AN ACT relating to products that offer benefits in connection with personal property.

UNOFFICIAL COPY 26 RS SB 158/EN
Page 1 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
AN ACT relating to products that offer benefits in connection with personal 1
property. 2
Be it enacted by the General Assembly of the Commonwealth of Kentucky: 3
SECTION 1. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 4
READ AS FOLLOWS: 5
The purpose of Sections 1 to 7 of this Act is to provide a framework within which 6
vehicle financial protection products: 7
(1) Are defined; and 8
(2) May be offered within this state. 9
SECTION 2. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 10
READ AS FOLLOWS: 11
As used in Sections 1 to 7 of this Act: 12
(1) "Borrower" means a debtor, or retail purchaser or lessee, under a finance 13
agreement; 14
(2) "Commercial" means a transaction under which a vehicle will be used primarily 15
for business purposes; 16
(3) "Consumer": 17
(a) Means: 18
1. An individual purchaser or lessee of a vehicle; or 19
2. A borrower; and 20
(b) Includes a contract holder; 21
(4) "Contract holder" means a person who is the purchaser or holder of a vehic le 22
value protection agreement; 23
(5) "Creditor" means any of the following: 24
(a) The lender in a loan transaction; 25
(b) The lessor in a lease transaction; 26
(c) Any retail seller of vehicles; and 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 2 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(d) The assignee of any person referenced in paragraph (a), (b), o r (c) of this 1
subsection to whom a credit obligation is payable; 2
(6) "Debt waiver" means any: 3
(a) Guaranteed asset protection waiver; and 4
(b) Excess wear and use waiver; 5
(7) "Excess wear and use waiver" means a contractual agreement, as part of or as a 6
separate addendum to a lease agreement, in which a creditor agrees, with or 7
without a separate charge, to cancel or waive all or parts of amounts that may 8
become due under a borrower's lease agreement as a result of excessive wear and 9
use of a vehicle, includ ing an agreement to cancel or waive amounts due for 10
excessive mileage; 11
(8) "Finance agreement" means any of the following: 12
(a) A loan, retail installment sales contract, or lease for the purchase, 13
refinancing, or lease of a vehicle; and 14
(b) A loan with a t erm of at least twelve (12) months that is secured by a 15
vehicle; 16
(9) "Free look period" means a period of time from the effective date of a vehicle 17
financial protection product until the date the vehicle financial protection 18
product may be canceled without penalty, fees, or costs; 19
(10) "Guaranteed asset protection waiver": 20
(a) Means a contractual agreement wherein a creditor agrees, with or without a 21
separate charge, to cancel or waive all or part of amounts due under a 22
borrower's finance agreement in the event of a total physical damage loss or 23
unrecovered theft of the vehicle; and 24
(b) May provide, with or without a separate charge, a benefit that waives an 25
amount, or provides a borrower with a credit, toward the purchase of a 26
replacement vehicle; 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 3 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(11) "Insurer" means: 1
(a) An insurance company licensed, registered, or otherwise authorized under 2
the laws of this state to transact insurance business; or 3
(b) A nonadmitted insurer in accordance with the requirements of Subtitle 10 4
of KRS Chapter 304; 5
(12) "Person" includes an individual, company, association, organization, 6
partnership, business trust, corporation, and every form of legal entity; 7
(13) "Vehicle": 8
(a) Means a self -propelled or towed vehicle designed for personal or 9
commercial use; and 10
(b) Includes automobiles, trucks, motorcycles, recreational vehicles, all -terrain 11
vehicles, snowmobiles, campers, boats, personal watercraft, and related 12
trailers; 13
(14) "Vehicle financial protection product" means any: 14
(a) Debt waiver; and 15
(b) Vehicle value protection agreement; and 16
(15) "Vehicle value protection agreement": 17
(a) Means a contractual agreement that, upon the occurrence of an adverse 18
event to a contract holder's vehicle, including loss, theft, damage, 19
obsolescence, diminished value, or depreciation, pro vides a benefit towards 20
either: 21
1. The reduction of some or all of the contract holder's current finance 22
agreement deficiency balance; or 23
2. The purchase or lease of a replacement vehicle or vehicle services; 24
(b) Includes trade -in credit agreements, dimini shed value agreements, 25
depreciation benefit agreements, vehicle cash down payment agreements, 26
and other similarly named agreements; and 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 4 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(c) Does not include: 1
1. A debt waiver; 2
2. A service contract as defined in KRS 304.5-070; or 3
3. Insurance or an insuran ce contract regulated under KRS Chapter 4
304. 5
SECTION 3. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 6
READ AS FOLLOWS: 7
(1) (a) Except as provided in paragraph (b) of this subsection, a vehicle financial 8
protection product offered, sold, or given to a consumer in this state shall 9
comply with Sections 1 to 7 of this Act. 10
(b) Paragraph (a) of this subsection shall not apply to any debt waiver offered 11
by a state or federal bank or credit union in compliance with applicable 12
state and federal law. 13
(2) Notwithstanding any other law to the contrary, vehicle financial protection 14
products issued before, on, or after the effective date of this Act shall not be 15
considered insurance. 16
(3) Sections 1 to 7 of this Act shall not apply to any vehicle financial protection 17
product offered prior to the effective date of this Act. 18
SECTION 4. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 19
READ AS FOLLOWS: 20
(1) Notwithstanding any other law to the contrary, any amount charged or financed 21
for a vehicle financial protection product: 22
(a) Is an authorized charge that shall be separately stated; and 23
(b) Shall not be considered a finance charge or interest. 24
(2) (a) An extension of credit, the terms of a loan, or the terms of a related vehicle 25
sale or lease shall not be conditioned upon a consumer's payment for, or 26
financing of, any charge for a vehicle financial protection product. 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 5 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(b) A vehicle financial protection pro duct may be discounted or given at no 1
charge in connection with the purchase of other noncredit -related goods or 2
services. 3
SECTION 5. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 4
READ AS FOLLOWS: 5
(1) As used in this section, "administrator" means a person, other than an insurer or 6
creditor, that performs administrative or operational functions relating to debt 7
waivers. 8
(2) (a) 1. Except as provided in subparagraphs 2. and 3. of this paragraph, a 9
retail seller of vehicle s shall insure its debt waivers under a 10
contractual liability policy or other insurance policy that: 11
a. Is issued by an insurer; 12
b. States an obligation by the insurer to reimburse or pay to a 13
creditor under the debt waiver any sums the creditor is legally 14
obligated to waive under a debt waiver; 15
