Auto Indirect

No.

Alabama does not allow a creditor to require vendors' single interest insurance ("VSI insurance") at origination.

The Alabama Consumer Credit Act Regulations, Ala. Admin. Code r. 155-2-2-.01 et seq. ("Mini-Code Regulations"), provide that single interest coverage is permitted only after the debtor has been notified in writing of the cancellation or lack of dual interest coverage. The debtor must be afforded at least 15 days to procure a dual interest policy and if such policy is procured, any single interest coverage written by the creditor must be canceled at that time. Ala. Admin. Code r. 155-2-2-.12(10)(c).

The Alabama Consumer Credit Act, Ala. Code §§ 5-19-1 et seq. ("Mini-Code"), provides that if the insurance insures only the creditor's interest in the property, the term of the insurance provided may not exceed the approximate remaining term of the credit, and the amount of insurance may not exceed the approximate amount of the unpaid balance of the debt excluding unearned finance charges, if any. Ala. Code § 5-19-20(c). The Mini-Code Regulations likewise limit the single interest coverage to the lesser of the retail value of the collateral or the net payoff on the account at the time of the insurance contract. Ala. Admin. Code r. 155-2-2-.12(10)(c).

The Mini-Code allows the creditor to contract for and receive a separate charge for insurance against loss of or damage to property or against liability for property damage or personal injuries if the original amount financed, excluding the charges for insurance, is $300 or more and the value of the property is $300 or more. Ala. Code § 5-19-20(g); Ala. Admin. Code r. 155-2-2-.12(10)(h).

The Mini-Code Regulations allow the creditor to sell automobile insurance only if the average recognized retail value of the automobile as determined by a nationally recognized pricing guide is four times greater than the annual insurance premium. Ala. Admin. Code r. 155-2-2-.12(10)(e).

July 30, 2021   Show Redlined Changes