{"data":{"id":"us-ky/krs-304.17-240","jurisdiction":"us-ky","citation":"KRS 304.17-240","heading":"Relation of earnings to insurance.","body":"(1) There may be a provision as follows:\n\"After the loss-of-time benefit of this policy has been payable for ninety (90) days,\nsuch benefit will be adjusted, as provided below, if the total amount of unadjusted\nloss-of-time benefits provided in all valid loss -of-time coverage upon the insured\nshould exceed -- % of the insured's earned income; provided, however, that if the\ninformation contained in the application discloses that the total amount of loss -of-\ntime benefits under this policy and under all other val id loss -of-time coverage\nexpected to be effective upon the insured in accordance with the application for this\npolicy exceeded -- % of the insured's earned income at the time of such application,\nsuch higher percentage will be used in the place of -- %. Such adjusted loss-of-time\nbenefit under this policy for any month shall be only such proportion of the loss -of-\ntime benefit otherwise payable under this policy as:\n(a) The product of the insured's earned income and -- % (or, if higher, the\nalternative perce ntage described at the end of the first sentence of this\nprovision) bears to\n(b) The total amount of loss -of-time benefits payable for such month under this\npolicy and all other valid loss-of-time coverage on the insured (without giving\neffect of the overinsurance provision in this or any other coverage) less in both\nparagraphs (a) and (b) of this subsection any amount of loss -of-time benefits\npayable under other valid loss -of-time coverage which does not contain an\n'overinsurance provision.' In making such  computation, all benefits and\nearnings shall be converted to a consistent (insert 'weekly' if the loss -of-time\nbenefit of this policy is payable weekly, 'monthly' if such benefit is payable\nmonthly, etc.) basis. If the numerator of the foregoing ratio is zero (0) or is\nnegative, no benefit shall be payable under this policy. In no event shall this\nprovision\n1. Operate to reduce the total combined amount of loss-of-time benefits for\nsuch month payable under this policy and all other valid loss -of-time\ncoverage below the lesser of three hundred dollars ($300) and the total\ncombined amount of loss -of-time benefits determined without giving\neffect to any 'overinsurance provision' nor\n2. Operate to increase the amount of benefits payable under this policy\nabove the amount which would have been paid in the absence of this\nprovision, nor\n3. Take into account or operate to reduce any benefit other than the loss-of-\ntime benefit.\n(c) For purposes of this provision:\n1. 'Earned income,' except where otherwise specified,  means the greater of\nthe monthly earnings of the insured at the time disability commences\nand his or her average monthly earnings for a period of two (2) years\nimmediately preceding the commencement of such disability, and shall\nnot include any investment income or any other income not derived from\nthe insured's vocational activities.\n2. 'Overinsurance provision' shall include this provision and any other\nprovision with respect to any loss -of-time coverage which may have the\neffect of reducing an insurer's liability if the total amount of loss-of-time\nbenefits under all coverage exceeds a stated relationship to the insured's\nearnings.\"\n(2) The foregoing provision may be included only in a policy which provides a loss -of-\ntime benefit which may be payable for at least fifty-two (52) weeks, which is issued\non the basis of selective underwriting of each individual application, and for which\nthe application includes a question designed to elicit information necessary either to\ndetermine the ratio of the total los s-of-time benefits of the insured to the insured's\nearned income or to determine that such ratio does not exceed the percentage of\nearnings, not less than sixty percent (60%), selected by the insurer and inserted in\nlieu of the blank factor above. The insurer may require, as part of the proof of claim,\nthe information necessary to administer this provision. If the application indicates\nthat other loss -of-time coverage is to be discontinued, the amount of such other\ncoverage shall be excluded in computing th e alternative percentage in the first\nsentence of the overinsurance provision. The policy shall include a definition of\n\"valid loss -of-time coverage,\" approved as to form by the commissioner, which\ndefinition may include coverage provided by governmental a gencies and by\norganizations subject to regulations by insurance law and by insurance authorities of\nthis or any other state of the United States or any other country or subdivision\nthereof, coverage provided for such insured pursuant to any disability ben efits\nstatute or any workers' compensation or employer's liability statute, benefits\nprovided by labor -management trusteed plans or union welfare plans or by\nemployer or employee benefit organizations, or by salary continuance or pension\nprograms, and any other coverage the inclusion of which may be approved by the\ncommissioner.\n(3) If by application of any of the foregoing provisions the insurer effects a material\nreduction of benefits otherwise payable under the policy, the insurer shall refund to\nthe ins ured any premium unearned on the policy by reason of such reduction of\ncoverage during the policy year current and that next preceding at the time the loss\ncommenced, subject to the insurer's right to provide in the policy that no such\nreduction of benefits or refund will be made unless the unearned premium to be so\nrefunded amounts to five dollars ($5) or such larger sum as the insurer may so\nspecify.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=17311","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:45Z","sha256":"8650441e6717a2c89596386a4b89ba87a693c6ef89d45d1ccbf855621f69802a","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.17-230","next":"us-ky/krs-304.17-250"},"notice":"GroundRules: Original legal text. Not legal advice."}