SB416 Alabama 2010 Session

Summary

Primary Sponsor

George M. “Marc” Keahey

Democrat

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.

Summary

SB416 overhauls Alabama's preneed funeral and cemetery contracts by tightening licensing, funding, and consumer protections, and creating a dedicated protection fund.

What This Bill Does

It clarifies that preneed contracts are not insurance and requires sellers to obtain a certificate of authority from the Department of Insurance, with regular financial reporting and updated renewal/expiration rules. It strengthens funding rules by requiring funds to be placed in trusts or insurance/annuities, allows bonding and preconstruction trusts, tightens enforcement with higher penalties, and creates the Alabama Funeral and Cemetery Preneed Consumer Protection Fund for consumer protection and restitution. It imposes ongoing oversight including annual and quarterly reporting, branch registration, and various timelines for cemetery construction and endowment care, with broader authority for the Insurance Commissioner to enforce the act.

Who It Affects

• preneed contract sellers, trustees, and cemetery authorities who must obtain certificates of authority, meet new bond/trust requirements, file reports, pay fees, and comply with the new consumer protection framework.
• consumers who purchase preneed contracts, who gain stronger protections, potential restitution from the new fund if a seller fails to fulfill contracts, and clearer disclosures about fund handling and protections.

Key Provisions

• Defines preneed contracts as not insurance and clarifies funding methods; outer burial containers can be delivered at need and storage rules for cemetery merchandise are established.
• Requires any seller of preneed contracts to obtain a certificate of authority from the Department of Insurance; sets eligibility rules for individuals and business entities; creates branch registrations; and changes renewal/expiration dates for certificates.
• Imposes annual and quarterly financial reporting to the commissioner, allows inspection fees up to 250, and increases penalties for willful violations to Class C felony; authorizes use of funds for enforcement and creates the Alabama Funeral and Cemetery Preneed Consumer Protection Fund.
• Establishes minimum trust funding amounts by category (e.g., 110% of wholesale cost for cemetery merchandise, 60% of contract price for outer burial containers and cemetery services, 100% for cash advances) and requires deposits within specified timeframes; funds must go to approved trusts.
• Requires funds from preneed contracts to be placed in trusts or life insurance/annuities; restricts sellers from discharging trustee responsibilities and requires deposits into trusts within set timelines after payments are received.
• Creates and regulates preconstruction trusts for mausoleum, columbarium, or below-ground crypts; outlines deposit calculations, construction timelines (start within 5 years, complete within 6 years), and refund procedures if construction is not completed.
• Imposes endowment care fund rules and cemetery authority investment restrictions; outlines valuation requirements, withdrawals, and creditor protections for trust funds.
• Authorizes restitution provisions from the fund to purchasers or their estates in cases of nonperformance or lack of funds, with limits and subrogation rights; details distributions and caps on total restitution per year and per contract.
• Effective date provision states the act becomes effective on the first day of the third month after passage and governor approval.

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