HB588 Alabama 2010 Session

Summary

Primary Sponsor

Ron Johnson

Republican

Session

Regular Session 2010

Title

Preneed funeral and cemetery services, sellers of required to be licensed by Board of Funeral Service or obtain certificate of authority from Insurance Department, certificate of authority requirements altered, trust requirements specified, bonds, penalties increased, Funeral and Cemetery Preneed Consumer Protection Fund established, cemetery authorities further provided for, Secs. 27-17A-5, 27-17A-26 added; Secs. 27-17A-3, 27-17A-10, 27-17A-11, 27-17A-12, 27-17A-13, 27-17A-14, 27-17A-15, 27-17A-22, 27-17A-25, 27-17A-30, 27-17A-31, 27-17A-32, 27-17A-40, 27-17A-41, 27-17A-42, 27-17A-43, 27-17A-44, 27-17A-50, 27-17A-55 am'd. (2010-20437)

Summary

HB588 creates a comprehensive regulatory framework for preneed funeral and cemetery contracts, including licensure, funding requirements, and a consumer protection fund to safeguard buyers.

What This Bill Does

It clarifies that a preneed contract is not an insurance contract and requires anyone selling preneed services to obtain a certificate of authority from the Department of Insurance, with regular reporting and annual inspections. It sets up funding requirements—either a trust or a surety bond—for preneed funds, updates bond amounts based on expected liabilities, and allows inspections and penalties for noncompliance. It establishes the Alabama Funeral and Cemetery Preneed Consumer Protection Fund to help protect consumers, plus expanded enforcement powers and penalties for willful violations; it also extends protections to cemetery authorities and outlines how funds must be deposited and managed.

Who It Affects

• Preneed contract sellers (funeral homes, cemetery authorities, life insurance or trust companies, banks) who must obtain a certificate of authority, post bonds or maintain trusts, and file regular financial reports and undergo inspections.
• Consumers who purchase preneed contracts (and their estates) who gain new protections, potential restitution from the fund if providers fail to fulfill contracts, and clearer funding and trust requirements to secure promised merchandise and services.

Key Provisions

• Defines that preneed contracts are not insurance contracts and requires a preneed seller to hold a certificate of authority from the Department of Insurance.
• Requires quarterly and annual financial reporting by certificate holders and annual inspections by the commissioner, with inspection fees up to $250.
• Increases penalties for willful violations from Class B misdemeanor to Class C felony and authorizes use of funds from the enforcement of the act.
• Creates the Alabama Funeral and Cemetery Preneed Consumer Protection Fund to protect consumers who purchased preneed contracts after April 30, 2002, with funds used for restitution and enforcement.
• Requires funds received from preneed sales to be deposited into an approved trust, life insurance contract, or annuity contract, and imposes specific deposit timelines.
• Establishes initial and ongoing bonding requirements for preneed providers, with bonds sized to cover anticipated 12-month liabilities and adjustments tied to changes in liabilities or consumer price index.
• Permits the commissioner to require branch registrations for entities operating under a common business enterprise and to set filing fees (up to $150 initial, up to $75 renewal).
• Allows preconstruction and cemetery trust arrangements (including mausoleum/collumbarium projects) with dedicated preconstruction trusts and specific rules for deposits, withdrawals, and completion.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Funeral Service, Board of