806 KAR 12:040.
Insurance in credit transactions.
RELATES TO: KRS
AND CONFORMITY: KRS 304.2-110 provides that the Executive Director of
Insurance shall 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 respective rights and obligations of the vendor and
vendee where insurance is procured on property sold in a credit transaction.
Section 1. In a
finance or loan transaction wherein the vendee refuses or for any reason fails
to provide reasonable insurance protection against loss from physical damage,
an insurer may, at the request of the dealer, finance factor, or lender,
provide such insurance protection.
Section 2. Where the
dealer, finance factor, or lender requests and secures such protection, no part
of the cost thereof shall be charged to the vendee unless losses payable
thereunder shall be for the benefit of the vendee as well as the dealer,
finance factor, or lender. In the event a loss is payable under such policy
where any part of the cost of such protection is charged to the vendee, it
shall be applied toward restoration of the damaged subject of the transaction
or toward reduction of the balance of the debt, if any remains, arising out of
Section 3. When
insuring motor vehicle or aircraft, the title page of a policy providing single
interest protection for the sole benefit of the dealer, finance factor, or
lender must have clearly stamped or printed in not less than fourteen (14)
point type the words: "This policy does not provide protection:
(1) To the buyer of
the property insured hereunder;
(2) Against legal
liability to persons or property of third parties." (I-12.05; 1 Ky.R.
1079; eff. 7-2-75; TAm eff. 8-9-2007.)