c. Remains in effect unless canceled or terminated in compliance 16
with applicable insurance laws of this state; and 17
d. Provides that the cancellation or termination of the policy shall 18
not reduce the insurer's respon sibility for any debt waivers that 19
are: 20
i. Issued by a creditor prior to the date of cancellation or 21
termination; and 22
ii. Insured under a policy for which a premium has been 23
received by the insurer. 24
2. To the extent permitted under KRS Chapter 304, a cance llation or 25
termination of a contractual liability policy or any other insurance 26
policy required under subparagraph 1. of this paragraph may reduce 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 6 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
the insurer's responsibility for any debt waiver if the policy is canceled 1
or terminated due to fraud. 2
3. A r etail seller of vehicles shall not be required to comply with 3
subparagraph 1. of this paragraph for leased vehicles. 4
(b) A creditor that is not otherwise required to insure its debt waivers under 5
paragraph (a) of this subsection may insure its debt waivers under a 6
contractual liability or other insurance policy that: 7
1. Is issued by an insurer; and 8
2. Complies with this subsection. 9
(c) An insurance policy referenced under paragraph (a) or (b) of this 10
subsection may be: 11
1. Obtained directly by the retail seller or other creditor; or 12
2. Procured by an administrator. 13
(3) (a) A debt waiver shall remain a part of a finance agreement upon the 14
assignment, sale, or transfer of the finance agreement by the creditor. 15
(b) For a debt waiver that is insured under a contractual liability policy or other 16
insurance policy, a creditor shall: 17
1. Report the sale of any finance agreement that includes the debt waiver 18
to the insurer; and 19
2. If applicable, forward any funds due to the assignee, buyer, or 20
transferee of the finance agreement. 21
(c) Funds that are received by a creditor or administrator and that belong to an 22
assignee, buyer, or transferee of a finance agreement shall be held by the 23
creditor or administrator in a fiduciary capacity. 24
(4) A debt waiver, other than a debt waiver offered in connection with a commercial 25
transaction, shall disclose the following, in writing and in clear and 26
understandable language that is easy to read: 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 7 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(a) That the following shall not be conditione d on the borrower's purchase of a 1
debt waiver: 2
1. The extension of credit; 3
2. The terms of the loan; or 4
3. The terms of any related vehicle sale or lease; 5
(b) The name and address of: 6
1. The initial creditor and the borrower of the finance agreement; and 7
2. The administrator, if applicable; 8
(c) The terms and conditions of the debt waiver, including: 9
1. The purchase price of the debt waiver, if any; 10
2. The requirements for protection, conditions, and exclusions; and 11
3. The procedure the borrower must follow, if any, to obtain benefits 12
under the debt waiver, including, if applicable, a telephone number or 13
website and address where the borrower may apply for the benefits; 14
(d) That the borrower: 15
1. May cancel the debt waiver within a free look period of not less than 16
thirty (30) days, as specified in the debt waiver; and 17
2. Will be entitled to a full refund of the purchase price paid by the 18
borrower, if any, if: 19
a. The borrower cancels the debt waiver during the free look 20
period; and 21
b. A benefit has not been provided; 22
(e) Whether the debt waiver is cancellable after the free look period and the 23
conditions under which it may be canceled, if applicable, including the 24
procedures for requesting any refund of amounts paid; 25
(f) If the debt waiver is cancellable after the free look period, the borrower may 26
be entitled to a refund of the unearned portion of the purchase price of the 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 8 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
debt waiver, if any, less an administrative fee of not more than seventy -five 1
dollars ($75), if a benefit has not been, and will not be, provided; 2
(g) If the borrower seeks a refund under paragraph (f) of this subsection, the 3
borrower shall, in accordance with the terms and conditions of the debt 4
waiver, provide a written request to cancel to the creditor or administrator, 5
except if the borrowe r seeks a refund due to the early termination of the 6
finance agreement, the borrower shall provide the written request to cancel 7
within ninety (90) days of the occurrence of the event terminating the 8
finance agreement; 9
(h) The methodology for calculating a ny refund under paragraph (f) of this 10
subsection, if any; and 11
(i) If the cancellation of a debt waiver is due to a default under the finance 12
agreement, the repossession of the vehicle associated with the finance 13
agreement, or any other early termination of the finance agreement, any 14
refund due may be paid directly to the creditor or administrator and applied 15
as a reduction of the amount owed under the finance agreement, unless the 16
borrower can show that the finance agreement has been paid in full. 17
SECTION 6. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 18
READ AS FOLLOWS: 19
(1) As used in this section: 20
(a) "Administrator" means a person, other than a provider, that performs 21
administrative or operational functions relating to vehicle value protection 22
agreements, including the adjudication of claims or benefits requested by 23
contract holders; 24
(b) "Provider" means a person that is obligated to provide a benefit under a 25
vehicle value protection agreement; and 26
(c) "SEC" means the United States Securities and Exchange Commission. 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 9 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(2) A provider may , but shall not be required to, utilize an administrator to be 1
responsible for any and all of the administration of a vehicle value protection 2
agreement in compliance with Sections 1 to 7 of this Act. 3
(3) A vehicle value protection agreement shall not be s old unless the contract holder 4
has been, or will be, provided access to a copy of the vehicle value protection 5
agreement. 6
(4) In order to ensure faithful performance under a vehicle value protection 7
agreement, each provider shall comply with at least one ( 1) of the following 8
paragraphs of this subsection: 9
(a) A provider shall insure all of its vehicle value protection agreements under 10
an insurance policy that: 11
1. Pays or reimburses if the provider fails to perform it obligations under 12
any vehicle value protection agreement; and 13
2. Is issued by an insurer; 14
(b) 1. A provider shall: 15
a. Maintain a funded reserve account for its obligations under all 16
of its vehicle value protection agreements issued and outstanding 17
in this state, which shall: 18
i. Contain not less than forty percent (40%) of the gross 19
consideration received, less claims paid, on the sale of all 20
in-force vehicle value protection agreements; and 21
ii. Be subject to examination and review by the Attorney 22
General; and 23
b. Place a financial security deposit , in the form required by 24
