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286.4-560 Insurance.
Notwithstanding the provisions of this or any other law:
(1) A licensee may request a borrower to insure tangible personal property, except
household goods, offered as security for a loan exceeding three hundred
dollars ($300) under this subtitle against any substantial risk of loss, damage,
or destruction for an amount not to exceed the actual value of such property or
the approximate amount of the loan, whichever is greater, and for a term and
upon conditions which are reasonable and appropriate considering the nature
of the property and the maturity and other circumstances of the loan; provided
such insurance is sold by a licensed agent, broker, or solicitor.
(2) A licensee may also request, provide, obtain, or take as security for any loan
obligation insurance on the life, unemployment, health, or disability, or all, of
the borrower, or two (2) of them if there are two (2) or more. Life insurance
shall be in the approximate amount of the indebtedness scheduled to be due
the licensee under the loan contract. Not more than one (1) policy of life
insurance may be written in connection with any loan transaction under this
subtitle. The aggregate amount of periodic benefits payable by any
unemployment, health, or disability insurance provided, obtained, or requested
by the licensee in the event of unemployment or disability, as defined in the
policy, shall not exceed the aggregate of the scheduled installments and the
waiting period provided in such policy must be fourteen (14) days or longer.
The premium rate for insurance provided under this section shall be
reasonable in relation to the benefits provided and shall be filed with the
commissioner of insurance. The commissioner of insurance shall, within thirty
(30) days after the filing of any premium rate, disapprove such premium rate if
it is excessive in relation to the benefits. In determining whether to approve or
disapprove any premium rate, the commissioner of insurance shall give due
consideration to the unemployment, mortality, and morbidity costs with respect
to such insurance on borrowers under this subtitle or similar acts in other
states, a reasonable margin for underwriting expenses and profit and
contingencies to the insurer, and cost and compensation to the licensees for
providing and servicing such insurance, plus the premium taxes payable on
such insurance.
(3) In accepting any insurance provided for by this section as security for a loan
the licensee, its officers, agents, or employees may deduct the premiums or
identifiable charge therefor from the proceeds of the loan, which premium or
identifiable charge shall not exceed the rate filed with the commissioner of
insurance and not disapproved and remit such premiums to the insurance
company writing such insurance and any gain or advantage to the licensee or
any employee, officer, director, agent, affiliate, or associate from such
insurance or its sale shall not be considered as additional or further charge in
connection with any loan made under this subtitle. The arranging for and
collecting of an identifiable charge shall not be deemed the sale of insurance.
(4) Every insurance policy or certificate written in connection with a loan
transaction pursuant to subsection (2) of this section shall provide for
cancellation of coverage and a refund of the premium or identifiable charge
unearned upon the discharge of the loan obligation for which such insurance is
(5)
(6)
security without prejudice to any claim. Such refund shall be under a formula
filed by the insurer with the commissioner of insurance.
Whenever insurance is written in connection with a loan transaction pursuant
to this section the licensee shall deliver or cause to be delivered to the
borrower a policy, certificate, or other memorandum which shall show the
coverages and the cost thereof, if any, to the borrower within thirty (30) days
from the date of the loan.
All such insurance shall be written by a company authorized to conduct such
business in this state and the licensee shall not require the purchase of such
insurance from any agent or broker designated by the licensee nor shall the
licensee decline existing coverages which equal or exceed the standards of
this section.
Effective:July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 665, effective July 15, 2010. -Amended 1992 Ky. Acts ch. 222, sec. 3, effective July 14, 1992. -- Amended
1982 Ky. Acts ch. 53, sec. 4, effective July 15, 1982. -- Amended 1970 Ky. Acts
ch. 48, sec. 3. -- Created 1960 Ky. Acts ch. 204, sec. 16, effective June 16,
1960.
Formerly codified as KRS 288.560.
Legislative Research Commission Note (7/12/2006). In accordance with 2006
Ky. Acts ch. 247, secs. 38 and 39, this statute has been renumbered as a
section of the Kentucky Financial Services Code, KRS Chapter 286, and KRS
references within this statute have been adjusted to conform with the 2006
renumbering of that code.
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