RELATES TO:
KRS
324.010,
324.020,
324.395
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
324.281(5) and
324.282
require the Real Estate Commission, with the approval of the executive director
of the Kentucky Real Estate Authority, to promulgate administrative regulations
to carry out and enforce the provisions of KRS Chapter 324.
KRS
324.395(1) requires all real
estate licensees, except those whose licenses are in inactive status to carry
errors and omissions insurance to cover all activities contemplated under KRS
Chapter 324.
KRS
324.395(5) requires the
commission to determine the terms and conditions of mandatory errors and
omissions insurance coverage. This administrative regulation sets forth the
minimum terms and conditions of insurance coverage required under
KRS
324.395.
Section
1. Minimum Coverage Requirements. A licensee shall carry
continuous errors and omissions coverage that, at a minimum includes:
(1) A limit of liability not less than
$100,000 for any one (1) claim, excluding the cost of investigation and
defense; and
(2) An annual
aggregate limit of liability of not less than $1,000,000, excluding the cost of
investigation and defense.
Section
2. Firm Coverage. A principal broker who purchases errors and
omissions "firm coverage" insurance shall have at least the following aggregate
amounts:
(1) One (1) to forty (40) licensees
shall carry a $1,000,000 annual aggregate; or
(2) Forty-one (41) or more licensees shall
carry a $2,000,000 annual aggregate.
Section 3. Deductibles. All errors and
omissions coverage or professional liability insurance policies shall have
maximum deductibles, which may be separate deductibles, which shall not exceed:
(1) $2,500 for judgment or settlement;
and
(2) $1,000 for the cost of
investigation and defense.
Section
4. Exclusions permitted Coverage may exclude claims brought
against the insured, regardless of whether the professional service involves an
activity for which a license is required by the Commonwealth of Kentucky,
consistent with common custom in the market.
Section 5. Licensee certification of
compliance. A licensee who chooses to obtain an insurance policy other than the
group insurance policy obtained by the commission pursuant to
KRS
324.395(3) shall file with
the commission a Certification of Insurance Coverage, KREC Form 203, as
incorporated by reference in
201 KAR
11:210, annually upon issuance of the initial private
insurance policy or its renewal.