subparagraph 2. of this paragraph, in trust with the Attorney 25
General that has a value of not less than the greater of the 26
following: 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 10 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
i. Five percent (5%) of the gross consideration received, less 1
claims paid, on the sale of all i n-force vehicle value 2
protection agreements; or 3
ii. Twenty-five thousand dollars ($25,000). 4
2. The financial security deposit required under subparagraph 1.b. of 5
this paragraph shall be in the form of one (1) of the following: 6
a. A surety bond issued by an authorized surety; 7
b. Securities of the type eligible for deposit by authorized insurers 8
in this state; 9
c. Cash; or 10
d. A letter of credit issued by a qualified financial institution; or 11
(c) 1. Subject to subparagraph 2. of this paragraph, a provider shall: 12
a. Maintain, or together with its parent company maintain, a net 13
worth of stockholder's equity of at least one hundred million 14
dollars ($100,000,000); and 15
b. Upon request, provide the Attorney General with a copy of the 16
provider's or its parent company's: 17
i. Except as provided in subpart ii. of this subdivision, most 18
recent Form 10-K or Form 20 -F filed with the SEC within 19
the last calendar year; or 20
ii. If the provider and its parent company doe s not file with 21
the SEC, the audited financial statements of the provider or 22
its parent company that show a net worth of the provider or 23
its parent company of at least one hundred million dollars 24
($100,000,000). 25
2. If the Form 10 -K, Form 20 -F, or audited f inancial statements of the 26
provider's parent company are used to satisfy the requirements of 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 11 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
subparagraph 1. of this paragraph, the parent company shall agree to 1
guarantee the obligations of the provider under the vehicle value 2
protection agreements sold by the provider in this state. 3
(5) Except as provided in subsection (4) of this section, a provider shall not be subject 4
to financial security requirements relating to vehicle value protection agreements. 5
(6) A vehicle value protection agreement, other than a vehicle value protection 6
agreement offered in connection with a commercial transaction, shall disclose the 7
following in writing and in clear and understandable language that is easy to 8
read: 9
(a) That the following shall not be conditioned on the contrac t holder's 10
purchase of an agreement: 11
1. The extension of credit; 12
2. The terms of a loan; or 13
3. The terms of any related vehicle sale or lease; 14
(b) The name and address of: 15
1. The provider and contract holder; and 16
2. The administrator, if applicable; 17
(c) The terms and conditions of the agreement, including: 18
1. The purchase price of the agreement, if any; 19
2. The requirements for eligibility, conditions, and exclusions; and 20
3. The procedure the contract holder must follow, if any, to obtain a 21
benefit under the agreement, including, if applicable, a telephone 22
number or website and address where the contract holder may apply 23
for vehicle value protection agreement benefits; 24
(d) That the agreement is not a contract of insurance; 25
(e) That the contract holder: 26
1. May cancel the agreement within a free look period of not less than 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 12 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
thirty (30) days as specified in the agreement; and 1
2. Will be entitled to a full refund of the purchase price paid by the 2
contract holder, if any, if: 3
a. The borrower cancels the agreement during the free look period; 4
and 5
b. A benefit has not been provided; 6
(f) Whether the agreement is cancellable after the free look period and the 7
conditions under which it may be canceled, if applicable, including the 8
procedures for requesting any refund of amounts paid; 9
(g) The terms, restrictions, and conditions governing a cancellation of the 10
agreement by the provider or the contract holder prior to the termination or 11
expiration of the agreement, which shall include: 12
1. Except as provided in subparagraph 2. of this paragrap h, the provider 13
shall mail a written notice of the cancellation to the contract holder's 14
last known address contained in the records of the provider at least 15
five (5) days prior to the cancellation of an agreement by the provider; 16
2. A provider shall not b e required to provide prior notice of its 17
cancellation of an agreement if the cancellation is due to: 18
a. Nonpayment of a provider fee; 19
b. A material misrepresentation by the contract holder to the 20
provider or administrator; or 21
c. A substantial breach of du ties by the contract holder under the 22
terms of the agreement; 23
3. A notice of cancellation of an agreement by a provider shall state: 24
a. The effective date of the cancellation; and 25
b. The reason for the cancellation; 26
4. If the cancellation of an agreement b y a provider is not due to 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 13 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
nonpayment of a provider fee, the provider shall provide the contract 1
holder with a refund of one hundred percent (100%) of the unearned 2
pro rata provider fee paid by the contract holder, if any; 3
5. If coverage under the agreemen t continues after a claim, any claims 4
paid may be deducted from any refund; and 5
6. The provider may charge a reasonable administrative fee not to exceed 6
seventy-five dollars ($75); and 7
(h) The methodology for calculating any refund of the unearned purchase price 8
of the agreement, if any, that will be due in the event of a cancellation, 9
including that any refund may be reduced by claims paid. 10
SECTION 7. A NEW SECTION OF KRS CHAPTER 367 IS CREATED TO 11
READ AS FOLLOWS: 12
(1) (a) The Attorney General may take action necessary or appropriate to enforce 13
Sections 1 to 7 of this Act. 14
(b) All of the remedies, powers, and duties provided to the Attorney General by 15
KRS 367.190 to 367.300 and 367.990, pertaining to acts and practices 16
declared unlawful by KRS 367.170, shall apply with equal force and effect 17
to acts and practices declared unlawful under Sections 1 to 7 of this Act. 18
(2) (a) After proper notice and opportunity for a hearing in accordance with KRS 19
Chapter 13B, the Attorney Gen eral may take any one (1) or more of the 20
following actions: 21
1. Order a creditor, provider, administrator, or any other person to cease 22
and desist from conduct in violation of any provision of Sections 1 to 7 23
of this Act; and 24
2. Impose a civil penalty of no t more than five hundred dollars ($500) 25
per violation of any provision of Sections 1 to 7 of this Act, except a 26
civil penalty shall not exceed ten thousand dollars ($10,000) in the 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 14 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
aggregate for violations of a similar nature. 1
(b) For purposes of paragraph (a) of this subsection, violations are of a similar 2
nature if the violations consist of the same or similar course of conduct, 3
action, or practice, irrespective of the number of times the action, conduct, 4
or practice occurred. 5
