SB48 Alabama 2022 Session

Updated Feb 26, 2026

Notable

Summary

Primary Sponsor: Tom Whatley
Republican
Session: Regular Session 2022
Title: Motor vehicle, financing and lease agreements, lease waiver agreements to pay deficiency balances at end of lease, motor vehicle value protection agreements to reduce deficiency balances, Secs. 8-37A-1 to 8-37A-6, inclusive, added; Sec. 8-37-2 am'd.
Summary: SB48 creates a new framework for motor vehicle value protection agreements (MVVPA) tied to auto financing, defines them, and sets financial, disclosure, and enforcement rules for providers to reduce deficiency balances or help with replacement vehicles.
What This Bill Does
It adds Chapter 37A to authorize MVVPA and defines key terms. It lets providers offer MVVPA, subject to one of three financial arrangements: insured by a licensed insurer meeting strict financial criteria; a funded reserve plus a security deposit; or a guarantee from a parent company with high net worth. It requires clear disclosures, a minimum 30-day free-look period, and defined refund rules on cancellation. It also gives the Alabama Superintendent of Banks enforcement power, including cease-and-desist orders and penalties.

Who It Affects
Consumers/contract holders who buy MVVPA (and may use it to reduce their deficiency balance or obtain a replacement vehicle or services) and who get defined disclosures and cancellation/refund rights.
MVVPA providers/administrators (and their insurers or parent companies) who must meet financial security requirements, provide disclosures, and comply with enforcement.

Key Provisions
Defines motor vehicle value protection agreements and clarifies they are not insurance; adds exemptions for certain federally regulated institutions.
Requires three financial compliance options for MVVPA providers: (a) insured by a licensed insurer with specified financial thresholds; (b) a funded reserve account plus a separate security deposit; (c) net worth of at least $100,000,000 with a parent guarantee of obligations.
Mandates clear disclosures in MVVPA contracts, including parties, terms and price, free-look cancellation rights and refund calculations, and that credit terms are not conditioned on purchasing the MVVPA.
Implements enforcement provisions: the Superintendent of Banks may issue cease-and-desist orders and impose penalties for violations.
Effective date: January 1, 2023.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Motor Vehicles