SB185 Alabama 2024 Session

Summary

Primary Sponsor

Bobby D. SingletonSenator

Democrat

Session

Regular Session 2024

Title

Service contract providers, disclosures required in contracts and related marketing, limitation of liability, right to pay out cash value in lieu of repair or replacement, size and placement of disclosures.

Summary

SB185 would require service contract providers in Alabama to clearly define terms and prominently reveal limits of liability and the option to pay cash value in contracts and marketing materials.

What This Bill Does

The bill amends Alabama law to require definitions of key terms (repair, replace, cash value), and to mandate prominent, clearly stated disclosures about limits on the provider’s obligations and how claims can be settled with cash value. It requires these disclosures to appear on the first page of the contract in large, bold text and to be included in all marketing and advertising content. It also sets rules on the size and placement of these disclosures and effective dates, with the act taking effect October 1, 2024.

Who It Affects

• Service contract holders/consumers, who would see clearer explanations of what is covered, the provider’s liability limits, and the possibility of receiving cash value instead of repairs or replacements.
• Service contract providers, marketers, and insurers, who must update contracts, marketing materials, and disclosures to comply with the new definitions, formatting, and placement requirements.

Key Provisions

• Define the terms 'repair,' 'replace,' and 'cash value' in service contracts sold or offered in Alabama.
• Contracts must use eight-point type or larger for requirements and disclosures.
• Disclosures on the first page must be in bold print no smaller than the largest type on the page, detailing liability limits and when they apply, plus the circumstances around these limits.
• Disclosures must state the provider’s right to satisfy a claim by paying the cash value of a covered property in lieu of repair or replacement, with this information shown on the first page and in all marketing content, in the same or larger type as other content.
• Disclosures must appear in all marketing and advertising content and in benefit overviews for both repair and replacement contracts, with size and placement standards matching or exceeding other on-page text.
• Contract content must include provider name/address, administrator, seller, and holder information when available; purchase price, term, and renewal provisions; and these details may be preprinted or negotiated at sale.
• If the provider will reimburse third-party repairs and prior approval is required, the contract must describe the approval and claim procedures and provide a toll-free claim number; emergency or after-hours repair procedures must be described if applicable.
• If the contract is insured under a reimbursement insurance policy, the contract must include a statement that obligations are guaranteed under that policy and, if a claim is not paid within 60 days after proof of loss, the holder may claim directly against the insurer; the contract must state the insurer’s name and address.

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

Subjects

Consumer Protection