HB338 Alabama 2012 Session

Summary

Primary Sponsor

K.L. Brown

Republican

Session

Regular Session 2012

Title

Funeral or cemetery services, preneed funeral service contracts, regulation further provided for, Secs. 27-17A-5, 27-17A-11.1 added; Secs. 27-17A-2, 27-17A-3, 27-17A-10, 27-17A-11, 27-17A-12, 27-17A-13, 27-17A-14, 27-17A-16, 27-17A-18, 27-17A-22, 27-17A-23, 27-17A-25, 27-17A-30, 27-17A-31, 27-17A-32, 27-17A-33, 27-17A-34, 27-17A-47, 27-17A-50, 27-17A-55 am'd. (2012-20272R1)

Summary

HB338 tightens regulation of preneed funeral and cemetery contracts in Alabama by clarifying definitions, requiring licensing and extensive reporting, and strengthening trust, bond, and refund protections for buyers.

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. It updates renewal dates, may waive certain annual financial statements, and adds quarterly reporting of preneed activity and trust activity. It tightens funding rules, requiring funds from preneed contracts to be placed in approved trusts or funded by life insurance or annuities, strengthens enforcement, and extends these rules to cemetery authorities, with refund protections for purchasers upon cancellation.

Who It Affects

• Sellers of preneed contracts (funeral establishments, cemetery authorities, third-party sellers) whom would need a preneed certificate of authority, must file quarterly reports, and must follow new bonding/trust requirements.
• Preneed contract purchasers and beneficiaries, and cemetery patrons who benefit from clearer funding, cancellation refunds, and trustee oversight; the rules also affect endowment care funds and cemetery governance to improve financial protection and transparency.

Key Provisions

• Defines and clarifies that a preneed contract is not an insurance contract.
• Requires any person selling preneed funeral or cemetery services to obtain a certificate of authority from the Alabama Department of Insurance.
• Sets revised annual application and renewal dates for preneed certificates of authority; allows waiver of annual financial statements under specified conditions.
• Requires certificate holders to file quarterly reports of preneed contract activity and quarterly trust activity; maintains logs of sales.
• Specifies bond and funding rules: initial bond amount based on expected preneed liability for the next 12 months; permits an alternative to trusting via a surety bond or letter of credit; funds from post-2002 preneed contracts must be deposited into an approved trust.
• Mandates that preneed funds for cemetery merchandise and services remain in trust until cancellation or fulfillment and outlines refund procedures upon cancellation; deposits and trust management timelines are defined.
• Extends the act to cemetery authorities; tightens endowment care fund rules, defines net income, requires trustee bonds, and restricts conflicts of interest with board members.
• Requires funds for construction of mausoleums or below-ground crypts to be placed in a preconstruction trust until completion; refunds are provided if construction is not completed within specified timeframes.
• Repeals certain prior preneed cemetery contract provisions (27-17A-40 to -44); Mobile Memorial Gardens is exempt; current act provides for enforcement funding and penalties; effective date specified.
• Provisions related to local funds expenditures are addressed under constitutional exceptions; act becomes law after governor’s approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Funeral Services