(3) Any person aggrieved by a final order issued by the Attorney General pursuant to 6
this section shall have the right of an appeal in accordance with KRS Chapter 7
13B. 8
Section 8. KRS 190.100 is amended to read as follows: 9
(1) (a) Every retail installment contract shall: 10
1. Be in writing in at least eight (8) point type; 11
2. Contain all the agreements of the parties; 12
3. Be signed by the retail buyer;[ and] 13
4. Require a copy thereof to be furnished to the retail buyer at the time of 14
the execution of the contract; and 15
5. Comply with Sections 1 to 7 of this Act, as applicable. 16
(b) A retail installment contract need not appear on a single page and a contract 17
that i ncludes a provision incorporating agreements that appear after the 18
buyer's signature, including without limitation, terms, and conditions on the 19
back or on subsequent pages, shall be deemed in compliance with KRS 20
446.060(1). 21
(c) No provisions for confession of judgment, power of attorney therefor, or wage 22
assignment contained in any retail installment contract shall be valid or 23
enforceable. 24
(d) 1. The holder of a retail installment contract may collect a delinquency and 25
collection charge in an amount not in excess of five percent (5%) of 26
each installment or fifteen dollars ($15), whichever is greater, for each 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 15 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
installment in arrears for a period not less than: 1
a. Three (3) days for installment periods that are less than twenty -2
eight (28) days; or 3
b. Ten (10) days for installment periods that are twenty -eight (28) 4
days or longer. 5
2. In addition to such delinquency and collection charge, the retail 6
installment contract may provide for the payment of reasonable 7
attorneys' fees where such contract is referred to an attorney not a 8
salaried employee of the holder of the contract for collection, plus the 9
court costs. 10
(e) Unless notice has been given to the retail buyer of actual or intended 11
assignment of a retail installment contract, payment thereunder or tender 12
thereof made by the retail buyer to the last known holder of such contract 13
shall be binding upon all subsequent holders or assignees. 14
(f) Upon written request from the retail buyer, the holder of the retail installment 15
contract shall give or forward to the re tail buyer a written statement of the 16
total amount unpaid under such contract. A retail buyer shall be given a 17
written receipt for any payment when made in cash. 18
(2) The retail installment contract shall contain the following: 19
(a) The cash sale price of th e motor vehicle which is the subject matter of the 20
retail installment sale; 21
(b) The amount of the retail buyer's down payment, whether made in money or 22
goods, or partly in money or partly in goods; 23
(c) The difference between paragraphs (a) and (b) of this subsection; 24
(d) 1. Amount, if any, included for insurance and other benefits; and 25
2. Types of coverage and benefits; 26
(e) Official fees as defined in KRS 190.090; 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 16 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(f) Any amounts eligible for inclusion in the cash sale price as defined in KRS 1
190.090 that the seller elects to separately itemize; and 2
(g) Principal balance, which is the sum of paragraphs (c), (d), and (e) of this 3
subsection. 4
(3) A retail installment contract is deemed in compliance with subsection (2) of this 5
section if it satisfies the requir ements of the Truth in Lending Act that would apply 6
to a retail installment contract within the Truth in Lending Act's scope, regardless 7
of whether the Truth in Lending Act would apply to the retail installment sale at 8
issue. 9
(4) The amount, if any, includ ed for insurance, shall not exceed the premiums 10
chargeable in accordance with applicable rate filings made with the commissioner 11
of insurance. Every retail seller or sales finance company, if insurance on the motor 12
vehicle is included in a retail installme nt contract shall within thirty (30) days after 13
execution of the retail installment contract send or cause to be sent to the retail 14
buyer a policy or policies or certificate of insurance, which insurance shall be 15
written by a company authorized to do business in this state, clearly setting forth the 16
amount of the premium, the kind or kinds of insurance and the scope of the 17
coverage and all the terms, exceptions, limitations, restrictions and conditions of the 18
contract or contracts of the insurance. The buye r of a motor vehicle under a retail 19
installment contract shall have the privilege of purchasing such insurance from an 20
agent or broker of his own selection and of selecting an insurance company 21
acceptable to the seller; provided, however, that the inclusio n of the insurance 22
premium in the retail installment contract when the buyer selects the agent, broker 23
or company, shall be optional with the seller. If any such policy is canceled, the 24
unearned insurance premium refund received by the holder of the contra ct shall be 25
credited to the final maturing installments of the retail installment contract. For 26
purposes of this subsection, single interest insurance insuring the retail seller or 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 17 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
sales finance company shall not be considered insurance on the motor vehicl e. 1
Neither a copy of the policy nor a certificate of insurance of this type of insurance 2
shall be sent to the retail buyer. 3
(5) Any sales finance company hereunder may purchase or acquire from any retail 4
seller any retail installment contract on such terms and conditions as may be agreed 5
upon between them. No filing of the assignment, no notice to the retail buyer of the 6
assignment, and no requirement that the retail seller shall be deprived of dominion 7
over the payments thereunder or the goods covered ther eby if repossessed by the 8
retail seller shall be necessary to the validity of a written assignment of a retail 9
installment contract as against creditors, subsequent purchasers, pledgees, 10
mortgagees, and lien claimants of the retail seller. 11
(6) An acknowledgment in the body of the retail installment contract by the retail 12
buyer of the delivery of a copy thereof shall be conclusive proof of delivery in 13
any action or proceeding by or against any assignee of a retail installment 14
contract.[ 15
(7) (a) A "debt cance llation agreement" is a written provision in a retail installment 16
contract, or separate addendum thereto, which provides for cancellation of all 17
or part of an obligation of the buyer or obligor upon the occurrence of a 18
specified event. 19
(b) In accordance with subsection (2)(d) of this section, a debt cancellation 20
agreement shall be itemized by type on the retail installment contract and 21
considered an "other benefit" for which the seller, sales finance company, or 22
other holder may charge the buyer or obligor. 23
(c) A debt cancellation agreement shall not be considered a contract of, or for, 24
insurance.] 25
SECTION 9. A NEW SECTION OF SUBTITLE 4 OF KRS CHAPTER 286 IS 26
CREATED TO READ AS FOLLOWS: 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 18 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
