Effective July 13, 2013, Alabama Code §§27-22-40 though 27-22-45 will require new and renewal homeowners insurance policies to include an Outline of Coverage and a Comprehensive Policy Checklist. In addition, all insurance companies writing residential policies in Alabama must post on their websites the twelve “minimum standards” to be followed.

Here is what homeowners in Alabama can expect when it comes to property insurance issues:

  1. Policyholders shall have the right to competitive pricing practices of insurers as prescribed by applicable federal or state insurance law and regulation.
  2. Policyholders shall have the right to insurance advertising and sales approaches that provide representative information on the policy in accordance with Title 27, Chapter 12, Code of Alabama 1975.
  3. Policyholders shall have the right to assurance that the insurance market in general and their insurance company in particular are financially stable as provided in Section 27-12-7, Code of Alabama 1975.
  4. Policyholders shall have the right to receive service from licensed producers in accordance with Title 27, Chapter 7, Code of Alabama 1975, and to request the license status of an insurance company or producer.
  5. Policyholders shall have the right to a policy as prescribed in Title 27, Chapter 14, Code of Alabama 1975, to receive a complete policy, and to request a duplicate or replacement policy, if needed.
  6. Policyholders shall have the right to receive in writing from their insurance company the reason for any cancellation of coverage and a minimum number of days’ notice of cancellation of coverage, subject to applicable federal or state insurance law and regulation.
  7. Policyholders shall have the right to cancel their policy and receive a refund of any unearned premium. If a policy was funded by a premium finance company, the unearned premium will be returned to the premium finance company to pay toward the policyholder’s financing loan.
  8. Policyholders shall have the right to a written notification, at renewal, describing changes in their insurance contract language that are applicable to the renewal period.
  9. Policyholders shall have the right, in the event of a claim, to reject any settlement amount offered by the insurance company.
  10. Policyholders shall have the right to select their licensed contractor or vendor to repair, replace, or rebuild damaged property covered by the insurance policy.
  11. Policyholders shall have the right to file a written complaint against any insurance company with the Department of Insurance and to have that complaint reviewed by the Department of Insurance.  
  12. Policyholders shall have the right to file a written complaint against any insurance producer with the Department of Insurance and to have that complaint reviewed by the Department of Insurance. 

Many consumers in Alabama may consider these standards very basic but having insurance companies acknowledge these standards will benefit policyholders shopping for insurance and those who suffer a loss.

Rule number five is particularly crucial when insureds are filing a claim. Policyholders need to have the complete insurance policy—not just the few loose endorsements that may get mailed to you at the time of renewal. Remember, for a coverage analysis, coverage, exclusions, limitations and exceptions to the exclusions and limitations need to be understood. Reading and reviewing your insurance policy is not something that can be done piecemeal. Recently, there has been a trend by certain insurance companies to be hesitant, slow or even demanding payment from insureds before sending a copy of the insurance policy. Insureds should know they have a right to see a complete copy of their contract with the insurance company.

Rule number nine is also particularly important and I think every insurance company should have this on the homepage of their website. Policyholders shall have the right, in the event of a claim, to reject any settlement amount offered by the insurance company. Remember, insurance companies are in the business of making profits and claim evaluations are done based on estimates. If a policyholder is not happy with the value of the claim or the scope of the damages found by the insurance company, the insured needs to voice the concerns and not accept a low-ball or incomplete offer.

Rule number ten also helps policyholders understand that they have a choice when it comes to repairing property. Some policies in Florida attempt to mandate which repair company is used. Some carriers elect or improperly attempt to elect an option to repair (again, this makes having the complete policy important so you can see the full agreement you have with an insurance company regarding repairs and payments). Under rule ten, Alabama policyholders have the right to select their own licensed contractor to repair, replace or rebuild the property. This contractor does not have to have a preferred relationship with your insurance company and you can make sure you are satisfied with qualifications of your repair company before they start work, including emergency services. This rule covers water extraction companies, board-up companies, and mold remediation companies. Many times a homeowner will say "XYZ company showed up at my house and told me the insurance company sent them to help," In Alabama, a homeowner is not obligated to hire this company. An insured needs to understand this before signing a repair contract, because the bill for services will be the homeowner’s obligation.