides, sells, or offers to sell a service contract, who is
contractually obligated to provide service under a service
contract.
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contract.
(11) PROVIDER FEE. The total purchase price paid for a
service contract. In cases where a reimbursement insurance
policy is issued to a provider, the "provider fee" is the
total purchase price paid for a service contract net of the
premium.
(12) REFUND. To refund the price of covered property or
a component thereof, less reasonable depreciation, if:
a. The replacement or repair of the property is not
commercially practicable; or
b. The contract holder agrees to accept a refund in
place of the replacement or repair.
(12)(13) REIMBURSEMENT INSURANCE POLICY. A policy of
insurance issued to a provider pursuant to which the insurer
agrees, for the benefit of the service contract holders, to
discharge the obligations of the provider under the terms of
the service contracts in the event of non-performance
nonperformance by the provider.
(14) REPAIR. The restora