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304.39-320 Underinsured motorist coverage -- Effect of settlement of claims.
(1)
(2)
(3)
(4)
(5)
As used in this section, "underinsured motorist" means a party with motor
vehicle liability insurance coverage in an amount less than a judgment
recovered against that party for damages on account of injury due to a motor
vehicle accident.
Every insurer shall make available upon request to its insureds underinsured
motorist coverage, whereby subject to the terms and conditions of such
coverage not inconsistent with this section the insurance company agrees to
pay its own insured for such uncompensated damages as he may recover on
account of injury due to a motor vehicle accident because the judgment
recovered against the owner of the other vehicle exceeds the liability policy
limits thereon, to the extent of the underinsurance policy limits on the vehicle of
the party recovering.
If an injured person or, in the case of death, the personal representative agrees
to settle a claim with a liability insurer and its insured, and the settlement would
not fully satisfy the claim for personal injuries or wrongful death so as to create
an underinsured motorist claim, then written notice of the proposed settlement
must be submitted by certified or registered mail to all underinsured motorist
insurers that provide coverage. The underinsured motorist insurer then has a
period of thirty (30) days to consent to the settlement or retention of
subrogation rights. An injured person, or in the case of death, the personal
representative, may agree to settle a claim with a liability insurer and its insured
for less than the underinsured motorist's full liability policy limits. If an
underinsured motorist insurer consents to settlement or fails to respond as
required by subsection (4) of this section to the settlement request within the
thirty (30) day period, the injured party may proceed to execute a full release in
favor of the underinsured motorist's liability insurer and its insured and finalize
the proposed settlement without prejudice to any underinsured motorist claim.
If an underinsured motorist insurer chooses to preserve its subrogation rights
by refusing to consent to settle, the underinsured motorist insurer must, within
thirty (30) days after receipt of the notice of the proposed settlement, pay to the
injured party the amount of the written offer from the underinsured motorist's
liability insurer. Thereafter, upon final resolution of the underinsured motorist
claim, the underinsured motorist insurer is entitled to seek subrogation against
the liability insurer to the extent of its limits of liability insurance, and the
underinsured motorist for the amounts paid to the injured party.
The underinsured motorist insurer is entitled to a credit against total damages
in the amount of the limits of the underinsured motorist's liability policies in all
cases to which this section applies, even if the settlement with the
underinsured motorist under subsection (3) of this section or the payment by
the underinsured motorist insurer under subsection (4) of this section is for less
than the underinsured motorist's full liability policy limits. The term "total
damages" as used in this section means the full amount of damages
determined to have been sustained by the injured party, regardless of the
amount of underinsured motorist coverage. Nothing in this section, including
any payment or credit under this subsection, reduces or affects the total
amount of underinsured motorist coverage available to the injured party.
Effective:July 15, 1998
History: Amended 1998 Ky. Acts ch. 564, sec. 1, effective July 15, 1998. -Amended 1990 Ky. Acts ch. 103, sec. 2, effective December 1, 1990. -Amended 1988 Ky. Acts ch. 180, sec. 1, effective July 15, 1988. -- Created 1974
Ky. Acts ch. 385, sec. 32, effective July 1, 1975.
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