Kentucky Warranty Reimbursement Law

KENTUCKY WARR COMP STATUTE

(effective July 15, 2026)

Sec. 190.046

(1) Notwithstanding the terms of any franchise agreement, each motor vehicle manufacturer or distributor, doing business within this Commonwealth, shall assume all responsibility for and shall defend, indemnify, and hold harmless its motor vehicle dealers against any loss, damages, and expenses, including legal costs, arising out of complaints, claims, recall repairs or modifications or factory authorized or directed repairs, or lawsuits resulting from warranty defects, which shall include structural or production defects; defects in the assembly; or design of motor vehicles, parts, accessories; or other functions beyond the control of the dealer, including without limitation, the selection of parts or components for the vehicle. Each manufacturer or distributor shall pay reasonable compensation to any authorized dealer who performs work to repair defects, or to repair any damage to the manufacturer’s or distributor’s product sustained while the product is in transit to the dealer, when the carrier or the means of transportation is designated by the manufacturer or distributor. Each manufacturer or distributor shall provide to its dealers with each model year a schedule of time allowances for the performance of warranty repair work and services, which shall include time allowances for the diagnosis and performance of warranty work and service time, and shall be reasonable and adequate for the work to be performed.

(2) (a) In the determination of what constitutes “reasonable compensation” under this section, the principal factor to be considered shall be the amount of money that the dealer is charging its other customers for the same type service or repair work. Other factors may be considered, including:

1. The compensation being paid by other manufacturers or distributors to their dealers for work; and

2. The prevailing amount of money being paid or charged by the dealers in the city or community in which the authorized dealer is doing business.

(b) Except as provided in paragraph (d) of this subsection, “reasonable compensation” shall include:

1. Diagnosing the defect as needed;

2. Repair service;

3. Labor;

4. Parts; and

5. Administrative and clerical costs.

(c) Except as provided in paragraph (d) of this subsection, the compensation of a dealer shall not be less than:

1. The amount charged by the dealer for like services and parts, which minimum compensation for parts shall be dealer cost plus thirty percent (30%) gross profit, to retail customers for nonwarranty service and repairs; or

2. The amounts indicated for work on the schedule of warranty compensation required to be filed by the manufacturer with the commission as a part of the manufacturer’s license application by KRS 190.030

(d) The compensation of a dealer for vehicles with a classification of seven (7) or higher as established in 49 C.F.R. sec. 565.15 by a manufacturer, component manufacturer, or distributor shall be subject to the following conditions:

1. The dealer shall be entitled to receive, as to reimbursement for parts, not less than its actual acquisition cost of the parts including freight, handling, taxes, and any other related out-of-pocket expenses, plus a gross profit margin of thirty percent (30%);

2. In addition to paragraph (b) of this subsection, “reasonable compensation” shall also include:

a. All dealer costs incurred for training and certifying technicians and warranty administration personnel;

b. Dealer costs to acquire, use, and maintain computer hardware and software systems utilized for warranty and recall repairs, including diagnostic computers, mobile devices, and software for tracking and reporting warranty and recall time and expenses; and

c. Dealer costs for specialized tools and hardware required for warranty and recall repairs;

3. A dealer may submit reimbursement requests for its costs described in subparagraph 2. of this paragraph, and the manufacturer, component manufacturer, or distributor shall pay for those costs, at the dealer’s election either on a:

a. Per repair basis, as may be mutually agreeable between the dealer and manufacturer, component manufacturer, or distributor;

b. Per repair basis, based upon the amounts customarily charged by the dealer to retail customers for similar nonwarranty work; or

c. Periodic basis no less frequent than annually, with reasonable documentation of the costs and a reasonable method of allocating the costs between reimbursable warranty and recall services and nonwarranty services;

4. If labor hours on a warranty or recall repair, diagnostics, or service are incurred by a technician trained or certified in that service by a manufacturer, component manufacturer, or distributor, or if such training or certification is not furnished, the actual hours incurred shall be the basis of reasonable compensation unless the manufacturer, component manufacturer, or distributor proves by clear and convincing evidence that the hours incurred were unreasonable for the specific repair. Reference to standard repair times, labor guides, or time allowance guidelines shall not constitute sufficient evidence of that proof;

5. If a component manufacturer for any system, subassembly, or other component part of a motor vehicle has assumed, undertaken, or otherwise has legal responsibility for reimbursement and processing of a dealer claim for warranty or recall services by virtue of any pass-through or extended warranty arrangement, governmental recall mandate, consent decree, judicial decree, litigation settlement, or other means, the component manufacturer shall be subject to all the requirements of this section as if primarily liable as a manufacturer or distributor. This subparagraph shall not relieve the manufacturer or distributor of the motor vehicle from any primary liability for the indemnification obligations of subsection (1) of this section to its dealers. If a component warranty is made contemporaneously with the sale of a new motor vehicle and extends beyond the original manufacturer or distributor warranty on the entire vehicle, the manufacturer or distributor shall continue to have primary liability to its dealers for the performance of warranty service on those components during the extended period;

6. Compensation to be paid a dealer from a component manufacturer for warranty or recall work on a component part shall be no less than the amount that would otherwise be reimbursable if the manufacturer or distributor of the vehicle had made the component warranty or was otherwise responsible for the component part. This subparagraph shall apply regardless of whether or not the part bears a different part number than the originally manufactured part, or is a remanufactured or rebuilt part that is required or permitted to be utilized in a warranty or recall repair;

7. A manufacturer, component manufacturer, or distributor shall not refuse payment for a replacement part installed by a dealer in connection with a warranty or recall repair that the manufacturer, component manufacturer, or distributor claims is not defective based upon laboratory or other testing, or where no fault with the part is found, unless the part is returned to the dealer with a written certification from the manufacturer, component manufacturer, or distributor setting forth the test conditions and results and warranting that the part is not defective, is fully functional, and qualified for reuse in future repairs; and

8. As used in this paragraph, “component manufacturer” means any person who manufactures, assembles, imports, or distributes new, remanufactured, or rebuilt parts, assemblies, subassemblies, or other components for motor vehicles

(e) A manufacturer or distributor shall not require unreasonable proof or unduly burdensome processes to establish “reasonable compensation.”

(3) thru (7) [individual claims]

Although the statutory text provided above represented that codified and in effect in the respective state at the time of publication of the above, Armatus Dealer Uplift, LLC bears no responsibility for deviations of the above from versions thereof subsequently in effect as a result of future statutory amendments.