Kentucky to Penalize Lawyers Who Solicit Auto Accident Victims

By | March 16, 2011

Nearing the close of its regular legislative session, Kentucky lawmakers enacted bills designed to crack down on fraudulent auto personal insurance claims and bring the state in line with new federal tax requirements for the surplus lines insurance industry.

Lawmakers passed a measure that targets lawyers who are too quick to contact accident victims.

The measure, HB 382, states that in the first 30 days following a motor vehicle accident, an unauthorized person “shall not directly solicit or knowingly permit another person to directly solicit an individual, or relative or an individual, involved in a motor vehicle accident for the provision of any service related to a motor vehicle accident.” Any person violating the new law will be fined a $1,000.

The law does not apply to insurance adjusters, police officers, or most medical personnel but does apply to lawyers.

“By cracking down on individuals who improperly solicit injured accident victims, Kentucky is addressing potential consumer fraud and the abuse in the no-fault system,’ said Jeffrey Junkas, government affairs representative for the Property Casualty Insurers Association of America. “This legislation provides consumers some measure of protection from medical professionals, lawyers and others who seek to take unfair advantage of them following an accident.”

Although the $1,000 fine represents the first step toward penalizing people seeking accident victims, it falls shy of an initial proposal that would have made the practice a class A misdemeanor with stiffer penalties, including possible jail time.

Kentucky is one of the 12 states with a no-fault law: Florida, Michigan, New Jersey, New York, Pennsylvania, Hawaii, Kansas, Massachusetts, Minnesota, North Dakota and Utah. Kentucky’s minimum coverage requirements are $25,000 for the death or injury of one person, $50,000 for the death or injury to two persons, $10,000 in property damage coverage and $10,000 in no-fault coverage.

In other news, lawmakers enacted HB 167, which brings the state into compliance with the federal Non-admitted and Reinsurance Reform Act, part of the Dodd-Frank Act. It adopts the provisions of the act and establishes the tax rate that each broker must pay on multistate risks at 11.8 percent.

Based on the taxes paid, Kentucky’s total surplus lines premiums equal $167,996,133, giving it a 0.55 percent share of the country’s total surplus lines premiums.

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