Notwithstanding any other provision of this subtitle, a consumer loan company shall 1
comply with Sections 1 to 7 of this Act. 2
Section 10. KRS 304.1-120 is amended to read as follows: 3
No provision of this code shall apply to: 4
(1) Fraternal benefit societies (as identified in Subtitle 29), except as stated in Subtitle 5
29;[.] 6
(2) Nonprofit hospital, medical -surgical, dental, and health service corporations (as 7
identified in Subtitle 32) except as stated in Subtitle 32;[.] 8
(3) Burial associations (as identified in KRS Chapter 303), except as stated in Subtitle 9
31;[.] 10
(4) Assessment or cooperative insurers (as identified in KRS Chapter 299), except as 11
stated in KRS Chapter 299;[.] 12
(5) Insurance premium finance companies (as identified in Subtitle 30), except as stated 13
in Subtitle 30;[.] 14
(6) Qualified organizations which issue charitable gift annuities within the 15
Commonwealth of Kentucky. For the purposes of this subsection: 16
(a) A "qualified organization" means one which is: 17
1. Exempt from taxation under Section 501(c)(3) of the Internal Revenue 18
Code as a charitable organization, if it files a copy of federal form 990 19
with the Office of Consumer Protection in the Office of the Attorney 20
General;[ or] 21
2. Exempt from taxation under Se ction 501(c)(3) of the Internal Revenue 22
Code as a religious organization; or 23
3. Exempt as a publicly owned or nonprofit, privately endowed educational 24
institution approved or licensed by the State Board of Education, the 25
Southern Association of Colleges an d Schools, or an equivalent public 26
authority of the jurisdiction where the institution is located; and 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 19 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(b) A "charitable gift annuity" means a giving plan or method by which a gift of 1
cash or other property is made to a qualified organization in exchange f or its 2
agreement to pay an annuity;[.] 3
(7) A religious organization, as identified in this subsection, or its participants, that: 4
(a) Is a nonprofit religious organization; 5
(b) Is limited to participants who are members of the same denomination or 6
religion; 7
(c) Matches its participants who have financial, physical, or medical needs with 8
participants who choose to assist with those needs; 9
(d) 1. Includes the following notice for delivery to all participants, printed in 10
not less than ten (10) point, bold -faced type on or accompanying all 11
applications, guideline materials, or any similar documents: 12
"NOTICE: UNDER KENTUCKY LAW, THE RELIGIOUS 13
ORGANIZATION FACILITATING THE SHARING OF MEDICAL 14
EXPENSES IS NOT AN INSURANCE COMPANY, AND ITS 15
GUIDELINES, PLAN OF OPERAT ION, OR ANY OTHER 16
DOCUMENT OF THE RELIGIOUS ORGANIZATION DO NOT 17
CONSTITUTE OR CREATE AN INSURANCE POLICY. 18
PARTICIPATION IN THE RELIGIOUS ORGANIZATION OR A 19
SUBSCRIPTION TO ANY OF ITS DOCUMENTS SHALL NOT BE 20
CONSIDERED INSURANCE. ANY ASSISTANCE YOU RECEIVE 21
WITH YOUR MEDICAL BILLS WILL BE TOTALLY 22
VOLUNTARY. NEITHER THE ORGANIZATION OR ANY 23
PARTICIPANT SHALL BE COMPELLED BY LAW TO 24
CONTRIBUTE TOWARD YOUR MEDICAL BILLS. WHETHER OR 25
NOT YOU RECEIVE ANY PAYMENTS FOR MEDICAL 26
EXPENSES, AND WHETHER OR NOT THIS ORGANIZATI ON 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 20 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
CONTINUES TO OPERATE, YOU SHALL BE PERSONALLY 1
RESPONSIBLE FOR THE PAYMENT OF YOUR MEDICAL 2
BILLS." 3
2. A participant shall acknowledge receipt of the "Notice" by signing 4
below the "Notice" on the application; and 5
(e) Suggests amounts to give that are voluntary among the participants, with no 6
assumption of risk or promise to pay either among the participants or between 7
the participants and the organization;[.] 8
(8) A public or private ambulance service licensed and regulated by the Cabinet for 9
Health and Family Services to the extent that it solicits membership subscriptions, 10
accepts membership applications, charges membership fees, and furnishes prepaid 11
or discounted ambulance services to subscription members and designated members 12
of their households;[.] 13
(9) A direct primary care agreement established under KRS 311.6201, 311.6202, 14
314.198, and 314.199; or 15
(10) A vehicle financial protection product as defined in Section 2 of this Act. 16
SECTION 11. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 17
IS CREATED TO READ AS FOLLOWS: 18
As used in Sections 11 to 18 of this Act: 19
(1) "Collateral" means any personal property, including but not limited to a motor 20
vehicle, pledged as security or in which a purc hase money security interest is 21
retained, for the satisfaction of a debt; 22
(2) "Credit personal property insurance" means a policy, endorsement, rider, binder, 23
certificate, or other instrument or evidence of insurance that: 24
(a) Is offered in connection with a credit transaction; 25
(b) Covers perils to the personal property purchased through, or used as 26
collateral for, a credit transaction; and 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 21 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(c) Concerns a creditor's interest in the purchased personal property or pledged 1
collateral, in whole or in part; 2
(3) "Credit transaction": 3
(a) Means any transaction in which the: 4
1. Repayment of money loaned, or a credit commitment, is made; or 5
2. Payment of goods, services, property, rights, or privileges sold or 6
leased, is to be made at a future date or dates; and 7
(b) Includes a retail installment transaction; 8
(4) "Creditor" means: 9
(a) A lender of money; 10
(b) A vendor or lessor of goods, services, property, rights, or privileges for 11
which payment is arranged through a credit transaction; 12
(c) Any successor to the right, title, or interest of a lender, vendor, or lessor; 13
(d) Any director, officer, or employee of any person referenced under 14
paragraph (a), (b), or (c) of this subsection; 15
(e) Any affiliate, association, or subsidiary of any person referenced under 16
paragraph (a), (b), or (c) of this subsection; or 17
(f) Any person associated in any way with a person referenced under 18
paragraph (a), (b), or (c) of this subsection; 19
(5) "Debtor" means: 20
(a) Any or all borrowers of money; or 21
(b) A purchaser or lessee of goods, services, property, rights, or privileges for 22
which payment is arranged through a credit transaction; and 23
(6) "Finance charge": 24
(a) Means any charge payable, directly or indirectly, as an incident to, or a 25
condition of, the extension of credit, including but not limited to: 26
1. Interest; 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 22 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
2. Time price differentials; 1
3. Amounts payable under a discount system of additional charges; 2
4. Service, transaction, or carrying charges; 3
5. Loan fees; 4
6. Points or similar charges; 5
7. Appraisal fees; or 6
8. Charges incurred for investigating the credit worthiness of the 7
consumer; and 8
(b) Does not include charges as a result of: 9
1. Default; 10
2. Taxes; 11
3. License fees; 12
4. Delinquency charges; or 13
5. Filing fees. 14
SECTION 12. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 15
IS CREATED TO READ AS FOLLOWS: 16
