{"data":{"id":"us-ky/krs-367.706","jurisdiction":"us-ky","citation":"KRS 367.706","heading":"Definition of administrator -- Duties of retail seller of vehicles relating to","body":"debt waivers -- Debt waiver requirements.  (Effective January 1, 2027)\n(1) As used in this section, \"administrator\" means a person, other than an insurer or\ncreditor, that performs administrative or operational functions relating to debt\nwaivers.\n(2) (a) 1. Except as provided in subparagraphs 2. and 3. of this paragraph, a retail\nseller of vehicles shall insure its debt waivers under a contractual\nliability policy or other insurance policy that:\na. Is issued by an insurer;\nb. States an obligation by the insurer to reimburse or pay to a creditor\nunder the debt waiver any sums the creditor is legally obligated to\nwaive under a debt waiver;\nc. Remains in effect unless cance led or terminated in compliance\nwith applicable insurance laws of this state; and\nd. Provides that the cancellation or termination of the policy shall not\nreduce the insurer's responsibility for any debt waivers that are:\ni. Issued by a creditor prior to t he date of cancellation or\ntermination; and\nii. Insured under a policy for which a premium has been\nreceived by the insurer.\n2. To the extent permitted under KRS Chapter 304, a cancellation or\ntermination of a contractual liability policy or any other insurance policy\nrequired under subparagraph 1. of this paragraph may reduce the\ninsurer's responsibility for any debt waiver if the  policy is canceled or\nterminated due to fraud.\n3. A retail seller of vehicles shall not be required to comply with\nsubparagraph 1. of this paragraph for leased vehicles.\n(b) A creditor that is not otherwise required to insure its debt waivers under\nparagraph (a) of this subsection may insure its debt waivers under a\ncontractual liability or other insurance policy that:\n1. Is issued by an insurer; and\n2. Complies with this subsection.\n(c) An insurance policy referenced under paragraph (a) or (b) of this sub section\nmay be:\n1. Obtained directly by the retail seller or other creditor; or\n2. Procured by an administrator.\n(3) (a) A debt waiver shall remain a part of a finance agreement upon the assignment,\nsale, or transfer of the finance agreement by the creditor.\n(b) For a debt waiver that is insured under a contractual liability policy or other\ninsurance policy, a creditor shall:\n1. Report the sale of any finance agreement that includes the debt waiver to\nthe insurer; and\n2. If applicable, forward any funds due to the assignee, buyer, or transferee\nof the finance agreement.\n(c) Funds that are received by a creditor or administrator and that belong to an\nassignee, buyer, or transferee of a finance agreement shall be held by the\ncreditor or administrator in a fiduciary capacity.\n(4) A debt waiver, other than a debt waiver offered in connection with a commercial\ntransaction, shall disclose the following, in writing and in clear and understandable\nlanguage that is easy to read:\n(a) That the following shall not be con ditioned on the borrower's purchase of a\ndebt waiver:\n1. The extension of credit;\n2. The terms of the loan; or\n3. The terms of any related vehicle sale or lease;\n(b) The name and address of:\n1. The initial creditor and the borrower of the finance agreement; and\n2. The administrator, if applicable;\n(c) The terms and conditions of the debt waiver, including:\n1. The purchase price of the debt waiver, if any;\n2. The requirements for protection, conditions, and exclusions; and\n3. The procedure the borrower must follow, if any, to obtain benefits under\nthe debt waiver, including, if applicable, a telephone number or website\nand address where the borrower may apply for the benefits;\n(d) That the borrower:\n1. May cancel the debt waiver within a free look period of not less than\nthirty (30) days, as specified in the debt waiver; and\n2. Will be entitled to a full refund of the purchase price paid by the\nborrower, if any, if:\na. The borrower cancels the debt waive r during the free look period;\nand\nb. A benefit has not been provided;\n(e) Whether the debt waiver is cancellable after the free look period and the\nconditions under which it may be canceled, if applicable, including the\nprocedures for requesting any refund of amounts paid;\n(f) If the debt waiver is cancellable after the free look period, the borrower may\nbe entitled to a refund of the unearned portion of the purchase price of the\ndebt waiver, if any, less an administrative fee of not more than seventy -five\ndollars ($75), if a benefit has not been, and will not be, provided;\n(g) If the borrower seeks a refund under paragraph (f) of this subsection, the\nborrower shall, in accordance with the terms and conditions of the debt\nwaiver, provide a written request t o cancel to the creditor or administrator,\nexcept if the borrower seeks a refund due to the early termination of the\nfinance agreement, the borrower shall provide the written request to cancel\nwithin ninety (90) days of the occurrence of the event terminat ing the finance\nagreement;\n(h) The methodology for calculating any refund under paragraph (f) of this\nsubsection, if any; and\n(i) If the cancellation of a debt waiver is due to a default under the finance\nagreement, the repossession of the vehicle associat ed with the finance\nagreement, or any other early termination of the finance agreement, any\nrefund due may be paid directly to the creditor or administrator and applied as\na reduction of the amount owed under the finance agreement, unless the\nborrower can show that the finance agreement has been paid in full.","path":["KRS Chapter 367"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58235","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:05Z","sha256":"7e51f0fa5c0c388a87ade2176bb716e50de82a183f9f7e16ea7bd821ec0c40aa","source_id":"us-ky","stale":false,"prev":"us-ky/krs-367.705","next":"us-ky/krs-367.708"},"notice":"GroundRules: Original legal text. Not legal advice."}