Kentucky Adjuster Practice Test: Kentucky law, Part 2

Correct answer: A. $750

Section 7(5) requires the insurer, on request, to include the deductible in its subrogation demand and to share recoveries with the insured on a proportionate basis unless the deductible was otherwise recovered. The $6,000 recovery is 75% of the $8,000 loss, so Ahmed receives 75% of his deductible: $1,000 x 0.75 = $750, and the insurer keeps $5,250. No expense deduction applies because no outside attorney was retained.

Reference: 806 KAR 12:095, Section 7(5)

Correct answer: C. Only when the policy limit is paid or a compromise is agreed

Section 4(4) bars an insurer from indicating that a first-party payment is final or a release unless the policy limit has been paid or the claimant and insurer have agreed to a compromise on coverage and the amount payable. Section 4(5) also bars partial settlement checks with language releasing total liability. Separately, KRS 304.20-070 says release language on an auto liability check does not end liability for personal injury claims.

Reference: 806 KAR 12:095, Section 4(4) and (5); KRS 304.20-070

Correct answer: D. The insurer pays $650, at any shop Keisha selects

KRS 304.20-060(2) requires a policy with comprehensive coverage to pay glass-only claims in full without regard to any deductible, so the insurer owes the full $650. Subsection (3) and KRS 304.9-470(1) bar insurers, agents and adjusters from requiring the insured to use a particular glass shop or pressuring her to do so, although an insurer may keep a shop network and explain the coverage. Under KRS 304.9-470(3), the insurer need not pay more than the lowest price a qualified local glass shop charges.

Reference: KRS 304.20-060(2) and (3); KRS 304.9-470(1) and (3)

Correct answer: C. $75,000

KRS 304.39-110(1)(a) sets minimum split limits of $25,000 per person and $50,000 per accident for bodily injury and $25,000 for property damage. The first claimant is capped at $25,000, so injury claims total $25,000 + $20,000 + $15,000 = $60,000, which the per accident limit cuts to $50,000. Property damage is capped at $25,000, for a total of $75,000. A $60,000 single limit is the alternative minimum.

Reference: KRS 304.39-110(1)

Correct answer: B. $10,000, paid without regard to fault

KRS 304.39-020(2) caps basic reparation benefits at $10,000 for all economic loss from injury to one person in one accident, however many people or insurers are involved, and KRS 304.39-040(1) says they are paid without regard to fault. Covered loss includes medical expense, work loss, replacement services and survivors' loss; funeral and burial costs count as medical expense up to $5,000.

Reference: KRS 304.39-020(2) and (5); KRS 304.39-040(1)

Correct answer: A. The coverage on the coworker's car he occupied

KRS 304.39-050(1) makes the security covering the vehicle the injured person occupied primary for basic reparation benefits; a pedestrian looks to the vehicle that struck him. If that obligor does not pay within 30 days after reasonable proof of loss, Tomas may claim under his own policy, and that insurer is entitled to full reimbursement. Recovery from more than one obligor cannot exceed $10,000.

Reference: KRS 304.39-050(1) to (3)

Correct answer: C. Yes, because a fractured bone meets the threshold

KRS 304.39-060(2)(b) allows a tort claim for pain, suffering, mental anguish and inconvenience only if medical expense benefits exceed $1,000 or the injury includes permanent disfigurement, a fracture to a bone, loss of a body member, permanent injury, permanent loss of bodily function or death. Hannah's fracture alone meets the threshold, even though her medical bills are under $1,000.

Reference: KRS 304.39-060(2)(b)

Correct answer: D. It must be filed with the Department before an accident

KRS 304.39-060(4) requires a rejection to be made in writing or electronically on a Department of Insurance form and filed with the Department before the accident it is to apply to. Under subsection (5), it takes effect when filed and stays effective until revoked, so a new policy does not require a new filing. A person who rejects keeps full tort rights and liabilities but generally cannot collect basic reparation benefits.

Reference: KRS 304.39-060(4), (5) and (8)

Correct answer: A. After 30 days from reasonable proof; 12%, or 18% if unreasonable

KRS 304.39-210(1)(c) makes benefits overdue if not paid within 30 days after the reparation obligor receives reasonable proof of the fact and amount of loss, unless it accumulates claims for up to 31 days and pays within 15 days after that. Subsection (2) sets interest on overdue payments at 12% a year, rising to 18% if the delay was without reasonable foundation.

Reference: KRS 304.39-210(1) and (2)

Correct answer: B. He mails notice; his UIM insurer has 30 days to consent or pay

KRS 304.39-320(3) requires written notice of the proposed settlement by certified or registered mail to every UIM insurer, which has 30 days to consent or, under subsection (4), preserve its subrogation rights by paying Gabriel the $25,000 offered. If it consents or does not respond within 30 days, he may sign a full release and keep his UIM claim. The UIM insurer gets credit for the liability limits.

Reference: KRS 304.39-320(3) to (5)

Correct answer: B. $301,200

KRS 304.36-080(1)(a) caps the association at $300,000 per claimant for most covered claims and separately pays up to $10,000 per policy for unearned premium. The fire claim is limited to $300,000, and the $1,200 premium refund is paid in full: $300,000 + $1,200 = $301,200. Workers' compensation claims are paid in full, and first-party claims by insureds with net worth over $10 million are excluded.

Reference: KRS 304.36-080(1)(a); KRS 304.36-050(5)

Correct answer: D. She must report to the Division of Insurance Fraud Investigation

KRS 304.47-050(2)(c) requires any insurer, agent or other person licensed under the Insurance Code who knows or believes a fraudulent insurance act is being committed to send a report to the Department's Division of Insurance Fraud Investigation. Reporting to another agency does not replace that duty. Under KRS 304.47-020, a fraudulent claim of $500 to under $10,000 is a Class D felony.

Reference: KRS 304.47-050(2) and (6); KRS 304.47-020(2)

Correct answer: A. Give the employee the specific reasons in writing

Section 5 of the rule requires a carrier, after notice of a work injury needing medical care or causing lost work days, to advise the employee of acceptance or denial as soon as practicable and to give the specific reasons for a denial in writing. Section 7 requires a full response to a Department of Workers' Claims inquiry within 15 days. KRS 342.267 fines carriers $1,000 to $5,000 per violation.

Reference: 120 KAR 1:240 (recodified from 803 KAR 25:240), Sections 5 and 7; KRS 342.267

Correct answer: B. 5 days

KRS 342.040(1) bars income benefits for the first seven days of disability unless the disability lasts more than two weeks, in which case benefits run from the first day. Mateo's 12-day disability does not exceed two weeks, so only days 8 through 12 are paid: 12 - 7 = 5 days. The waiting period applies to income benefits, and payments must begin by the 15th day after the employer learns of the disability.

Reference: KRS 342.040(1)

Correct answer: C. October 15, 2027

KRS 342.185(1) normally requires an application within two years after the accident. When income benefits have been paid, the application must be filed within two years after payments are suspended or two years after the accident, whichever is later. Two years after the October 15, 2025 suspension is October 15, 2027, which is later than March 2, 2027. Notice of the accident is due to the employer as soon as practicable.

Reference: KRS 342.185(1)