Download as PDF
304.33-390 Special provision for third-party claims.
(1)
(2)
(3)
(4)
Third-party's claim. Whenever any third party asserts a cause of action against an
insured of an insurer in liquidation, the third party may file a claim with the
liquidator. The filing of the claim shall release the insured's liability to the third
party on that cause of action in the amount of the applicable policy limit, but the
liquidator shall also insert in any form used for the filing of third-party claims
appropriate language to constitute such a release. The release shall be void if the
insurance coverage is avoided by the liquidator.
Insured's claim. Whether or not the third party files a claim, the insured may file a
claim on his own behalf in the liquidation. If the insured fails to file a claim by the
date for filing claims specified in the order of liquidation or within sixty (60) days
after mailing of the notice required by paragraph (b) of subsection (1) of KRS
304.33-250, whichever is later, he is an unexcused late filer.
Procedure for insured's claim. The liquidator shall make his recommendations to the
court under KRS 304.33-440 for the allowance of an insured's claim under
subsection (2) of this section after consideration of the probable outcome of any
pending action against the insured on which the claim is based, the probable
damages recoverable in the action and the probable costs and expenses of defense.
After allowance by the court, the liquidator shall withhold any dividends payable on
the claim, pending the outcome of litigation and negotiation with the insured.
Whenever it seems appropriate, he shall reconsider the claim on the basis of
additional information and amend his recommendations to the court. The insured
shall be afforded the same notice and opportunity to be heard on all changes in the
recommendation as in its initial determination. The court may amend its allowance
as it thinks appropriate. As claims against the insured are settled or barred, the
insured shall be paid from the amount withheld, the same percentage dividend as
was paid on the other claims of like priority, based on the lesser of (a) the amount
actually recovered from the insured by action or paid by agreement plus the
reasonable costs and expenses of defense, or (b) the amount allowed on the claims
by the court. After all claims are settled or barred, any sum remaining from the
amount withheld shall revert to the undistributed assets of the insurer. Delay in final
payment under this subsection shall not be a reason for unreasonable delay of final
distribution and discharge of the liquidator.
Multiple claims. If several claims founded upon one (1) policy are filed, whether by
third parties or as claims by the insured under this section, and the aggregate
allowed amount of the claims to which the same limit of liability in the policy is
applicable exceeds that limit, each claim as allowed shall be reduced in the same
proportion so that the total equals the policy limit. Claims by the insured shall be
evaluated as in subsection (3) of this section. If any insured's claim is subsequently
reduced under subsection (3) of this section, the amount thus freed shall be
apportioned ratably among the claims which have been reduced under this
subsection.
Effective: June 18, 1970
History: Created 1970 Ky. Acts ch. 301, subtit. 33, sec. 39, effective June 18, 1970.
Disclaimer: These codes may not be the most recent version. Kentucky may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.