Definitions for KRS 367.701 to 367.709. (Effective January 1, 2027)
KRS 367.702
proposed367.702. Definitions for KRS 367.701 to 367.709. (Effective January 1, 2027)
As used in KRS 367.701 to 367.709:
(1) "Borrower" means a debtor, or retail purchaser or lessee, under a finance agreement;
(2) "Commercial" means a transaction under which a vehicle will be used primarily for business purposes;
(3) "Consumer":
(a) Means: 1. An individual purchaser or lessee of a vehicle; or 2. A borrower; and
(b) Includes a contract holder;
(4) "Contract holder" means a person who is the purchaser or holder of a vehicle value protection agreement;
(5) "Creditor" means any of the following:
(a) The lender in a loan transaction;
(b) The lessor in a lease transaction;
(c) Any retail seller of vehicles; and
(d) The assignee of any person referenced in paragraph (a), (b), or (c) of this subsection to whom a credit obligation is payable;
(6) "Debt waiver" means any:
(a) Guaranteed asset protection waiver; and
(b) Excess wear and use waiver;
(7) "Excess wear and use waiver" means a contractual agreement, as part of or as a separate addendum to a lease agreement, in which a creditor agrees, with or without a separate charge, to cancel or waive all or parts of amounts that may become due under a borrower's lease agreement as a result of excessive wear and use of a vehicle, including an agreement to cancel or waive amounts due for excessive mileage;
(8) "Finance agreement" means any of the following:
(a) A loan, retail installment sales contract, or lease for the purchase, refinancing, or lease of a vehicle; and
(b) A loan with a term of at least twelve (12) months that is secured by a vehicle;
(9) "Free look period" means a period of time from the effective date of a vehicle financial protection product until the date the vehicle financial protection product may be canceled without penalty, fees, or costs;
(10) "Guaranteed asset protection waiver":
(a) Means a contractual agreement wherein a creditor agrees, with or without a separate charge, to cancel or waive all or part of amounts due under a borrower's finance agreement in the event of a total physical damage loss or unrecovered theft of the vehicle; and
(b) May provide, with or without a separate charge, a benefit that waives an amount, or provides a borrower with a credit, toward the purchase of a replacement vehicle;
(11) "Insurer" means:
(a) An insurance company licensed, registered, or otherwise authorized under the laws of this state to transact insurance business; or
(b) A nonadmitted insurer in accordance with the requirements of Subtitle 10 of KRS Chapter 304;
(12) "Person" includes an individual, company, association, organization, partnership, business trust, corporation, and every form of legal entity;
(13) "Vehicle":
(a) Means a self-propelled or towed vehicle designed for personal or commercial use; and
(b) Includes automobiles, trucks, motorcycles, recreational vehicles, all-terrain vehicles, snowmobiles, campers, boats, personal watercraft, and related trailers;
(14) "Vehicle financial protection product" means any:
(a) Debt waiver; and
(b) Vehicle value protection agreement; and
(15) "Vehicle value protection agreement":
(a) Means a contractual agreement that, upon the occurrence of an adverse event to a contract holder's vehicle, including loss, theft, damage, obsolescence, diminished value, or depreciation, provides a benefit towards either: 1. The reduction of some or all of the contract holder's current finance agreement deficiency balance; or 2. The purchase or lease of a replacement vehicle or vehicle services;
(b) Includes trade-in credit agreements, diminished value agreements, depreciation benefit agreements, vehicle cash down payment agreements, and other similarly named agreements; and
(c) Does not include: 1. A debt waiver; 2. A service contract as defined in KRS 304.5-070; or 3. Insurance or an insurance contract regulated under KRS Chapter 304.
Effective: January 1, 2027
History: Created 2026 Ky. Acts ch. 16, sec. 2, effective January 1, 2027. Legislative Research Commission Note (1/1/2027). 2026 Ky. Acts ch. 16, sec. 24, provides that this statute shall apply to vehicle financial protection products that become effective on or after January 1, 2027.
Source: Kentucky Legislative Research Commission (legislature.ky.gov)URL: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=58232Fetched: 10/20/2026