Lawmakers mandate new automotive dealer insurance coverage requirements

The Kentucky State Legislature convened on February 12, 2025, to introduce Senate Bill 18, a legislative proposal aimed at enhancing the insurance requirements for motor vehicle dealers and wholesalers in the state. The bill seeks to address concerns regarding liability coverage and financial responsibility within the automotive industry.

Senate Bill 18 stipulates that motor vehicle dealers must maintain specific levels of insurance coverage. Key provisions include a mandate for a minimum of $250,000 for bodily injury or death of any one person, $500,000 for bodily injury or death in any one accident, and $250,000 for property damage. Additionally, the bill requires that any cancellation of the insurance policy must be preceded by a 15-day written notice to the Kentucky Motor Vehicle Commission, ensuring that dealers are not left without coverage unexpectedly.

The bill also introduces a provision for automotive recycling dealers, aligning their insurance requirements with those of traditional motor vehicle dealers. This move is seen as a necessary step to protect consumers and ensure that dealers are financially accountable in the event of accidents or damages.

Debate surrounding Senate Bill 18 has highlighted concerns from various stakeholders. Supporters argue that the increased insurance requirements will enhance consumer protection and reduce the financial risks associated with automotive transactions. Conversely, some industry representatives have expressed apprehension about the potential financial burden on smaller dealerships, which may struggle to meet the new insurance standards.

The implications of Senate Bill 18 extend beyond the automotive industry. Economically, the bill could lead to increased insurance premiums for dealers, which may be passed on to consumers. Socially, it aims to foster a safer environment for vehicle transactions, potentially reducing the incidence of disputes and claims related to accidents.

As the bill progresses through the legislative process, experts suggest that its passage could set a precedent for stricter regulatory measures in other sectors, reflecting a growing trend towards enhanced consumer protection in Kentucky. The next steps will involve further discussions and potential amendments as lawmakers weigh the benefits against the concerns raised by industry stakeholders.