Alabama

The relevant statute and regulations are the Consumer Finance Act, Ala. Code §§5-19-1 et seq. (“AL-CFA”) and the Alabama Consumer Credit Act Regulations, Chapter 155-2-2-.01 et seq. (“AL-REGS”).

A. Actions creditor may take: AL-CFA §5-19-20(c); AL-REGS §§155-2-2-.12(8), 155-2-2-.12(10) - If the debtor fails to purchase any required property insurance, the creditor may purchase single-interest insurance, or, with the debtor's written consent, may purchase dual-interest insurance. The creditor may obtain the debtor's written consent to place dual-interest insurance when the consumer credit contract is executed, or when such insurance is placed. Single-interest coverage may not exceed the retail value of the collateral or the net payoff on the account, whichever is less, at the time of the insurance contract. The term of any single-interest insurance may not exceed the approximate remaining term of the credit, and the amount of single-interest insurance may not exceed the approximate amount of the unpaid balance of the debt, excluding any unearned finance charges.

B. Notices required: AL-REGS §155-2-2-.12(10) - A creditor may obtain single-interest coverage only after giving the debtor written notice of the cancellation or lack of dual-interest coverage. The debtor then has 15 days to procure a dual-interest policy, and the creditor must cancel any single-interest insurance it has written if dual-interest insurance is procured within that time.

C. Charges permitted: AL-CFA §§5-19-20(c), 5-19-20(f); AL-REGS §§155-2-2-.12(10)(b), 155-2-2-.13(1) - The creditor may charge the debtor for the single-interest or dual-interest insurance premium, up to the premium amount approved by the AL-CFA administrator or the rates filed by the insurer with the Alabama Department of Insurance. If a debt is renewed, refinanced, or paid before the final maturity date, creditors must refund or credit the debtor with the portion of the premium refunded by the insurance carrier after any insurance is terminated. Insurance provided by a creditor must be cancelled as of the date a loan is prepaid in full, renewed, or refinanced. Refund methods must comply with the rules, regulations and orders of the Alabama Commissioner of Insurance.

D. Finance charge allowed on creditor's payment: AL-CFA §5-19-20(c) - A creditor may charge interest on insurance premiums at the contract rate or other rate agreed to in writing.

Click here to view relevant Alabama Code and Regulations.