KRS 304.36-110: Effect of paid claims.

(1) Any person recovering under this subtitle shall be deemed to have assigned his

rights under the policy to the association to the extent of his recovery from the

association. Every insured or claimant seeking the protection of this subtitle shall

cooperate with the association to the same extent as such person would have been

required to cooperate with the insolvent insurer. The association shall have no cause

of action against the insured of the insolvent insurer for any sums it has paid out,

except as follows:

(a) Any insured whose net worth on December 31 of the year next preceding the

date the insurer becomes an insolvent insurer exceeds twenty -five million

dollars ($25,000,000) and whose liability obligations to other persons are

satisfied in whole or in part by payments made under this subtitle;

(b) Any person who is an affiliate of the insolvent insurer and whose liability

obligations to other persons are satisfied in whole or in part by payments made

under this subtitle; and

(c) No limitation is placed on the ability of the association to recover from the

principal all claim payments and expenses arising from a surety contract that

is a covered claim to the association.

(2) The receiver, liquidator, or statutory successor of an insolvent insurer shall b e

bound by settlements of covered claims by the association or a similar organization

in another state. The court having jurisdiction shall grant such claims priority equal

to that which the claimant would have been entitled in the absence of this subtitle

against the assets of the insolvent insurer. The expenses of the association or similar

organization in handling claims shall be accorded the same priority as the

liquidator's expenses.

(3) The association shall periodically file with the receiver or liquidator of the insolvent

insurer statements of the covered claims paid by the association and estimates of

anticipated claims on the association which shall preserve the rights of the

association against the assets of the insolvent insurer.