HB362 Alabama 2014 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Rod Scott
Democrat
Session: Regular Session 2014
Title: Insurance, Risk Manager and Finance Director to develop program to reconstruct certain destroyed buildings with materials superior to original, Sec. 41-15-4 am'd.
Summary: The bill requires the State Insurance Fund's risk manager, with Finance Director approval, to create a gap and gap-plus coverage program so K-12 schools can rebuild after a total loss using better materials and potentially larger size, funded by actuarially set premiums.
What This Bill Does
It defines gap coverage and gap-plus coverage, and requires the risk manager to develop a program under the State Insurance Fund to provide funds for rebuilding 80%+ losses with superior materials and possibly larger size. Gap coverage allows upgrading construction type and adding square footage, while gap plus covers additional expenses like new site preparation and utilities, with an 80% loss threshold and a maximum gap-plus limit of 10% of the insured value. Premiums for gap and gap-plus coverage must be actuarially sound and are paid from the Public School Fund to the Department of Finance, Division of Risk Management, with distribution to follow existing law; participation is mandatory for qualifying K-12 systems. The Department of Finance may also handle salvage and adjust payments accordingly.

Who It Affects
K-12 public school districts/systems: mandatory participation in the gap and gap-plus coverage for buildings that qualify, with premiums funded from the Public School Fund, enabling reconstruction with superior materials and potentially larger size after an 80%+ loss.
State agencies (State Insurance Fund, risk manager, and Department of Finance): responsible for developing and administrating the new program, drafting rules and endorsements, setting actuarially sound premiums, and handling premium flow and salvage procedures.

Key Provisions
Gap coverage allows upgrading from ISO 1-3 to ISO 4 construction, potential increase in building size in approved increments, and requires an 80%+ loss of insured value.
Gap plus coverage covers normally uncovered expenses (e.g., new site, underground utilities, paving) with a maximum of 10% of the insured value and requires an 80%+ loss.
The risk manager, with Finance Director approval, must draft rules, guidelines, limitations, and endorsements for the program and set actuarially sound premiums.
Additional premiums for gap and gap-plus coverage are paid annually from the Public School Fund to the Department of Finance, Division of Risk Management; distributions follow Section 16-13-234.
Participation in gap and gap-plus coverage is mandatory for qualifying K-12 systems.
The Department of Finance may apply salvage procedures, including taking title to insured items and deducting salvage value from insurance payments.

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