Kentucky Auto Insurance Requirements

Kentucky operates as a "choice no-fault" state, giving drivers the option to choose between no-fault and traditional tort coverage. Understanding these requirements is essential for Kentucky P&C producers.

Kentucky's Choice No-Fault System

No-Fault Option (Default)

Under the no-fault system:

• Each driver's own insurer pays their medical expenses
• Covered regardless of who caused the accident
• Reduces need for litigation for minor accidents
• PIP coverage provides the benefits

Tort Option (Can Reject No-Fault)

Kentucky drivers can reject no-fault coverage:

• Must sign written rejection form
• Allows full lawsuit rights immediately
• Still required to carry liability insurance
• May be pursued by at-fault driver's insurer

Minimum Liability Requirements: 25/50/25

All Kentucky drivers must carry minimum liability coverage:

Understanding the Limits

25/50/25 Example:

• Maximum $25,000 for injuries to any one person
• Maximum $50,000 total for all injuries in one accident
• Maximum $25,000 for property damage per accident

Recommended Coverage Levels

Important: Minimum limits often prove inadequate in serious accidents. Average bodily injury claims now exceed $20,000, leaving little margin below the $25,000 per-person minimum.

Personal Injury Protection (PIP)

Mandatory Coverage (Unless Rejected)

Kentucky requires $10,000 basic PIP coverage:

PIP Benefits Explained

Medical Expenses:

• Hospital and doctor bills
• Surgery costs
• Prescription medications
• Physical therapy
• Medical equipment

Lost Wages:

• Up to $200 per week
• Maximum 52 weeks (one year)
• Total maximum $10,400
• Must be employed at time of accident

Replacement Services:

• Household tasks you cannot perform
• Childcare expenses
• Maximum $25 per day

Tort Threshold

Under no-fault, you can only sue for:

• Medical expenses exceeding $1,000, OR
• Permanent disfigurement, OR
• Permanent injury, OR
• Fracture to weight-bearing bone, OR
• Compound, comminuted, displaced, or compressed fracture, OR
• Loss of body member, OR
• Permanent limitation of use of body organ, OR
• Death

Uninsured/Underinsured Motorist Coverage

Mandatory Offer

Kentucky insurers must offer UM/UIM coverage:

• Equal to liability limits purchased
• Can be rejected in writing
• Protects against drivers with no/insufficient insurance

Uninsured Motorist (UM) Coverage

Covers you when at-fault driver has:

• No insurance
• Insurance company is insolvent
• Hit-and-run (phantom vehicle)

Underinsured Motorist (UIM) Coverage

Covers the gap when at-fault driver has:

• Insurance, but limits are insufficient
• Calculated as your limit minus their limit

Example:

• Your damages: $100,000
• At-fault driver's limit: $25,000
• Your UIM limit: $100,000
• UIM payment: $75,000 ($100,000 - $25,000)

Stacking

Kentucky allows stacking of UM/UIM coverage:

• Can stack coverage from multiple vehicles
• Increases available coverage
• Subject to policy terms

Exam Tip: Remember that Kentucky REQUIRES insurers to OFFER UM/UIM coverage equal to liability limits, but policyholders can reject it in writing.