Ala. Admin. Code r. 482-3-004-.07

Current through Register Vol. 43, No. 02, November 27, 2024

Section 482-3-004-.07 - Use Of Surety Bond In Lieu Of Trusting

(1) A surety bond may be used in lieu of establishing and maintaining a merchandise and services trust. The surety bond, its form, and amount must be approved by the Commissioner prior to use and written through an insurance company authorized to transact surety insurance in Alabama.

(2) The amount of the initial surety bond must be not less than the aggregate value of outstanding liabilities on undelivered preneed contracts of the certificate holder as of the end its last fiscal year. For purposes of determining the amount of the surety bond, "outstanding liabilities" means the original retail amount of services and cash advances and the actual cost to the certificate holder to provide the undelivered merchandise sold on each contract written after April 30, 2002. The surety bond shall be in an amount sufficient to cover the outstanding liability at the time each contract is executed.

(3) After initial approval, the amount of the bond shall be increased or decreased as necessary to correlate with changes in the outstanding liabilities for the previous calendar quarter and the projected liability for the immediately following quarter.

Ala. Admin. Code r. 482-3-004-.07

Adopted by Alabama Administrative Monthly Volume XXXIII, Issue No. 02, November 26, 2014, eff. 1/1/2015.

Author: Commissioner of Insurance

Statutory Authority:Code of Ala. 1975, §§ 27-2-17, 27-17A-1 to -57 (2014).