{"data":{"id":"us-ky/krs-304.33-430","jurisdiction":"us-ky","citation":"KRS 304.33-430","heading":"Order of distribution.","body":"The order of distribution of claims from the insurer's estate shall be as stated in this\nsection. The first fifty dollars ($50) of the amount allowed on each claim in the classes\nunder subsections (3) to (7), inclusive, of this section, shall be deducted f rom the claim\nand included in the class under subsection (9) of this section. Claims may not be\ncumulated by assignment to avoid application of the fifty dollars ($50) deductible\nprovision. Subject to the fifty dollars ($50) deductible provision, every claim in each class\nshall be paid in full or adequate funds retained for the payment before the members of the\nnext class receive any payment. No subclasses shall be established within any class. No\nclaim by a shareholder, policyholder, or other creditor shal l be permitted to circumvent\nthe priority classes through the use of equitable remedies.\n(1) Administration costs. The costs and expenses of administration, including but not\nlimited to the following: the actual and necessary costs of preserving or recover ing\nthe assets of the insurer; compensation for all services rendered in the liquidation;\nany necessary filing fees; the fees and mileage payable to witnesses; and reasonable\nattorney's fees.\n(2) Health maintenance organization and limited health service o rganization out -of-\nnetwork claims. In a liquidation of a health maintenance organization or limited\nhealth service organization, any claims for health plan benefits or for limited health\nservice contract benefits for out -of-network claims that would have o therwise been\ncovered.\n(3) Loss and unearned premium claims. Claims by policyholders, beneficiaries, and\ninsureds arising from and within the coverage of and not in excess of the applicable\nlimits of insurance policies and insurance contracts issued by the  company, and\nliability claims against insureds which claims are within the coverage of and not in\nexcess of the applicable limits of insurance policies and insurance contracts issued\nby the company, and claims of guaranty associations or foreign guaranty\nassociations. Notwithstanding the foregoing, the following claims shall be excluded\nfrom Class 2 priority:\n(a) Obligations of the insolvent insurer arising out of reinsurance contracts;\n(b) Obligations incurred after the expiration date of the insurance po licy or after\nthe policy has been replaced by the insured or canceled at the insured's request\nor after the policy has been canceled as provided in this chapter.\nNotwithstanding this subsection, earned premium claims on policies, other\nthan reinsurance agreements, shall not be excluded;\n(c) Obligations to insurers, insurance pools, or underwriting associations and their\nclaims for contribution, indemnity, or subrogation, equitable or otherwise;\n(d) Any claim which is in excess of any applicable limits provi ded in the\ninsurance policy issued by the insolvent insurer;\n(e) Any amount accrued as punitive or exemplary damages unless expressly\ncovered under the terms of the policy; and\n(f) Tort claims of any kind against the insurer, and claims against the insurer  for\nbad faith or wrongful settlement practices.\n(4) Claims of the federal government other than those claims included in Class 2.\n(5) Wages.\n(a) Debts due to employees for services performed, not to exceed one thousand\ndollars ($1,000) to each employee which have been earned within one (1) year\nbefore the filing of the petition for liquidation. Officers shall not be entitled to\nthe benefit of this priority.\n(b) This priority shall be in lieu of any other similar priority authorized by law as\nto wages or compensation of employees.\n(6) Residual classification. All other claims including claims of the federal or any state\nor local government, not falling within othe r classes under this section. Claims,\nincluding those of any governmental body, for a penalty or forfeiture, shall be\nallowed in this class only to the extent of the pecuniary loss sustained from the act,\ntransaction, or proceeding out of which the penalty  or forfeiture arose, with\nreasonable and actual costs occasioned thereby. The remainder of such claims shall\nbe postponed to the class of claims under subsection (9) of this section.\n(7) Judgments. Claims based solely on judgments. If a claimant files a c laim and bases\nit both on the judgment and on the underlying facts, the claim shall be considered by\nthe liquidator who shall give the judgment such weight as he deems appropriate.\nThe claim as allowed shall receive the priority it would receive in the absence of the\njudgment. If the judgment is larger than the allowance on the underlying claim, the\nremaining portion of the judgment shall be treated as if it were a claim based solely\non a judgment.\n(8) Interest on claims already paid. Interest at the legal rate compounded annually on all\nclaims in the classes under subsections (1) to (7) of this section, inclusive, from the\ndate of the petition for liquidation or the date on which the claim becomes due,\nwhichever is later, until the date on which the dividen d is declared. The liquidator,\nwith the approval of the court, may make reasonable classifications of claims for\npurposes of computing interest, may make approximate computations, and may\nignore certain classifications and time periods as de minimis.\n(9) Miscellaneous subordinated claims. The remaining claims or portions of claims not\nalready paid, with interest as in subsection (8) of this section:\n(a) The first fifty dollars ($50) of each claim in the classes under subsections (3)\nto (7), inclusive, of this section, subordinated under this section;\n(b) Claims under subsection (2) of KRS 304.33-380;\n(c) Claims subordinated by KRS 304.33-600;\n(d) Claims filed late;\n(e) Portions of claims subordinated under subsection (6) of this section; and\n(f) Claims or po rtions of claims, payment of which is provided by other benefits\nor advantages recovered or recoverable by the claimant.\n(10) Preferred ownership claims. Surplus or contribution notes, or similar obligations,\nand premium refunds on assessable policies. Int erest at the legal rate shall be added\nto each claim, as in subsections (8) and (9) of this section.\n(11) Proprietary claims. The claims of shareholders or other owners.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=29862","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:55Z","sha256":"f0b8c8c7a653193e47dc1d4e2b0cf52de656eeaa7aa3daeeabbb8ff2b1aa40c4","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.33-420","next":"us-ky/krs-304.33-431"},"notice":"GroundRules: Original legal text. Not legal advice."}