KRS 286.4-560: Insurance.

(1) A licensee may request a borrower to insure tangible personal property, except

household goods, offered as security for a loan exceeding three hundred dollars

($300) under this subtitle against any substantial risk of loss, damage, or destruction

for an am ount not to exceed the actual value of such property or the approximate

amount of the loan, whichever is greater, and for a term and upon conditions which

are reasonable and appropriate considering the nature of the property and the

maturity and other circ umstances of the loan; provided such insurance is sold by a

licensed agent, broker, or solicitor. The licensee may also request and secure credit

property insurance on the tangible personal property, except that no part of the cost

thereof shall be charged to the borrower unless the insurer agrees that it will not

exercise its right to subrogation against the borrower under the licensee's policy.

(2) A licensee may also request, provide, obtain, or take as security for any loan

obligation insurance on the l ife, unemployment, health, or disability, or all, of the

borrower, or two (2) of them if there are two (2) or more. Life insurance shall be in

the approximate amount of the indebtedness scheduled to be due the licensee under

the loan contract. Not more tha n one (1) policy of life insurance may be written in

connection with any loan transaction under this subtitle. The aggregate amount of

periodic benefits payable by any unemployment, health, or disability insurance

provided, obtained, or requested by the li censee in the event of unemployment or

disability, as defined in the policy, shall not exceed the aggregate of the scheduled

installments and the waiting period provided in such policy must be fourteen (14)

days or longer. The premium rate for insurance pr ovided under this section shall be

reasonable in relation to the benefits provided and shall be filed with the

commissioner of insurance. The commissioner of insurance shall, within thirty (30)

days after the filing of any premium rate, disapprove such pre mium rate if it is

excessive in relation to the benefits. In determining whether to approve or

disapprove any premium rate, the commissioner of insurance shall give due

consideration to the unemployment, mortality, and morbidity costs with respect to

such insurance on borrowers under this subtitle or similar acts in other states, a

reasonable margin for underwriting expenses and profit and contingencies to the

insurer, and cost and compensation to the licensees for providing and servicing such

insurance, plus the premium taxes payable on such insurance.

(3) In accepting any insurance provided for by this section as security for a loan the

licensee, its officers, agents, or employees may deduct the premiums or identifiable

charge therefor from the proceeds of the loan, which premium or identifiable charge

shall not exceed the rate filed with the commissioner of insurance and not

disapproved and remit such premiums to the insurance company writing such

insurance and any gain or advantage to the licensee 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

this subtitle. The arranging for and collecting of an identifiable ch arge shall not be

deemed the sale of insurance.

(4) Every insurance policy or certificate written in connection with a loan transaction

pursuant to subsection (2) of this section shall provide for cancellation of coverage

and a refund of the premium or ide ntifiable charge unearned upon the discharge of

the loan obligation for which such insurance is security without prejudice to any

claim. Such refund shall be under a formula filed by the insurer with the

commissioner of insurance.

(5) Whenever insurance is written in connection with a loan transaction pursuant to this

section, the licensee shall deliver or cause to be delivered to the borrower a policy,

certificate, memorandum, or other disclosure which shall show the coverages and

the cost thereof, if any, to the borrower within thirty (30) days from the date of the

loan.

(6) All such insurance shall be written by a company authorized to conduct such

business in this state and the licensee shall not require the purchase of such

insurance from any agent or broker designated by the licensee nor shall the licensee

decline existing coverages which equal or exceed the standards of this section.