Auto Indirect

Credit Life Insurance and Credit Disability Insurance. Only if the creditor is a licensed insurance agent.

Involuntary Unemployment Insurance. Unclear. Note that all sales must occur through licensed producers.

The Alabama Consumer Credit Act, Ala. Code §§ 5-19-1 et seq. ("Mini-Code"), authorizes a creditor to contract for a rate on the balance and specified fees. The Attorney General's office has taken the position that a creditor may not charge a fee unless the fee is authorized by the Mini-Code or another Alabama statute. This database takes the position that other fees are not permitted unless expressly authorized by a statute, the Attorney General or the Alabama Banking Department, Bureau of Loans ("Banking Department").

The Mini-Code does not allow a creditor to retain insurance commissions.

Credit insurance is also subject to the Alabama Insurance Code, Ala. Code §§ 27-1-1 et seq. ("Insurance Code"). Credit life insurance and credit disability insurance are subject to the Credit Life and Disability Rules, Ala. Admin. Code rr. 482-1-117-.01 et seq. ("CL&D Rules"), issued by the Alabama Insurance Department ("Insurance Department"), while involuntary unemployment insurance is subject to the Insurance Department's Credit Property and Involuntary Unemployment Rules, Ala. Admin. Code rr. 482-1-093-.01 et seq. ("CP&IU Rules").

Credit Life Insurance and Credit Disability Insurance. The CL&D Rules provide that a creditor must be a duly licensed insurance agent in order to solicit, negotiate, effectuate and/or receive a fee in connection with the insurance. Ala. Admin. Code r. 482-1-117-.15(1).

Involuntary Unemployment Insurance. The CP&IU Rules require all sales of involuntary unemployment insurance to occur through licensed producers. Ala. Admin. Code r. 482-1-093-.04. However, the CP&IU Rules do not address commissions.

September 26, 2022   Show Redlined Changes