{"data":{"id":"us-ky/krs-304.36-080","jurisdiction":"us-ky","citation":"KRS 304.36-080","heading":"Powers and duties of association.","body":"(1) The association shall:\n(a) 1. Be obligated to the extent of the covered claims existing:\na. Prior to the order of liquidation and arising within thirty (30) days\nafter the order of liquidation;\nb. Before the policy expiration date if less than thirty (30) days after\nthe order of liquidation; or\nc. Before the insured replaces the policy or on request, effects\ncancellation, if the insured does so within thirty (30) days of the\norder of liquidation.\n2. The obligation shall be satisfied by paying to the claimant an amount as\nfollows:\na. The full amount of a covered claim for benefits arising from a\nworkers' compensation insurance policy purchased to satisfy the\nrequirements of KRS 342.340;\nb. An amount not exceeding ten thousand dollars ($10,000) per\npolicy for a covered claim for the return of unearned premium;\nc. An amount not exceeding five hundred thousand dollars\n($500,000) per insured event for all covered claims resulting from\nthat event  for benefits arising from a cybersecurity insurance\npolicy; or\nd. An amount not exceeding three hundred thousand dollars\n($300,000) per claimant for all other covered claims;\n(b) 1. Not be obligated to pay a claimant an amount in excess of the obligation\nof the insolvent insurer under the policy or coverage from which the\nclaim arises.\n2. Notwithstanding any other provisions of this subtitle, a covered claim\nshall not include:\na. A claim filed with the association after the earlier of:\ni. Twelve (12) months after the date of the order of liquidation;\nor\nii. The final date set by the court for the filing of claims against\nthe liquidator or receiver of an insolvent insurer; or\nb. Any claim filed with the association or a liquidator for protection\nafforded und er the insured's policy for incurred but not reported\nlosses.\n3. Any obligation of the association to defend an insured shall cease upon\nthe association's payment or tender of an amount equal to the lesser of\nthe association's covered claim obligation limi t or the applicable policy\nlimit.\n4. Notwithstanding any other provisions of this subtitle, except in the case\nof a claim for benefits under workers' compensation coverage, any\nobligation of the association to any and all persons shall cease when ten\nmillion dollars ($10,000,000) shall have been paid in the aggregate by\nthe association and any one (1) or more associations similar to the\nassociation of any other state or states or any property and casualty\nsecurity fund that obtains contributions from insurers on a preinsolvency\nbasis to or on behalf of any insured and its affiliates on covered claims\nor allowed claims arising under the policy or policies of any one (1)\ninsolvent insurer.\n5. For purposes of this paragraph, the term \"affiliates\" means any pers on\nwho directly or indirectly, through one (1) or more intermediaries,\ncontrols, is controlled by, or is under common control with another\nperson.\n6. If the claimant has a covered claim or allowed claim against the\nassociation or any associations similar to the association or any property\nand casualty insurance security fund of another state, under the policy or\npolicies of any one (1) insolvent insurer, the association may establish a\nplan to allocate amounts payable by the association in a manner as the\nassociation in its discretion deems equitable;\n(c) 1. Be deemed the insurer to the extent of its obligation on the covered\nclaims and to that extent shall have all rights, duties, and obligations of\nthe insolvent insurer as if the insurer had not become ins olvent,\nincluding, but not limited to, the right to pursue and retain salvage and\nsubrogation recoverable on paid covered claim obligations.\n2. In the case of a covered claim involving obligations assumed by an\nassuming insurer from a ceding insurer, the association shall:\na. Have the right to recover a deposit, bond, or other assets that may\nhave been required to be posted by the ceding insurer to the extent\nof covered claim payments; and\nb. Be subrogated to any rights the ceding insurer's policyholders ma y\nhave against the ceding insurer;\n(d) 1. Assess insurers amounts necessary to pay the obligations of the\nassociation under paragraph (a) of this subsection subsequent to an\ninsolvency, the expenses of handling covered claims subsequent to an\ninsolvency, the cost of examinations under KRS 304.36 -130, and other\nexpenses authorized by this subtitle.\n2. The assessments of each member insurer shall be in the proportion that\nthe net direct written premiums of the member insurer for the calendar\nyear preceding th e assessment bears to the net direct written premiums\nof all member insurers for the calendar year preceding the assessment.\n3. Each member insurer shall be notified of the assessment not later than\nthirty (30) days before it is due.\n4. No member insurer may be assessed in any year an amount greater than\ntwo percent (2%) of that member insurer's net direct written premiums\nfor the calendar year preceding the assessment.\n5. If the maximum assessment, together with the other assets of the\nassociation, does not provide in any one (1) year an amount sufficient to\nmake all necessary payments, the funds available shall be prorated and\nthe unpaid portion shall be paid as soon thereafter as funds become\navailable.\n6. The association shall pay claims in any order whi ch it may deem\nreasonable including the payment of claims as such are received from\nthe claimants or in groups or categories of claims.\n7. The association may exempt or defer, in whole or in part, the assessment\nof any member insurer, if:\na. The assessment  would cause the member insurer's financial\nstatement to reflect amounts of capital or surplus less than the\nminimum amounts required for a certificate of authority by any\njurisdiction in which the member insurer is authorized to transact\ninsurance; and\nb. During the period of deferment, no dividends are paid by the\nmember insurer to shareholders or policyholders.\n8. Deferred assessments shall be paid when the payments will not reduce\ncapital and surplus below required minimums, and the payments shall be\nrefunded to those companies receiving larger assessments by virtue of\nthe deferment or at the election of any such c ompany, credited against\nfuture assessments.\n9. Each member insurer serving as a servicing facility may set off against\nany assessment authorized payments made on covered claims and\nexpenses incurred in the payment of such claims by such member\ninsurer;\n(e) Investigate claims brought against the association and adjust, compromise,\nsettle, and pay covered claims to the extent of the association's obligation and\ndeny all other claims;\n(f) Notify such persons as the commissioner directs under KRS 304.36-100(2)(a);\n(g) 1. Handle claims through its employees or through one (1) or more\ninsurers or other persons designated as servicing facilities.\n2. Designation of a servicing facility is subject to the approval of the\ncommissioner, but the designation may be decli ned by a member\ninsurer;\n(h) Reimburse each servicing facility for obligations of the association paid by\nthe facility and for expenses incurred by the facility while handling claims on\nbehalf of the association; and\n(i) Pay the other expenses of the association authorized by this subtitle.\n(2) The association may:\n(a) Appear in, defend, and appeal any action on a claim brought against the\nassociation;\n(b) Employ or retain such persons as are necessary to handle claims and perform\nother duties of the association;\n(c) Borrow funds necessary to effect the purposes of this subtitle in accord with\nthe plan of operation;\n(d) Sue or be sued;\n(e) Negotiate and become a party to such contracts as are necessary to carry out\nthe purpose of this subtitle;\n(f) Perform such other acts as are necessary or proper to effectuate the purpose of\nthis subtitle; and\n(g) Refund to the member insurers in proportion to the contribution of each\nmember insurer to the association that amount by which the assets of the\nassociation exceed the liabilities, if, at the end of any calendar year, the board\nof directors finds that the assets of the association exceed the liabilities of the\nassociation as estimated by the board of directors for the coming year.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=53654","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:57:55Z","sha256":"185d83b2a220a1f8d1cc274f3a4a7e491b81cfbfe0cb3c8a28e419f11a26e81e","source_id":"us-ky","stale":false,"prev":"us-ky/krs-304.36-070","next":"us-ky/krs-304.36-085"},"notice":"GroundRules: Original legal text. Not legal advice."}