(1) Except as provided in subsection (2) of this section, all credit p ersonal property 17
insurance written in connection with credit transactions for personal, family, or 18
household purposes shall be subject to Sections 11 to 18 of this Act. 19
(2) The following shall not be subject to Sections 11 to 18 of this Act: 20
(a) Transactions involving extensions of credit primarily for business or 21
commercial purposes; 22
(b) Insurance that is not classified and filed as credit insurance; 23
(c) Insurance written in connection with a credit transaction that is secured by 24
a real estate mortgage or deed of trust; 25
(d) Title insurance; 26
(e) Non-filing insurance; 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 23 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
(f) Insurance purchased by a creditor after: 1
1. Repossession; or 2
2. A similar event where the creditor gains possession of the property; 3
(g) Insurance for which no identifiable charge is made to, or collected from, 4
the debtor; 5
(h) Blanket vendor single interest (VSI); or 6
(i) Vehicle financial protection products as defined in Section 2 of this Act. 7
SECTION 13. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 8
IS CREATED TO READ AS FOLLOWS: 9
(1) As used in this section, "gross debt" means the sum of the remaining payments 10
owed to a creditor by a debtor. 11
(2) For credit personal property insurance sold in conjunction with a closed -end 12
credit transaction, an insurer shall not issue the insurance: 13
(a) In an amount that exceeds the gross debt of the underlying credit 14
transaction; or 15
(b) With a term that exceeds the scheduled term of the underlying credit 16
transaction. 17
(3) Credit personal property insurance shall cover a substantial risk of loss of, or 18
damage to, the collateral pledged or secured in the credit transaction. 19
(4) An insurer shall not: 20
(a) Require the bundling of other credit insurance coverages with the purchase 21
of credit personal property insurance; or 22
(b) Use gross debt in determining credit personal property insurance premiums. 23
(5) A debtor shall have the choice to purchase credit pers onal property insurance 24
separate from other credit insurance coverage. 25
SECTION 14. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 26
IS CREATED TO READ AS FOLLOWS: 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 24 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
When credit personal property insurance is written pursuant to Sections 11 to 18 of 1
this Act, the creditor shall deliver, or cause to be delivered, a policy, certificate, 2
memorandum, or other disclosure which discloses the coverage and costs to the debtor 3
within thirty (30) days after the date of the loan. 4
SECTION 15. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 5
IS CREATED TO READ AS FOLLOWS: 6
With respect to credit personal property insurance delivered or issued for de livery in 7
this state, all of the following shall be filed with the commissioner: 8
(1) All policies, certificates, plans, and contracts, including endorsements and riders; 9
(2) Group and individual applications for insurance; 10
(3) Enrollment forms; and 11
(4) Schedules of premiums rates. 12
SECTION 16. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 13
IS CREATED TO READ AS FOLLOWS: 14
(1) Upon cancellation of credit personal property insurance for any reason prior to 15
the scheduled matur ity date of the indebtedness, the insurer shall promptly 16
refund or credit the debtor any unearned premium in accordance with subsection 17
(2) of this section, except an insurer shall not be required to refund or credit an 18
amount of less than five dollars ($5). 19
(2) (a) Except as provided in paragraph (b) of this subsection, the method of 20
calculating unearned premium due under subsection (1) of this section 21
shall be the method in the credit personal property insurance policy, 22
certificate, plan, or contract as f iled with the commissioner before or after 23
the effective date of this Act. 24
(b) If a method for calculating unearned premium due under subsection (1) of 25
this section is not set forth in the credit personal property insurance policy, 26
certificate, plan, or contract, the method shall be the method set forth in the 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 25 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
underlying credit transaction for the refund of finance charges. 1
SECTION 17. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 2
IS CREATED TO READ AS FOLLOWS: 3
(1) (a) Any claim under a credit personal property insurance policy, certificate, 4
plan, or contract shall be promptly reported to the insurer or its designated 5
claim representative. 6
(b) An insurer shall maintain adequate claims files for claims reported under 7
paragraph (a) of this subsection. 8
(2) A claim under credit personal property insura nce shall be paid by draft drawn 9
upon the insurer, by electronic funds transfer, or by check of the insurer to the 10
order of: 11
(a) Except as provided in paragraph (b) of this subsection, the claimant to 12
whom payment of the claim is due pursuant to the policy provisions; or 13
(b) Upon direction of the claimant, to a person other than the claimant. 14
(3) (a) A firm, corporation, or other person, other than the insurer or its designated 15
claim representative, shall not be authorized to settle or adjust claims under 16
credit personal property insurance. 17
(b) 1. Except as provided in subparagraph 2. of this paragraph, a creditor 18
shall not be designated as a claim representative for the insurer in 19
adjusting claims. 20
2. When the amount of a claim is determined, a group policy holder may, 21
by arrangement with the insurer and subject to audit and review by the 22
insurer, draw drafts or checks or make electronic transfers, in 23
payment of claims due to the group policyholder. 24
(4) All claims for credit personal property insurance shall be subject to Subtitle 12 of 25
this chapter to the extent applicable and not in conflict with Sections 11 to 18 of 26
this Act. 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 26 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
SECTION 18. A NEW SECTION OF SUBTITLE 19 OF KRS CHAPTER 304 1
IS CREATED TO READ AS FOLLOWS: 2
(1) Unless a remedy is otherwise specifically provided, any person aggrieved by a 3
final decision of the commissioner issued pursuant to Sections 11 to 18 of this Act 4
may, within twenty (20) days of service of the notice of the decision, request an 5
administrative hearing which shall be conducted in accordance with KRS 6
Chapter 13B. 7
(2) An insurer that violates any provision of Sections 11 to 18 of this Act shall be 8
subject to the penalty provisions of Subtitle 99 of this chapter. 9
Section 19. KRS 304.19-010 is amended to read as follows: 10
All life insurance and all health insurance in connection with loans or other credit 11
transactions shall be subject to the provisions of KRS 304.19 -020 to 304.19 -140[this 12
subtitle], except health in surance in connection with a loan or other credit transaction of 13
more than five (5) years' duration or life insurance in connection with a loan or other 14
credit transaction of more than ten (10) years' duration; nor shall insurance be subject to 15
