Ala. Admin. Code r. 482-3-003-.08

Current through Register Vol. 43, No. 1, October 31, 2024

Section 482-3-003-.08 - Installation Of Vaults Or Outer Burial Containers Before Need

(1) The sale of a vault or outer burial container on a preneed basis is a preneed contract even if the contract provides for installation of the vault or outer burial container before need.

(2) On or after January 1, 2015, where a provider's practice is to install vaults or outer burial containers before need, the preneed contract must grant to the preneed contract purchaser the sole option to have a contracted-for vault or outer burial container installed before need or at need and must otherwise conform to the requirements in this Rule.

(3) The preneed contract must contain a conspicuously-displayed provision, to be signed by the purchaser separate from signing the contract as a whole, in the following or substantially similar terms:

It is the Seller's practice to install a vault prior to need unless the Purchaser elects to have the vault installed at the time of need.

_________________ I elect to have my vault installed prior to need.

_________________ I elect not to have my vault installed prior to need.

(4) The preneed contract must clearly distinguish between service fees to install the vault/outer burial container before need and fees for re-opening the previously installed vault/outer burial container, placing the casket, and closing and covering the vault/outer burial container at need. The disclosed fee for installing a vault/outer burial container before need must be described in the preneed contract using the term "vault installation fee," "burial (or grave) space excavation fee," or other words reasonable descriptive of the nature of the services being performed. The fee may not be described by use of the word, "interment."

(5) The amount of the disclosed fee to install a vault/outer burial container before need shall not exceed fifty percent (50%) of the total amount (expressed in dollars) of that fee and the disclosed fee charged for opening the installed vault/outer burial container, placing the casket, and closing and covering the vault/outer burial container at need. This allowed allocation notwithstanding, the Department may require a provider to increase the amounts trusted for opening/closing services at interment in the event (i) a provider ceases performing the service using its own employees and equipment in favor of contracting with third parties to perform the service, or (ii) as a condition for the Commissioner's approval of an application by the provider to transfer or to surrender of a certificate of authority or branch registration, or (iii) if the provider's financial condition warrants an increase in the trust amount.

(6) The preneed contract shall specify a time period within which the vault/outer burial container will be installed before need (if so elected by the purchaser).

(7) The preneed contract shall provide that, in the case a purchaser elects preneed vault/outer burial container installation, the preneed provider bears any risk of damage to the vault/outer burial container when installed and will provide and install a new vault/outer burial container of comparable quality at no cost to the preneed contract purchaser or beneficiary if required by the circumstances at the time of interment.

(8) No other preneed contract provisions can conflict with, qualify, defeat, or diminish the contractual option granted to the preneed contract purchaser/beneficiary.

(9) At the time the preneed contract is negotiated, the preneed seller must furnish the contract purchaser a disclosure substantially in the form of the model disclosure developed by the Department and published on the Department's website. The actual form of the disclosure must have been submitted to and approved by the Department before use. The original disclosure signed by the preneed contract purchaser(s) and the responsible preneed sales agent must be retained by the preneed provider as part of the preneed contract file. The preneed contract purchaser(s) must be furnished a copy of the signed disclosure at the time the preneed contract is finalized.

(10) Any preneed provider offering installation of a vault/outer burial container before need must implement a program to instruct its preneed sales agents about properly explaining installation of vaults/outer burial containers before need and answering purchaser inquiries about installation before or at need. The program must include reasonable measures for monitoring preneed sales agents' actual explanation methods to purchaser. The program must be maintained in a form that can be produced to the Department for review upon request.

(11) The vault/outer burial container must be installed within thirty (30) days prior to the time the first trust deposit is required to be made under the contract in accordance with state law. If the contract is funded by another method, the vault/outer burial container must be installed within thirty (30) days from the date of the preneed contract.

(12) Any preneed provider offering installation of a vault/outer burial container before need must maintain records sufficient to permit the Department's examiners to verify that vaults/outer burial containers contracted for installation before need have been installed.

Ala. Admin. Code r. 482-3-003-.08

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).