Kentucky Personal Lines Study Guide

Kentucky legislates cancellation and nonrenewal in more detail than most states, and — this is the part that generates exam questions — it does so twice. Automobile policies are governed by KRS 304.20-040. Property and casualty policies generally, homeowners included, are governed by KRS 304.20-320. The two schemes use different numbers for events that sound identical. Build the two-column table below before exam day and you will collect these marks.

Auto runs 14 / 20 / 75

For a personal automobile policy:

• Nonpayment of premium — at least 14 days’ notice, accompanied by the reason
• Any other cancellation ground — at least 20 days’ notice before the effective date
• Nonrenewal — at least 75 days’ advance notice of the intention not to renew

Seventy-five days is unusually long by national standards, and it is the classic Kentucky answer. Twenty is the number that exists here and nowhere else on the property side.

Property runs 14 / 75 / 75

For homeowners and dwelling policies under KRS 304.20-320:

• Nonpayment, or cancellation within the first 60 days of issuance — at least 14 days’ notice
• Cancellation where the policy has been in force more than 60 days — at least 75 days’ notice
• Nonrenewal — at least 75 days before the end of the policy period
• A premium increase exceeding 25% — at least 75 days before the end of the policy period

The property scheme jumps straight from 14 to 75 with nothing in between. The premium-increase trigger is distinctly Kentucky and is easy to forget: a rate rise over a quarter of the expiring premium gets the same 75 days’ warning as a nonrenewal.

The 60-day rule is about grounds, not about notice

This is the most common misreading in the whole topic. Candidates see “sixty days” and conclude that an insurer may cancel a new auto policy without notice during its first two months. That is wrong. Fourteen days’ notice is still owed.

What the sixty days actually buys the insurer is freedom from the permitted-grounds list. A policy or coverage in force fewer than 60 days when the cancellation notice is mailed is not restricted to the enumerated grounds. Past sixty days, midterm cancellation of an auto policy is limited to exactly five:

1. Nonpayment of premium
2. Suspension or revocation of the driver’s licence or the vehicle registration
3. Fraud or material misrepresentation
4. Wilful acts or omissions increasing the hazard
5. A determination by the commissioner that continuing the policy violates the law

And the exception swallows a great deal: if the policy is a renewal policy, the sixty-day freedom does not apply at all, even though the renewal term itself has only just begun.

”Underwriting reasons” is not a reason

Kentucky does not merely require that a reason be given — it forbids a generic one. 806 KAR 20:010 provides that all notices requiring reasons for declination, cancellation or nonrenewal under KRS 304.20-320 “shall provide specific grounds, and shall not rely on general underwriting reasons.” Auto liability notices must likewise be in writing and state the specific reason.

The regulation carries one carve-out: where the insurer has information indicating that the insured contributed to the loss by arson or fraud, the specificity requirement gives way.

Two related rules complete the picture. Proof of mailing the notice to the named insured at the address shown in the policy “shall be sufficient proof of notice” — the insurer need not prove delivery. And an applicant who is simply declined may request a written explanation, which the insurer must provide promptly (KRS 304.20-320(1)).

Two personal-lines rules worth carrying into the field

Credit history alone is not enough. An insurer may not decline, cancel or nonrenew a personal automobile policy solely because of the applicant’s credit history or lack of credit history. Credit may inform the decision; it may not be the whole of it.

Mine subsidence rides on the homeowners policy by default. In any Kentucky county whose fiscal court has voted into the Mine Subsidence Insurance Fund, subsidence coverage must be included on a dwelling or homeowners policy unless the insured waives it in writing, at a separate premium. The Fund reinsures up to $500,000 on structures plus $50,000 for additional living expense. This is the single most Kentucky-specific item a personal lines producer handles, and the direction of the default — opt out, not opt in — is what makes it testable.

Finally, keep the two residual markets straight, because their names invite confusion. The Kentucky FAIR Plan Reinsurance Association is the property residual market. KAIP, the Kentucky Automobile Insurance Plan, is the auto one: an applicant must have been refused motor vehicle insurance within the last 60 days, and KAIP writes bodily injury, property damage, PIP and uninsured motorist coverage — but not comprehensive and collision.