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Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
An automobile club cannot get an Alabama Certificate of Authority without either a $25,000 surety bond or $25,000 parked with the state. The bond is the cheaper route, and the Alabama Department of Insurance publishes the exact form it wants, so there is nothing to draft. You pay a premium, the surety signs the department's form, and it goes in the application packet with the fee.
Alabama requires every automobile club or association applying for a Certificate of Authority to file a $25,000 surety bond with the Commissioner of Insurance, or in its place a $25,000 deposit of cash or securities, under Code of Alabama 27-39-6. The Certificate of Authority runs on a calendar year and must be renewed every January 1 with the department's $255 fee. The bond is written on the department's prescribed Automobile Club Surety Bond form and cannot be cancelled without 30 days written notice to the Commissioner.
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Code of Alabama 27-39-6 gives an automobile club two ways to satisfy the financial safeguard. It can deposit $25,000 in cash or securities with the State Treasurer, or it can file a $25,000 surety bond from a company authorized in Alabama. The Alabama Department of Insurance instructions restate this as a $25,000 surety bond written by an insurer licensed in Alabama or a $25,000 certificate of deposit from an Alabama bank held in trust by the Commissioner. There is one flat amount. It does not scale with membership, revenue or the number of services offered.
The department's form names the Commissioner of Insurance of Alabama and successors in office as obligee. The club promises to faithfully perform its obligations to members and subscribers, to pay every liability that is adjusted by contract or fixed by court judgment, and to answer for all obligations under Alabama law. The statute describes the purpose as protecting members against wrongful acts or misrepresentation by the club. A member who is owed a towing reimbursement, a refund or another promised service and cannot collect can make a claim on the bond. The surety pays a valid claim and then recovers from the club.
Under 27-39-6 a Certificate of Authority is issued for the period beginning January 1 and expires the following December 31. The department requires renewal each January 1 and lists the Certificate of Authority fee at $255 for both the initial application and each renewal. The statute itself states a $250 annual license fee, so confirm the current figure with the department when you file. The bond form says the bond may not be cancelled or released until 30 days after written notice to the Commissioner, so a surety cannot drop you without warning in the middle of a license year.
The department asks for the application, an agent for service of process designation, the bond or certificate of deposit, the membership application and certificate, bylaws, service contracts, advertising, a current financial statement and the rate schedule. Renewals need the application, the latest financial statement, membership rates and the fee. Code of Alabama 27-39-7 separately requires licensing of the producers who sell memberships, and 27-39-2 bars a club from providing anything that amounts to insurance unless it has complied with the insurance laws. The bond does not substitute for either.
Chapter 39 does not disturb membership certificates issued and outstanding before January 1, 1972. Beyond that there is no grandfather clause for clubs already operating. Any automobile club or association doing business in Alabama needs the Certificate of Authority and the $25,000 safeguard.
Yes. Code of Alabama 27-39-6 allows a $25,000 deposit of cash or securities with the State Treasurer in place of the bond, and the department accepts a $25,000 certificate of deposit from an Alabama bank held in trust by the Commissioner. Most clubs choose the bond so the $25,000 keeps working in the business.
No. The statute sets a single $25,000 figure for every automobile club regardless of size or revenue.
Every January 1. Under 27-39-6 the Certificate of Authority runs from January 1 to December 31. The department's renewal packet needs the application, the latest financial statement, membership rates and the $255 fee.
No. The only grandfather language in Chapter 39 protects membership certificates issued before January 1, 1972. Every club doing business today needs the Certificate of Authority and the $25,000 bond or deposit.
The surety prices the bond from the club's credit and financial condition. The premium is a fraction of the $25,000 amount and is paid each year the bond stays in force.
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