New, Tougher Insurance Fraud Law Now in Effect in Alabama

August 2, 2012

A number of recently enacted laws in Alabama concerning property-casualty insurance became effective on August 1.

• One newly enacted law, Act 12-429 (Insurance Fraud), makes insurance fraud a felony crime. It will be treated as Class B Felony if the fraud amount is over $1,000 and Class C Felony if $1,000 and under.

The fraud law also requires insurers to report suspected fraud. The National Association of Insurance Commissioners’ uniform reporting form will be used, according to state regulators.

The law also authorizes Insurance Fraud Unit to have law enforcement officers as investigators and to directly work on cases with the attorney general’s office.

For insurers, the law imposes a $200 annual assessment for the Insurance Fraud Unit Fund. The full text of this new law can be found here.

• Another law that became effective on August 1 is Act 12-374 (Writing of Coastal Insurance, Incentives). It gives premium tax credit to insurers writing in the coastal area. More details regarding the law can be found here.

• Another law that went into effect this Wednesday is Act 12-389 (Auto Insurance Discount, Amend 27-13-121). It requires auto insurers to offer a discount for drivers completing motor vehicle accident preventions courses of not less than 6 hours of instruction. The full text of the law can be found here.

• Act 12-373 (Property Insurance Clarity Act) also became effective on Wednesday. It requires disclosure of certain information from homeowners insurers (including policy and premium information) to the insurance department for publication on the department’s website.

First reports from insurers are due 10/1/2013. More information can be found here.

• Also on August 1, Act 12-519 (Property and Casualty Insurance; Cancel Residential Roofing Contract) went into effect. It permits cancellation of residential roofing contract within 10 business days if insured receives notice from insurer that all or part of the contract is not covered under the policy.

Roofing contractor must give notice of this right. The full text can be found here.

More information on Alabama’s new insurance laws from the 2012 regular legislative session can be found on the insurance department’s website.

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