KentuckyHB 2332025 Regular SessionHouseWALLET

AN ACT relating to the prevention of harmful practices associated with property and casualty insurance.

Sponsored By: Wade Williams (Republican)

Signed by Governor

InsuranceLiensReal EstateTrade Practices and RetailingAttorney GeneralConsumer AffairsContracts

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 2 benefits, 0 costs, 3 mixed.

Injured Owners Can Recover Double Financial Losses

Anyone can ask a court to stop a continuing violation of these contractor rules without proving actual damages. People injured by a violation are entitled to twice their actual financial losses. Courts can also award reasonable attorney fees and costs. The Kentucky Attorney General can use existing consumer-protection enforcement powers and seek a $5,000 civil penalty per violation. That penalty is not a direct payment to injured households, and these remedies do not block other available legal recovery.

Owners Can Cancel but Owe Repair Costs

For covered insurance-funded property contracts, you can cancel before midnight on the fifth business day after receiving written notice denying any coverage. These rules cover residential and commercial property contracts entered on or after the law’s effective date. Cancellation can be delivered personally, by mail, fax, or email; a written or recorded statement of intent is enough. Before signing, contractors must provide contact details, a cancellation disclosure in at least 10-point bold type, and two completed detachable cancellation forms. Contractors generally cannot require advance payments before the cancellation period ends. After cancellation, they must return payments, deposits, and debt papers within 10 days and cannot enforce cancellation fees. However, contractors can collect reasonable, customary charges for authorized repair or emergency work already provided.

Owners Gain Protections but Lose Contractor Discounts

For insurance-funded property work, contractors cannot damage property to win a contract or increase the work. They cannot offer deductible payments or claim-proceeds rebates to win business, or grant discounts against their fees. Payments to the insured owner or their representative for services or referrals cannot exceed $100 in any form. Contractors cannot claim a mechanic’s lien because an owner refuses charges above amounts the insurer paid or is expected to pay. A covered contract is also unenforceable if its price violates Kentucky’s price limits under KRS 367.374.

Contractors Cannot Negotiate Owners’ Insurance Claims

Contractors and their representatives cannot represent owners or negotiate insurance claims connected to their property work. They also cannot advertise that they provide those services. Contractors can still give repair estimates and discuss damage with the insurer after the owner submits a claim. Licensed public adjusters are exempt from this restriction.

Large Property Contracts Get Limited Escrow Exceptions

Private property improvement contracts of $500,000 or more generally require owners’ retained payments to enter a separate Kentucky bank escrow account. The contractor owns the deposited funds and receives the balance and interest after the owner gives written release for satisfactory completion. Agreed, commercially reasonable escrow fees come from the account; contractors can sue if owners refuse release. Government and school board contracts are exempt. For contracts covered by the insurance-funded property-work rules, escrow requirements give way only to the extent those rules provide—not through a blanket exemption.

Sponsors & Cosponsors

Sponsor

Wade Williams
Republican • House

Cosponsors

Daniel Grossberg
Democrat • House
Shawn McPherson
Republican • House

Roll Call Votes

All Roll Calls

Yes: 130 • No: 0

Senate vote • 3/11/2025

3rd reading, passed

Yes: 37 • No: 0

House vote • 2/18/2025