KRS 304.19 -020 to 304.19 -140[the provisions of this subtitle] , where the issuance of 16
such insurance is an isolated transaction on the part of the insurer not related to an 17
agreement or a plan for insuring debtors of the creditor. 18
Section 20. KRS 304.19-020 is amended to read as follows: 19
For the purpose of KRS 304.19-020 to 304.19-140[this subtitle]: 20
(1) "Credit life insurance" means insurance on the life of a debtor pursuant to or in 21
connection with a specific loan or other credit transaction; 22
(2) "Credit health insurance" means insurance on a debtor to provide indemnity for 23
payments becoming due on a specific loan or other credit transaction while the 24
debtor is disabled as defined in the policy; 25
(3) "Creditor" means the lender of m oney or vendor or lessor of goods, services, or 26
property, rights or privileges, for which payment is arranged through a credit 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 27 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
transaction, or any successor to the right, title or interest of any such lender, vendor, 1
or lessor, and an affiliate, associate or subsidiary of any of them, or any director, 2
officer or employee of any of them, or any other person in any way associated with 3
any of them; 4
(4) "Debtor" means a borrower of money or a purchaser or lessee of goods, services, 5
property, rights or privilege s for which payment is arranged through a credit 6
transaction; 7
(5) "Indebtedness" means the total amount payable by a debtor to a creditor in 8
connection with a loan or other credit transaction; 9
(6) "Joint credit life or credit health" shall mean insurance o n the life of the debtor and 10
the spouse of the debtor, partners, or any other legal cosigner. 11
Section 21. KRS 304.19-080 is amended to read as follows: 12
(1) All such policies, certificates of insurance, notices of proposed insurance, 13
applications for insurance, indorsements and riders delivered or issued for delivery 14
in this state and the schedule of premium rates pertaining thereto shall be filed with 15
the commissioner. 16
(2) All life insurance and all health insurance in connection with loans or other credit 17
transactions shall be subject to KRS 304.19 -020 to 304.19 -140[the provisions of 18
this subtitle] , except health insurance in connection with a loan or other c redit 19
transaction of more than five (5) years' duration or life insurance in connection with 20
a loan or other credit transaction of more than ten (10) years' duration; nor shall 21
insurance be subject to KRS 304.19-020 to 304.19 -140[provisions of this subtitl e] 22
where the issuance of such insurance is an isolated transaction on the part of the 23
insurer not relating to an agreement or a plan for insuring debtors of the creditor; 24
nor shall insurance issued for an amount in excess of forty thousand dollars 25
($40,000) be subject to KRS 304.19-020 to 304.19-140[this subtitle]. 26
(3) (a) Credit life insurance. The premium rates set forth hereunder, or actuarially 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 28 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
equivalent, shall not exceed: 1
1. For decreasing term credit life insurance, a single premium of sixty 2
cents ($0.60) per annum per one hundred dollars ($100) of scheduled 3
indebtedness, or sixty -five cents ($0.65) per annum per one hundred 4
dollars ($100) of scheduled indebtedness if dismemberment benefits are 5
included in the policy; 6
2. Single premium rates for indebtedness repayable in monthly 7
installments other than twelve (12) in n umber shall not exceed one -8
twelfth (1/12) of the above premium rate multiplied by the number of 9
full months in the scheduled period; 10
3. A premium payable monthly at the rate of ninety -two cents ($0.92) per 11
one thousand dollars ($1,000) of outstanding unpai d insured 12
indebtedness or one dollar ($1) per one thousand dollars ($1,000) of 13
outstanding unpaid insured indebtedness if dismemberment benefits are 14
included in the policy, will be deemed the actuarial equivalent of the 15
foregoing rates; and 16
4. For level te rm credit life insurance, a single premium of one dollar and 17
twenty cents ($1.20) per annum per one hundred dollars ($100) of 18
indebtedness or one dollar and thirty cents ($1.30) per one hundred 19
dollars ($100) of indebtedness if dismemberment benefits are i ncluded 20
in the policy. 21
(b) 1. The standards set forth above are applicable to a plan of death benefits 22
with or without requirements for evidence of insurability which contain 23
no exclusions except for suicide; other exclusions must receive the 24
approval of the commissioner. 25
2. Coverage shall be offered to all debtors regardless of age; or to all 26
debtors not older than the applicable age limit which shall be not less 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 29 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
than sixty-five (65) at the inception of the indebtedness or sixty -six (66) 1
at the scheduled m aturity date of the transaction, provided that each 2
company's right to underwrite risks on an individual basis shall not be 3
restricted by this subparagraph. Appropriate adjustments may be made 4
with the approval of the commissioner if premium rates are dete rmined 5
according to the age of the insured debtor or by age brackets. 6
3. Rates for use with forms which are more restrictive in any material 7
respect shall reflect such variations in lower rates. Similarly, forms 8
providing more extensive benefits than set f orth above may carry 9
appropriately higher charges. 10
4. The standards set forth above shall be applicable to contracts which may 11
contain a provision excluding or denying a claim for death, resulting 12
from pre -existing illness, disease or physical condition fo r which the 13
debtor received medical advice, consultation or treatment during the 14
twelve (12) month period immediately preceding the effective date of 15
the debtor's coverage and which would ordinarily be expected to affect 16
materially the debtor's health duri ng the period of coverage; provided, 17
however, that after such coverage has been in force for six (6) months 18
(twelve (12) months for contracts of more than three (3) years), this pre -19
existing exclusion clause shall not operate to deny coverage for any 20
death thereafter. The contract shall contain no other provision which 21
excludes or restricts liability in the event of death caused in a certain 22
specified manner, except provisions excluding or restricting coverage in 23
the event of intentionally self -inflicted in juries, foreign travel or 24
residence, flight in nonscheduled aircraft, war or military service. 25
(4) (a) Credit health insurance. The following premium rates, or actuarially 26
equivalent rates, shall be charged for the coverages set forth hereunder: 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 30 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
Single Premium Per $100 of Initial Indebtedness 1
--------------------------------------------------------------------------------------------------------- 2
Nonretroactive Basis Retroactive Basis 3
Number of Monthly 14-Day 30-Day 14-Day 30-Day 4
Installments Wait Wait Wait Wait 5
--------------------------------------------------------------------------------------------------------- 6
