Kentucky Surety Bonds

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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 surety bond needs.

Required Surety Bonds in Kentucky

Typical Kentucky bonds include (click on any for more info):

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Required Surety Bonds in Kentucky

All Kentucky surety bonds can be categorized as one of the following: construction and contractor bonds, license and permit bonds, or court bonds.

Kentucky Construction & Contractor Bonds

Kentucky requires contractors to purchase surety bonds as a condition of bidding on or being awarded a contract for a public works project over a certain dollar amount. There may be a similar requirement for municipal public works projects. Most commonly, the specific bonds required are bid bonds, performance bonds, and payment bonds.

Kentucky License & Permit Bonds

Kentucky has a complex system of occupational licensing involving two dozen regulatory boards operating under the auspices of the Kentucky Department of Professional Licensing. In many cases, purchasing a license and permit bond is required as part of the licensing process.
The state of Kentucky doesn’t issue licenses to general contractors. Only plumbers, electricians, and HVAC professionals are licensed at the state level. However, many Kentucky counties and municipalities do require contractors to obtain a local license before bidding or working on any public works project.

Kentucky Court Bonds

Anyone appealing the decision of a Kentucky court can be required by that court to obtain an “appeals” bond, especially when the case involves contested property or a large award for damages. The other type of surety bond sometimes required by Kentucky courts is a “probate bond.” This is a bond required of people named to serve in a fiduciary role to manage the assets of others, such as the executor of an estate or guardian of a minor.

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Frequently Asked Questions

There are three parties to every surety bond agreement, which is a legally binding contract:

  • The “obligee” is the state or local agency requiring the surety bond.
  • The “principal” is the party required to purchase the bond.
  • The “surety” is the company underwriting and issuing the bond.
  • The obligee sets the required amount of the bond, which is the maximum amount that will be paid out on a claim. The obligee also spells out the conduct required of the principal in order to avoid claims against the surety bond.

Any party who suffers a financial loss because the principal has violated the terms of the bond has the right to file a claim against the bond. The principal is solely responsible for paying all valid claims.

However, the surety will often pay a claim and wait to be reimbursed by the principal. This ensures timely settlement of the claim and gives the principal some time to gather the necessary funds.

What the principal in a bond agreement actually pays for a surety bond is a small percentage of the required bond amount established by the obligee. That percentage, known as the premium rate, is determined by the surety company based on the applicant’s credit score and other indicators of the likelihood of claims being filed against the bond. Those with good credit can expect a rate of 1-3%. Those with poorer credit may pay a higher premium.
No claim against a bond will be paid until the surety company has investigated and determined that it is valid. After making payment to a claimant, the surety company will demand reimbursement from the principal.