Kentucky School Surety Bond

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Kentucky School Surety Bond

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your Kentucky School Surety Bond needs.


What Are Kentucky School Surety Bonds?

Kentucky school surety bonds protect the state against liability for monetary losses incurred by students due to a private, non-degree granting school’s noncompliance with or breach of any applicable laws, statutes, ordinances, rules, or regulations. This includes demands for refunds of prepaid tuition and fees when a school fraudulently misrepresents the educational services to be provided or ceases operations without delivering the services students have paid for in advance.

Who Needs Them?

The Kentucky Commission on Proprietary Education requires a $20,000 surety bond as a prerequisite for licensing of any proprietary school operating within the state. Only private postsecondary institutions offering four-year bachelor degree programs are exempt from this bonding requirement. 

Kentucky school surety bonds must be continuous, renewed before they can expire. Not maintaining an active bond in force at all times can result in suspension of the school’s operating license.

How Do They Work?

The Kentucky Commission on Proprietary Education is the “surety” requiring the purchase of a Kentucky school surety bond by the owner of a school subject to bonding. The school owner purchasing a bond is known as the bond’s “principal.” The third party to the legally binding surety bond agreement is the bond’s guarantor, called the “surety.”

How Are Claims Paid?

When a claim is received, the surety will work with the obligee to determine its legitimacy. If the claim is deemed valid, the obligee will mail a demand letter to the principal. If the principal does not pay the claim within 10 days of that mailing date, the surety, as the bond’s guarantor, will pay it on the principal’s behalf. 

That initial payment by the surety does not eliminate the principal’s legal obligation to pay all valid claims. It creates a debt that the principal must, by law, repay to the surety. The surety can, if necessary, take legal action against the principal to recover the claim amount.

How Much Do They Cost?

The cost of a $20,000 Kentucky school surety bond depends on the premium rate assigned by the surety on a case-by-case basis through underwriting. The primary underwriting consideration is the risk of the surety not being repaid for claims paid on the principal’s behalf. 

The best indication of a low risk to the surety is the principal having a high personal credit score. A low risk level should result in a low premium rate, perhaps as low as one percent. With a lower credit score, the risk level is higher, which warrants a higher premium rate.

The average well-qualified principal will pay a premium rate that’s in the range of one to three percent.

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Our surety bond professionals will get you the Kentucky private school surety bond you need at a competitive rate.