1-6 months $ 1.51 $ .69 $2.02 $ .92 7
7-12 months 2.02 .91 2.69 1.22 8
13-19 months 2.50 1.56 3.33 2.08 9
20-24 months 2.93 1.84 3.91 2.45 10
25-30 months 3.28 2.34 4.37 3.12 11
31-36 months 3.85 2.77 5.14 3.70 12
37-48 months 4.77 3.67 6.36 4.89 13
49-60 months 5.68 4.58 7.58 6.11 14
-------------------------------------------------------------------------------------------------------- 15
(b) 1. The standards set forth above shall be applicable to contracts which may 16
contain a provision excluding or denying a claim for disability, result ing 17
from pre -existing illness, disease or physical condition for which the 18
debtor received medical advice, consultation or treatment during the 19
twelve (12) month period immediately preceding the effective date of 20
the debtor's coverage and which would ordin arily be expected to affect 21
materially the debtor's health during the period of coverage; provided, 22
however, that after such coverage has been in force for six (6) months 23
(twelve (12) months for contracts of more than three (3) years), this pre -24
existing ex clusion clause shall not operate to deny coverage for any 25
disability commencing thereafter. The contract shall contain no other 26
provision which excludes or restricts liability in the event of disability 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 31 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
caused in a certain specified manner, except provisio ns excluding or 1
restricting coverage in the event of pregnancy, intentionally self -2
inflicted injuries, foreign travel or residence, flight in nonscheduled 3
aircraft, war or military service. 4
2. Coverage shall be offered to all debtors regardless of age, or to all 5
debtors not older than the applicable age limit which shall be not less 6
than sixty-five (65) at the inception of the indebtedness or sixty -six (66) 7
at the scheduled maturity date of the transaction, provided that each 8
company's right to underwrite r isks on an individual basis shall not be 9
restricted by this subparagraph. Appropriate adjustments may be made 10
with the approval of the commissioner if premium rates are determined 11
according to the age of the insured debtor or by age brackets. 12
3. Rates for use with forms which are more restrictive in any material 13
respect shall reflect such variations in lower rates. Similarly, forms 14
providing more extensive benefits than set forth above may carry 15
appropriately higher charges. 16
(5) Statistical reporting. Each insurer writing credit life or credit health insurance 17
within this state shall keep and maintain statistical data of its experience on these 18
kinds of insurance. The insurer shall, on or before May 1 of each year, file with the 19
commissioner its statistical experience data for the year ending December 31 20
immediately preceding. Such experience shall be reported on forms conforming to 21
those now or hereafter from time to time adopted by the National Association of 22
Insurance Commissioners. 23
(6) If a group policy h as been delivered in this state before June 18, 1980, or has been 24
or is delivered in another state before or on or after June 18, 1980, the insurer shall 25
be required to file only the group certificate and notice of proposed insurance 26
delivered or issued fo r delivery in this state as specified in subsections (2) and (4) 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 32 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
of KRS 304.19-070, and such forms shall be approved by the commissioner if they 1
conform with the requirements specified in such subsections and if the schedules of 2
premium rates applicable to the insurance evidenced by such certificate or notice 3
are not in excess of the insurer's schedules of premium rates filed with the 4
commissioner. The premium rate in effect on existing group policies may be 5
continued until the first policy anniversary date following June 18, 1980. After June 6
18, 1980, no borrower shall be added to an existing group policy at rates higher 7
than those set forth in subsections (3) and (4) of this section. 8
(7) The foregoing rates and procedures are deemed to be legislative prero gatives and 9
shall not be subject to administrative or executive change or modification. 10
Section 22. KRS 304.19-090 is amended to read as follows: 11
(1) Any insurer may revise its schedules of premium rates from time to tim e, and shall 12
file such revised schedules with the commissioner. No insurer shall issue any credit 13
life insurance or credit health insurance policy for which the premium rate exceeds 14
that determined by the schedules of such insurer as then on file with the 15
commissioner. 16
(2) Each individual policy or group certificate shall provide that in the event of 17
termination of the insurance prior to the scheduled maturity date of the 18
indebtedness, any refund of an amount paid by the debtor for insurance shall be 19
paid o r credited promptly to the person entitled thereto. The commissioner shall 20
prescribe a minimum refund and no refund which would be less than such 21
minimum need be made. The formula to be used in computing such refund shall be 22
filed with and approved by the commissioner. Nothing contained in this section 23
shall require the debtor to surrender any policy or group certificate for cancellation 24
or termination solely because the indebtedness has been paid in full prior to the 25
scheduled maturity date nor require the insurer to return any premiums. 26
(3) When a debtor purchases credit life insurance or credit health insurance and an 27
UNOFFICIAL COPY 26 RS SB 158/EN
Page 33 of 33
SB015820.100 - 1901 - XXXX 3/25/2026 3:34 PM Engrossed
individual policy or group certificate of insurance is not issued, the creditor shall 1
immediately give written notice to such debtor and sh all promptly make an 2
appropriate credit to the account. 3
(4) The amount charged to a debtor for any credit life insurance or credit health 4
insurance shall not exceed the premiums charged by the insurer, as computed at the 5
time the charge to the debtor is determined. 6
(5) Nothing in KRS 304.19 -020 to 304.19 -140[this subtitle] shall be construed to 7
authorize any payments for insurance now prohibited under any statute, or rule 8
thereunder, governing credit transactions. 9
Section 23. KRS 304.19-130 is amended to read as follows: 10
Whenever the commissioner finds that there has been a violation of KRS 304.19-020 to 11
304.19-140[this subtitle] or any administrative regulations promulgated pursuant thereto, 12
the commissioner shall conduct a hearing in accordance with this chapter and KRS 13
Chapter 13B. 14
Section 24. Sections 1 to 10 of this Act apply to vehicle financial protection 15
products that become effective on or after January 1, 2027. 16
Section 25. Sections 11 to 18 of this Act apply to contracts issued or renewed 17
on or after the effective date of this section. 18
Section 26. If any provision of this Act or the application thereof to any person 19
or circumstance is held invalid, the invalidity shall not affect other provisions or 20
applications of the Act that can be given effect without the invalid provision or 21
application, and to this end the provisions of this Act are severable. 22
Section 27. Sections 1 to 10 and 24 take effect January 1, 2027. 23