{"data":{"id":"us-ky/krs-367.708","jurisdiction":"us-ky","citation":"KRS 367.708","heading":"Definitions for section -- Administrator may be utilized for compliance","body":"with KRS 367.701 to 367.709 -- Duties of provider as to vehicle value\nprotection agreements -- Vehicle value protection agreement requirements.\n(Effective January 1, 2027)\n(1) As used in this section:\n(a) \"Administrator\" means a person, other than a provider, that performs\nadministrative or operational functions relating to vehicle value protection\nagreements, including the adjudication of claims or benefits requested by\ncontract holders;\n(b) \"Provider\" means a person that is obligated to provide a benefit under a\nvehicle value protection agreement; and\n(c) \"SEC\" means the United States Securities and Exchange Commission.\n(2) A provider may, but shall not be required to, utili ze an administrator to be\nresponsible for any and all of the administration of a vehicle value protection\nagreement in compliance with KRS 367.701 to 367.709.\n(3) A vehicle value protection agreement shall not be sold unless the contract holder\nhas been, o r will be, provided access to a copy of the vehicle value protection\nagreement.\n(4) In order to ensure faithful performance under a vehicle value protection agreement,\neach provider shall comply with at least one (1) of the following paragraphs of this\nsubsection:\n(a) A provider shall insure all of its vehicle value protection agreements under an\ninsurance policy that:\n1. Pays or reimburses if the provider fails to perform it obligations under\nany vehicle value protection agreement; and\n2. Is issued by an insurer;\n(b) 1. A provider shall:\na. Maintain a funded reserve account for its obligations under all of\nits vehicle value protection agreements issued and outstanding in\nthis state, which shall:\ni. Contain not less than forty percent (40%) of the gross\nconsideration received, less claims paid, on the sale of all in -\nforce vehicle value protection agreements; and\nii. Be subject to examination and review by the Attorney\nGeneral; and\nb. Place a financial security deposit, in the form required by\nsubparagraph 2. of this paragraph, in trust with the Attorney\nGeneral that has a value of not less than the greater of the\nfollowing:\ni. Five percent (5%) of the gross consideration received, less\nclaims paid, on the sale of all in -force vehicle value\nprotection agreements; or\nii. Twenty-five thousand dollars ($25,000).\n2. The financial security deposit required under subparagraph 1.b. of this\nparagraph shall be in the form of one (1) of the following:\na. A surety bond issued by an authorized surety;\nb. Securities of the type eligible for deposit by authorized insurers in\nthis state;\nc. Cash; or\nd. A letter of credit issued by a qualified financial institution; or\n(c) 1. Subject to subparagraph 2. of this paragraph, a provider shall:\na. Maintain, or togethe r with its parent company maintain, a net\nworth of stockholder's equity of at least one hundred million\ndollars ($100,000,000); and\nb. Upon request, provide the Attorney General with a copy of the\nprovider's or its parent company's:\ni. Except as provided i n subpart ii. of this subdivision, most\nrecent Form 10 -K or Form 20 -F filed with the SEC within\nthe last calendar year; or\nii. If the provider and its parent company does not file with the\nSEC, the audited financial statements of the provider or its\nparent company that show a net worth of the provider or its\nparent company of at least one hundred million dollars\n($100,000,000).\n2. If the Form 10 -K, Form 20 -F, or audited financial statements of the\nprovider's parent company are used to satisfy the requiremen ts of\nsubparagraph 1. of this paragraph, the parent company shall agree to\nguarantee the obligations of the provider under the vehicle value\nprotection agreements sold by the provider in this state.\n(5) Except as provided in subsection (4) of this section,  a provider shall not be subject\nto financial security requirements relating to vehicle value protection agreements.\n(6) A vehicle value protection agreement, other than a vehicle value protection\nagreement offered in connection with a commercial transacti on, shall disclose the\nfollowing in writing and in clear and understandable language that is easy to read:\n(a) That the following shall not be conditioned on the contract holder's purchase\nof an agreement:\n1. The extension of credit;\n2. The terms of a loan; or\n3. The terms of any related vehicle sale or lease;\n(b) The name and address of:\n1. The provider and contract holder; and\n2. The administrator, if applicable;\n(c) The terms and conditions of the agreement, including:\n1. The purchase price of the agreement, if any;\n2. The requirements for eligibility, conditions, and exclusions; and\n3. The procedure the contract holder must follow, if any, to obtain a benefit\nunder t he agreement, including, if applicable, a telephone number or\nwebsite and address where the contract holder may apply for vehicle\nvalue protection agreement benefits;\n(d) That the agreement is not a contract of insurance;\n(e) That the contract holder:\n1. May cancel the agreement within a free look period of not less than\nthirty (30) days as specified in the agreement; and\n2. Will be entitled to a full refund of the purchase price paid by the\ncontract holder, if any, if:\na. The borrower cancels the agreemen t during the free look period;\nand\nb. A benefit has not been provided;\n(f) Whether the agreement 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(g) The terms, restrictions, and conditions governing a cancellation of the\nagreement by the provider or the contract holder prior to the termination or\nexpiration of the agreement, which shall include:\n1. Except as provided in subparagrap h 2. of this paragraph, the provider\nshall mail a written notice of the cancellation to the contract holder's last\nknown address contained in the records of the provider at least five (5)\ndays prior to the cancellation of an agreement by the provider;\n2. A provider shall not be required to provide prior notice of its\ncancellation of an agreement if the cancellation is due to:\na. Nonpayment of a provider fee;\nb. A material misrepresentation by the contract holder to the provider\nor administrator; or\nc. A sub stantial breach of duties by the contract holder under the\nterms of the agreement;\n3. A notice of cancellation of an agreement by a provider shall state:\na. The effective date of the cancellation; and\nb. The reason for the cancellation;\n4. If the cancellat ion of an agreement by a provider is not due to\nnonpayment of a provider fee, the provider shall provide the contract\nholder with a refund of one hundred percent (100%) of the unearned pro\nrata provider fee paid by the contract holder, if any;\n5. If coverage under the agreement continues after a claim, any claims paid\nmay be deducted from any refund; and\n6. The provider may charge a reasonable administrative fee not to exceed\nseventy-five dollars ($75); and\n(h) The methodology for calculating any refund of the unearned purchase price of\nthe agreement, if any, that will be due in the event of a cancellation, including\nthat any refund may be reduced by claims paid.","path":["KRS Chapter 367"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58236","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:59:05Z","sha256":"ab04330d7045fac38f3f1556c17b2af5b4177135b211f26e8182305d0700969b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-367.706","next":"us-ky/krs-367.709"},"notice":"GroundRules: Original legal text. Not legal advice."}