If Your Thing is the Organization of the Insurance Companies, This is a Really Interesting Opinion

If Your Thing is the Organization of the Insurance Companies, This is a Really Interesting Opinion

     In a recent decision, the Kentucky Court of Appeals in the course of determining whether an exemption from garnishment was available, undertook a detailed review of the various manners in which an insurance company may be organized. Choate  v. Bank of Cadiz & Trust Co., No. 2015-CA-000435-MR, 2016 WL 3453326 (Ky. App. June 17, 2016).

      The primary issue in this case was whether certain proceeds from an insurance policy are exempt from garnishment. Specifically, KRS § 427.110 exempts the proceeds of fire insurance policies from garnishment if those policy proceeds constituted “money or other benefit to be paid or rendered by any assessment or cooperative life or casualty insurance company.” Whether the proceeds of a policy would go to the policyholder or, alternatively, to the Bank of Cadiz pursuant to a garnishment to satisfy a deficiency judgment on a real property mortgage was the question facing the court.

      The decision reviews the various means and mechanisms by which insurance companies are organized. Thereafter, the Court of Appeals determined that State Farm, the insurer at issue, did not fall within the class of an “assessment or cooperative life or casualty insurance company.” On that basis, the proceeds of the policy were not exempt from garnishment.