SB118 creates a new regulatory framework in Kentucky for “credit personal property insurance,” which is insurance sold in connection with a credit transaction to protect a creditor’s interest in personal property used as collateral, such as a motor vehicle or other financed goods. The bill defines key terms, specifies which transactions and insurance products are covered or excluded, and applies its rules to personal, family, and household credit transactions. It does not apply to business-purpose credit, real estate-secured transactions, title insurance, non-filing insurance, debt cancellation agreements, post-repossession insurance, or blanket vendor single interest coverage.
The bill limits the amount and term of this insurance so it cannot exceed the gross debt or the scheduled term of the underlying credit transaction, and it requires the coverage to protect against a substantial risk of loss or damage to the collateral. It also prohibits tying the purchase of this insurance to other credit insurance products and bars insurers from using gross debt to calculate premiums. Debtors must be given disclosure of coverage and cost within 30 days, insurers must file policy forms and premium schedules with the commissioner, and unearned premiums must be refunded or credited when coverage is canceled, subject to a $5 minimum. Claims handling rules are also established, including prompt reporting, recordkeeping, and restrictions on who may settle or adjust claims.
In addition to creating these new provisions, SB118 amends Kentucky’s existing credit life and credit health insurance statutes to align related definitions, filing requirements, refund rules, and enforcement procedures. The bill preserves the current regulatory structure for those existing credit insurance lines while adding the new credit personal property insurance category under KRS Chapter 304. It also makes clear that violations are subject to the commissioner’s hearing process and the penalty provisions of Subtitle 99, and that the new sections apply only to contracts issued or renewed on or after the effective date.
The general sentiment reflected in the available vote history appears strongly favorable, as the Senate passed the bill on third reading by a unanimous 37-0 vote. No committee transcript excerpts were provided, so there is no recorded floor or committee debate to indicate opposition or amendments in the supplied materials. The unanimous vote suggests broad agreement on the need to regulate this insurance product and standardize consumer protections.
The main points of potential contention, based on the bill text itself, are the new limits on insurer pricing and product design, including the prohibition on bundling and the restriction on using gross debt to set premiums. Insurers or creditors could view the filing requirements, refund rules, and claim-handling restrictions as additional compliance burdens, while consumer advocates would likely favor the disclosure, refund, and anti-bundling protections. Because no committee discussion was provided, the specific arguments for or against those provisions are not documented in the available record.
SB118 would add a new set of statutes to KRS Chapter 304 governing credit personal property insurance and would also amend existing credit life and credit health insurance provisions to coordinate terminology, filing, refund, and enforcement rules. It expands the Insurance Code by creating a distinct regulatory category for insurance tied to financed personal property, while leaving existing rules for life and health credit insurance largely intact. The bill affects insurers, creditors, debtors, and the Kentucky commissioner of insurance by imposing disclosure, filing, premium, cancellation, claims, and administrative hearing requirements.
The available voting record shows clear support for the bill, with the Senate approving it 37-0 on third reading. No committee transcripts were provided, so there is no direct record of debate, but the unanimous vote indicates little visible opposition in the chamber at that stage. Overall, the bill appears to have been viewed as a consumer-protection and regulatory clarification measure rather than a controversial policy change.
The likely areas of contention are the bill’s restrictions on how credit personal property insurance may be sold and priced. Insurers may object to limits on premium calculations, the ban on bundling with other credit insurance, the required refund methodology, and the prohibition on creditor involvement in claims adjustment. On the other hand, consumer-oriented supporters would likely emphasize the bill’s disclosure requirements, unearned premium refunds, and limits designed to prevent overinsurance or coercive sales practices. No specific objections or amendments are documented in the provided transcripts.