HB466 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Artis McCampbellRepresentative
Democrat
Session: 2025 Regular Session
Title: Service contracts; terms defined; certain disclosures in advertising required; disclosures of limitations of contracts further provided for
Summary: HB466 would require clear refund and contract-disclosure rules for service contracts, plus provider registration and financial safeguards to protect consumers.
What This Bill Does
It requires advertisers of service contracts to disclose any right to a refund that is less than the provider's cost to repair or replace, and it mandates disclosure of any limitations, exceptions, and exclusions in the contract. It creates a framework for providers to register with the state, pay an annual fee, and meet financial safeguards such as reimbursement insurance or reserve funds, with additional net-worth and parent-guarantee provisions. It standardizes contract content (including receipt delivery, contract copy, price, term, cancellation rules, and refund procedures), sets refund and cancellation timelines, and imposes penalties and type-size requirements, with an effective date of October 1, 2025.

Who It Affects
Service contract providers, administrators, and sellers: must register with the Commissioner, pay a $200 annual fee, meet financial safeguards (insurance or reserves/guarantees), and comply with expanded disclosure and contract-content requirements.
Service contract holders/consumers: gain clearer information about refunds, contract limitations, and cancellation rights; receive timely refunds and easier access to refunds from insurers if providers fail to pay.
Insurance and financial services counterparts (reimbursement insurers and guarantors): may be used to back obligations and must follow disclosure and claim procedures, including recognizing direct claims against insurers if providers do not pay within specified timeframes.
State regulators and the Service Contract Revolving Fund: new registration fees and fund structures to supervise, examine, and administer the service contract framework.

Key Provisions
Defines key terms such as ADMINISTRATOR, PROVIDER, SERVICE CONTRACT, REFUND, REIMBURSEMENT INSURANCE, and SERVICE CONTRACT HOLDER.
Advertising rule: any service contract ad must prominently disclose the right to a refund amount that may be less than the cost to repair or replace the property.
Contract disclosures: service contracts must disclose limitations, exceptions, and exclusions in bold, larger print; contracts must include purchase price, term, renewal provisions, and transferability details.
Provider obligations to customers: providers must give a receipt and a copy of the contract to the holder within a reasonable time; contracts must describe the services and any deductibles or limits.
Financial safeguards: providers must either insure obligations under a reimbursement insurance policy or maintain reserves or a security deposit; net worth or equity minimum of $100 million, with parent-guarantee requirements if needed; annual reporting or audited statements may be required.
Refund and cancellation rules: a contract can be voided if returned within a specified period with no claims; full refund of purchase price plus any applicable premium; refunds credited to balances with any excess returned; penalties of 10% per month if refunds are not paid/credited within 45 days; administrative fees up to $25 may apply if cancellation is elected by the holder as allowed by the contract.
Direct claim rights: if the provider fails to pay a claim within 60 days, the contract holder may file a claim directly against the reimbursement insurer.
Contract content and formatting standards: contracts must be written in eight-point type or larger; service contracts must clearly state the provider’s name and address, and identify the administrator and contract seller; mandatory bolded disclosures of limitations and refund rights.

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