806 KAR 19:040.
Extinguishment of debt; options.
RELATES TO: KRS
AND CONFORMITY: KRS 304.2-110 provides that the Executive Director of
Insurance may make reasonable rules and regulations necessary for or as an aid
to the effectuation of any provision of the Kentucky Insurance Code. This administrative
regulation provides the debtor a choice, when a debt extinguished which is
covered by any type of credit insurance, to retain the insurance coverage or to
receive a pro rata return of the premium.
Section 1. In the
event of extinguishment of a debt by prepayment wherein the credit transaction
is secured by any type of credit insurance, and the debt is not renewed or
refinanced, termination of such insurance is not required, and may, at the
option of the debtor, continue for the benefit of the secondary beneficiary.
The agent shall, within ten (10) days of the extinguishment of the debt, notify
the debtor of the debtor's option to continue the insurance or receive a pro
rata return of the premiums.
Section 2. In the
event the debtor elects to continue such insurance in force, the agent shall
give written notice to the insurer within ten (10) days of the date the debtor
makes his election, that the debt is extinguished and that the insurance is to
remain in force for the benefit of the secondary beneficiary. (1-19.04; 1 Ky.R.
1084; eff. 7-2-75; TAm eff. 8-9-2007.)