Auto Indirect

No.

No. Alabama does not require a warrantor to refund the cost of vehicle protection products upon prepayment in full or default and contract acceleration of a motor vehicle retail installment sale contract. See Ala. Code §§ 8-33-1 et seq. Because vehicle protection products are consistently charged in both cash and credit sales, a charge for such a product is not a finance charge as defined by the Alabama Consumer Credit Act (commonly referred to as the "Mini-Code"), Ala. Code §§ 5-19-1 et seq., and therefore a charge for a vehicle protection product is not subject to the rebate requirements of a prepaid finance charge.Ala. Code § 5-19-1(1); Ala. Code § 5-19-4(c).

Please note that a warrantor may cancel a warranty if the warranty clearly provides the terms and conditions governing cancellation and only if the warranty holder does any of the following:

(1) Fails to pay for the vehicle protection product.

(2) Makes a material misrepresentation to the seller or warrantor.

(3) Commits fraud related to the purchase of the vehicle protection product, registration of the warranty, or a claim made under the warranty.

(4) Substantially breaches the warranty holder's duties under the warranty.

Ala. Code § 8-33-8. A warrantor canceling a warranty must mail written notice of cancellation to the warranty holder at the last address of the warranty holder in the warrantor's records at least 30 days prior to the effective date of the cancellation. Ala. Code § 8-33-8(c). The notice must state the effective date of the cancellation and the reason for cancellation. Ala. Code § 8-33-8(c).

A "vehicle protection product warrantor" or "warrantor" means a person who is contractually obligated to the warranty holder under the terms of the vehicle protection product warranty agreement. Ala. Code § 8-33-2(7). Warrantor does not include an authorized insurer providing a warranty reimbursement insurance policy. Ala. Code § 8-33-2(7). A "warranty holder" means the person who purchases a vehicle protection product or who is a permitted transferee. Ala. Code § 8-33-2(9).

January 1, 2002