Alabama Administrative Code › Title 482 - ALABAMA DEPARTMENT OF INSURANCE › Chapter 482-1-111 - LICENSING OF LIMITED LINE CREDIT INSURANCE PRODUCERS › Section 482-1-111-.03 - Definitions

Current through Register Vol. 42, No. 9, June 28, 2024
The following definitions shall apply for purposes of this
				chapter:
(a) ACTUAL CASH VALUE. In a
			 GAP insurance policy, this term shall have the same meaning as under the
			 physical damage insurance policy covering the leased property or collateral,
			 but may be reduced by all or part of any applicable deductible.
(b) BUSINESS ENTITY. As defined in Section
			 27-7-1,
Code of Ala.
			 1975
.
(c) COMMISSIONS.
			 Any valuable consideration paid with respect to the sale of insurance, the
			 amount of which is based on the amount of insurance written or the amount of
			 premium written or earned.
(d)
			 CREDIT DISABILITY INSURANCE. Insurance on a debtor or debtors, in connection
			 with a specific credit transaction, to provide indemnity for payments or debt
			 becoming due on that credit transaction, in whole or in part, while the debtor
			 is disabled as defined in the policy, and which precludes debtor selection of
			 primary beneficiary. The terms "credit accident and health insurance," "credit
			 health and accident insurance" and "credit disability insurance" have the same
			 meaning. "Mortgage disability insurance" shall also be considered "credit
			 disability insurance."
(e) CREDIT
			 INSURANCE. Shall include "Credit Life Insurance", "Credit Disability Insurance"
			 and "Credit Property and Casualty Insurance" as defined in this
			 section.
(f) CREDIT LIFE INSURANCE.
			 Insurance on a debtor or debtors, in connection with a specific credit
			 transaction, to provide for satisfaction of that credit obligation, in whole or
			 in part, upon the death of an insured debtor, and which precludes debtor
			 selection as to primary beneficiary. "Mortgage life insurance" shall also be
			 considered "credit life insurance."
(g) CREDIT PROPERTY AND CASUALTY INSURANCE.
			 Any of the following forms of insurance sold to a debtor or debtors in
			 connection with a specific credit transaction that is limited to partially or
			 wholly extinguishing that credit obligation: automobile physical damage
			 insurance (whether single interest or dual interest coverage), creditor-placed
			 insurance (also known as forced-placed insurance), mortgage guaranty insurance,
			 GAP insurance, family and medical leave insurance, nonfiling insurance,
			 physical damage coverage on household goods, and involuntary unemployment
			 insurance. Credit property and casualty insurance may be issued at or after
			 contract inception.
(h) CREDIT
			 TRANSACTION. Any transaction by the terms of which the repayment of money
			 loaned or loan commitment made, or payment for goods, services or properties
			 sold or leased, is to be made at a future date or dates. It is acknowledged
			 that the Alabama Consumer Credit Act does not apply to true leases; however, it
			 is intended that credit insurance issued or sold in connection with true leases
			 be subject to this chapter to the extent provided herein.
(i) CREDITOR. A person who regularly extends
			 or arranges for the extension of credit for which the payment of a finance
			 charge is required, whether in connection with loans, sales of property or
			 services, or otherwise, and, for purposes of this chapter, "creditor" also
			 includes a lessor, and any successor of the foregoing.
(j) DEBT CANCELLATION CONTRACT. A two-party
			 agreement between a creditor and a debtor whereby the creditor agrees that, in
			 the event of certain specified events, the creditor, or its assignee, will
			 cancel all or some specified portion of the debt. A debt cancellation contract
			 is not considered insurance, even if the creditor, independently of the debtor,
			 has obtained insurance to cover all or part of the debt that the creditor has
			 agreed to cancel.
(k) DEBTOR. A
			 borrower of money or a purchaser or lessee of goods, services, property, rights
			 or privileges for which payment is arranged through a credit
			 transaction.
(l) ENROLL. The term
			 "enroll" describes the process of adding debtors to a master group policy which
			 includes informing the debtor of the coverage, recommending the purchase,
			 calculating the insurance charge, preparing the certificate of insurance,
			 answering questions regarding the coverage and/or otherwise assisting the
			 debtor in making an informed decision whether or not credit insurance is to be
			 elected as a part of a loan or other credit transaction.
(m) GAP AMOUNT. In a GAP insurance policy,
			 any deficiency between the following:
1. The
			 amount owed by the lessee or debtor under the lease, loan or other credit
			 transaction as of the date of a total loss of the leased property or collateral
			 caused by theft or physical damage.
2. The sum of the following:
(i) Any unpaid payments and other charges
			 that accrued prior to the total loss.
(ii) The actual cash value of the leased
			 property or collateral as of the date of the loss.