KentuckySB 1582026 Regular SessionSenateWALLET

AN ACT relating to products that offer benefits in connection with personal property.

How does this bill affect your finances?

Personalize government policy and PRIA will tell you what this bill means for your household, plus every other piece of legislation we track. PRIA reads each provision against your financial profile to show you exactly what matters to your wallet.

Free to download

Bill Overview

Analyzed Economic Effects

6 provisions identified: 4 benefits, 0 costs, 2 mixed.

Caps and oversight on credit insurance

The law caps what you can be charged for credit life and credit health insurance. Examples: decreasing‑term credit life is capped at $0.60 per year per $100 of debt ($0.65 with dismemberment), or about $0.92 per $1,000 monthly ($1.00 with dismemberment). Level‑term credit life is capped at $1.20 per year per $100 ($1.30 with dismemberment). Credit health rates follow a state table by months and wait period (for example, 1–6 months, 14‑day nonretroactive = $1.51 per $100). Insurers must file policies and rate schedules, report annual experience data by May 1, and cannot charge above their filed rates when your charge is set. Older group policies cannot add borrowers at higher rates after June 18, 1980. Hearings are required for violations, and legislated rates and procedures cannot be changed by regulators.

Fair rules for property loan insurance

For credit personal property insurance tied to a loan, coverage cannot exceed your gross debt and cannot last longer than the loan. You can buy it separately from other credit insurance, and premiums cannot be based on gross debt or forced in a bundle. Within 30 days after the loan, the creditor must send you a policy, certificate, or clear disclosure. Insurers must file forms and premium schedules with the state. If the policy ends early, the insurer must promptly refund unearned premium to you (no refund is required if under $5). Claims must be paid to you or your designee, and creditors usually cannot settle your claim. If a final decision harms you, you can ask for a hearing within 20 days, and insurers that break these rules face penalties. These rules apply to contracts issued or renewed on or after their effective dates and exclude business credit, real‑estate secured insurance, blanket vendor policies, and other listed items.

Stronger backing for car add-ons

Providers must back car value‑protection promises so claims get paid. They must either carry insurance that pays if the provider fails; keep a reserve of at least 40% of money collected in Kentucky and post a security deposit equal to the greater of 5% or $25,000; or have at least $100,000,000 in net worth with a parent guarantee and recent SEC filings or audited statements if a parent is used.

Stronger rights on car add-ons

You get clearer rules when you buy car loan add‑ons (like GAP or value protection). For non‑commercial deals, you get at least 30 days to cancel for a full refund if no benefit was given. After that, refunds follow the stated method and can subtract claims and an admin fee up to $75. Providers must give 5 days’ written notice before canceling, except for nonpayment, fraud, or major breach. The seller must show the add‑on charge on its own line, and it is not treated as interest. Your loan, sale, or lease cannot depend on buying an add‑on. You must get a copy of the add‑on agreement and a copy of the retail installment contract at signing. The law also removes earlier special rules for debt cancellation agreements in retail contracts.

Coverage and refunds for credit insurance

Credit life and credit health insurance rules set who is covered and your refund rights. Insurers must offer coverage to everyone or at least to people up to age 65 at start and 66 at maturity. They cannot deny a death or disability that starts after six months of coverage (12 months if the contract is longer than three years). If coverage ends before the loan ends, refunds must be paid or credited promptly using a commissioner‑approved formula, and your account must be credited if no policy is issued. Some policies are outside these rules, like health tied to loans over 5 years, life tied to loans over 10 years, amounts over $40,000, and isolated sales. Definitions in the law clarify who is the creditor, the debtor, and what indebtedness means.

Which car add-ons are covered

The law defines who is covered by vehicle financial protection products and says these products are not insurance. It applies to products that take effect on or after January 1, 2027. It does not cover products sold before the law or certain bank or credit‑union waivers that follow other laws. Consumer loan companies must follow these rules. Providers may use an administrator to run the program. The Attorney General can enforce the rules and fine up to $500 per violation, up to $10,000 total for similar violations.

Sponsors & Cosponsors

Sponsor

Jason Howell
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 167 • No: 0

Senate vote • 3/25/2026

passed

Yes: 38 • No: 0

House vote • 3/24/2026

3rd reading, passed

Yes: 92 • No: 0

Senate vote • 2/12/2026