KentuckySB 1582026 Regular SessionSenateWALLET

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

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Bill Overview

Analyzed Economic Effects

5 provisions identified: 1 benefits, 1 costs, 3 mixed.

Stronger backing rules for add-on providers

Starting January 1, 2027, auto retail sellers must back their debt waivers with an insurer. Providers of vehicle value protection agreements must secure performance by insurance, a 40% reserve plus a 5% (or $25,000) deposit, or a $100,000,000 net worth with a parent guarantee. A creditor may also choose to insure its waivers, and an administrator can obtain the policy.

New protections for car loan add-ons

Beginning January 1, 2027, car debt waivers and vehicle value protection add-ons sold in Kentucky must meet new consumer rules. Sellers must give clear written terms, show the price as a separate, non‑interest charge, and cannot require you to buy one for loan approval or terms. You get at least 30 days to cancel for a full refund if no benefit was used; after that, unearned amounts must be refunded, and any admin fee is capped at $75. Ask for early‑end refunds within 90 days. These add‑ons stay with your loan if it is sold, insurers must be told when required, funds for the buyer are held in trust, and you must get a copy of the agreement; retail installment and consumer‑loan companies must follow these rules.

Rules for credit personal property insurance

New rules govern credit personal property insurance sold with consumer loans. The law excludes business loans and several insurance types. Coverage cannot be more than the loan amount or term, cannot be bundled with other coverages, and you can buy it separately. Creditors must give you written coverage and cost details within 30 days; insurers must file forms and rates, handle and pay claims properly, and refund unearned premiums (no refund is required under $5). You can seek an administrative hearing on commissioner decisions, and these rules apply to contracts issued or renewed after the section’s effective date.

State fines for bad add-on practices

The Kentucky Attorney General enforces these car add‑on rules. After notice and a hearing, the AG can order violators to stop and fine them up to $500 per violation, capped at $10,000 for similar violations. People can appeal under state hearing rules.

Car add-ons not regulated as insurance

Kentucky law treats car debt waivers and value protection add‑ons as non‑insurance. They are excluded from the state insurance code and instead follow the new consumer‑rule chapter. This status applies to products issued before, on, or after January 1, 2027.

Sponsors & Cosponsors

Sponsor

Jason Howell
Republican • Senate

Cosponsors

Michael Meredith
Republican • House

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