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286.7-480 Additional charges prohibited -- Allowed collateral.
In addition to the charge permitted by KRS 286.7-410 to 286.7-600, no further amount
shall be directly or indirectly charged, contracted for or received on any such installment
loan, except lawful fees actually paid to a public official for filing, recording or releasing
any instrument securing the loan, delinquency and deferral charges as set out in
subsection (1) of KRS 286.7-500. Provided, however, that the certificate holder may
request, as collateral for any loan, and collect premiums for:
(1) Notwithstanding the provisions of this or any other law:
(a) A certificate holder may request a borrower to insure tangible personal
property, except household goods, offered as security for a loan not exceeding
seven thousand five hundred dollars ($7,500) under KRS 286.7-410 to 286.7600 against any substantial risk of loss, damage or destruction for any amount
not to exceed the actual value of such property or the approximate amount of
the loan, whichever is lesser, 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.
(b) A certificate holder may also request as security for any loan obligation
insurance on the life of the borrower, or one of them if there are two or more.
The initial amount of credit life insurance shall not exceed the total amount
repayable under the contract of indebtedness and, where an indebtedness is
repayable in substantially equal installments, the amount of insurance shall at
no time exceed the scheduled or actual amount of unpaid indebtedness,
whichever is greater. Not more than one policy of life insurance may be
written in connection with any loan transaction under KRS 286.7-410 to
286.7-600.
(c) In accepting any insurance provided for by KRS 286.7-410 to 286.7-600 as
security for a loan the certificate holder, its officers, agents or employees may
deduct the premiums or identifiable charge therefor from the proceeds of the
loan, and remit such premiums to the insurance company writing such
insurance and any gain or advantage to the certificate holder 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 KRS 286.7-410 to 286.7-600. The arranging for and
collecting of an identifiable charge shall not be deemed the sale of insurance.
(d) Every insurance policy or certificate written in connection with a loan
transaction pursuant to paragraph (b) of this subsection 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
security without prejudice to any claim.
(e) Whenever insurance is written in connection with a loan transaction pursuant
to KRS 286.7-410 to 286.7-600, the certificate holder shall deliver or cause to
be delivered to the borrower a policy, certificate or other memorandum which
shall show the coverages and the costs thereof, if any, to the borrower within
(2)
(3)
thirty days from the date of the loan.
(f) All such insurance shall be written by a company authorized to conduct such
business in this state and the certificate holder shall not require the purchase
of such insurance from any agent or broker designated by the certificate holder
nor shall the certificate holder decline existing coverages which equal or
exceed the standards of KRS 286.7-410 to 286.7-600.
Insurance on real property pledged as security for a loan in an amount not to exceed
the actual value of such property or the approximate amount of the loan whichever
is lesser.
Accident and health insurance on not less than a fourteen-day retroactive basis,
covering one borrower in aggregate amount not to exceed the approximate amount
of the loan with each periodic indemnity payment not to exceed the original
indebtedness divided by the number of periodic installments; all subject to the
general provisions and limitations of KRS 286.7-410 to 286.7-600. Premium rates
for accident and health insurance written pursuant to KRS 286.7-410 to 286.7-600
shall be reasonable in relation to benefits, and shall be filed with the commissioner
of insurance.
Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 753, effective July 15, 2010. -- Amended
1972 Ky. Acts ch. 317, sec. 3. -- Created 1962 Ky. Acts ch. 166, sec. 6 (first clause
of subsection (2)).
Formerly codified as KRS 291.480.
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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