Kentucky Revised Statutes Title XXV. Business and Financial Institutions § 304.39-320.Underinsured motorist coverage; effect of settlement of claims

(3)(a) If an injured person or, in the case of death, the personal representative, agrees to settle a claim with a liability insurer and its insured, and the settlement would not fully satisfy the claim for personal injuries or wrongful death so as to create an underinsured motorist claim, then written notice of the proposed settlement shall be submitted by certified or registered mail to all underinsured motorist insurers that provide coverage.

(b) The underinsured motorist insurer then has a period of thirty (30) days to consent to the settlement or retention of subrogation rights.

(c) An injured person, or in the case of death, the personal representative, may agree to settle a claim with a liability insurer and its insured for less than the underinsured motorist's full liability policy limits.

(d) If an underinsured motorist insurer consents to settlement or fails to respond as required by subsection (4) of this section to the settlement request within the thirty (30) day period, the injured party may proceed to:

(a) The liability insurer to the extent of its limits of liability insurance; and

(b) The underinsured motorist for the amounts paid to the injured party.

(5)(a) Except as provided in paragraph (b) of this subsection, the underinsured motorist insurer is entitled to a credit against total damages caused by or as a result of a motor vehicle accident in the amount of the limits of the underinsured motorist's liability policies in all cases to which this section applies, even if the settlement with the underinsured motorist under subsection (3) of this section or the payment by the underinsured motorist insurer under subsection (4) of this section is for less than the underinsured motorist's full liability policy limits.

(b) If the full liability limits of the underinsured motorist's liability coverage are paid to multiple injured persons, including, in the case of death, the personal representative, pursuant to a reasonable settlement with the injured persons that is based on a pro rata distribution of the underinsured motorist's liability coverage in proportion to the injured persons' total damages, the credit to which the underinsured motorist insurer is entitled under paragraph (a) of this subsection shall be limited to the amount paid to the injured party.

(c) This subsection shall not be construed to prohibit an underinsured motorist insurer from seeking to apply or enforce other credits or offsets against total damages which are: