Does Kentucky Require a Contractor License Bond?
The state licensing sources we checked do not list a statewide contractor license bond in Kentucky. Kentucky's statutes for licensed trades such as HVAC, plumbing and electrical work set insurance requirements instead, and the state-level bond this page covers is a Transportation Cabinet encroachment permit bond.
- Who requires it: The Kentucky Department of Housing, Buildings and Construction; KRS 198B, 227A and 318; 603 KAR 5:150.
- Amount: The state licensing sources we checked list no statewide contractor license bond; the state-level bond this page covers is the Transportation Cabinet encroachment permit bond; when a performance bond is required, its amount equals the estimated cost of the work.
Official Kentucky Requirements
"The amount of the performance bond for any encroachment shall be equal to the estimated cost of the work, unless an engineering study is performed that justifies a different amount."Kentucky Transportation Cabinet, Permits Manual (PE-203) • View Official Requirements →
Does Kentucky require a contractor license bond?
If you are searching for a statewide Kentucky contractor license bond, the state licensing sources we checked do not list one. The Department of Housing, Buildings and Construction (DHBC) licenses or certifies plumbers, electricians, boiler contractors, sprinkler and fire alarm contractors, and building inspectors, and that list does not include a general contractor license. DHBC's published license list does not say outright that no bond is needed, so confirm your own situation with DHBC before you rely on this. DHBC has the final word on what a given license needs.
What Kentucky's trade statutes require instead: insurance
Kentucky's licensing statutes for HVAC, plumbing, electrical, fire sprinkler and elevator contractors condition those licenses on insurance, not a surety bond; the trade regulations can add conditions, so confirm the full requirements for your license with DHBC. Those statutes set the coverage below.
| Trade | What the state requires |
|---|---|
| HVAC contractor | General liability of at least $500,000 plus property damage insurance of at least $300,000 |
| Master plumber | General liability of at least $250,000, plus workers' comp and unemployment compliance |
| Electrical contractor | A general liability policy of at least $1,000,000 |
| Fire protection sprinkler contractor | Liability coverage of at least $250,000 per person / $500,000 per accident, plus workers' comp |
| Elevator contractor | General liability of at least $1,000,000, property damage of at least $500,000, plus workers' comp |
For HVAC, no license is valid without the insurance the statute requires, and that state insurance exempts licensees from obtaining separate insurance under local licensing laws. Electrical licensing is statewide and supersedes city and county rules for electricians and electrical contractors, except for zoning and occupational payroll taxes. Under the fire sprinkler statute, the insurance stays in force until the insurer ends it with 30 days' notice to the commissioner.
The state-level bond: the encroachment permit bond
The state-level bond this page covers is not a license bond at all — it is a permit bond from the Transportation Cabinet for work in a state right-of-way. For each encroachment permit, the Department determines the appropriate types and amounts of indemnities required, which may be one or more of insurance, a payment bond, a performance bond or a perpetual bond. When a performance bond is required, its amount equals the estimated cost of the work, unless an engineering study justifies a different amount, so there is no fixed statewide figure. A payment bond may be required at the Department's discretion, and the Department sets its amount.
The bond is submitted on form TC 99-7 from a surety company, or you may provide a cashier's check payable to the Kentucky State Treasurer for the full indemnity amount in lieu of the performance bond. On that form the obligee is the Commonwealth of Kentucky for the use and benefit of the Transportation Cabinet, and the penal sum is left blank on the form. The performance bond stays in force until the permit's construction is completed and the work is accepted by the Department, and the form remains in effect until terminated in writing by the Cabinet. Some permits may not require an indemnity, such as those that do not affect the traveled way and do not alter or modify the right of way.
One version note: regulation 603 KAR 5:150 incorporates the Permits Manual "as revised and effective September 17, 2021", while the manual's indemnity page (PE-203) is stamped 09/25; that date difference is unresolved, so confirm the current version with the Cabinet.
Local rules, and when a bond may still come up
Kentucky cities and counties may set their own contractor licensing and bond rules, so check with your local building or licensing office before you start. At the state level, the bond to know is the Transportation Cabinet encroachment permit bond above; the trade licensing statutes above set insurance rather than a bond.
Steps
- Find your trade license. Check whether your trade is state-licensed — plumbing, electrical, HVAC, boiler, fire sprinkler and fire alarm, or elevator work.
- Carry the insurance, not a bond. For your trade, hold the liability coverage (and, where required, property damage and workers' comp) the statute sets, because the licensing statutes for these trades condition the license on insurance, not a surety bond.
- Check for right-of-way work. If your project involves work in a state right-of-way, expect a Transportation Cabinet encroachment permit, where the Department decides the indemnity per permit.
- Size the permit bond. If a performance bond is required, plan for an amount equal to the estimated cost of the work, submitted on form TC 99-7 or covered by a cashier's check in lieu.
- Check local requirements. Contact your local building or licensing office, since cities and counties may set their own rules.
- Confirm with DHBC. Verify the current requirements for your license with DHBC before you apply.
Licensed? The bonds you'll need to win jobs in Kentucky
Your license bond gets you licensed. Bigger jobs, public work and most commercial contracts add contract bonds. We place license and contract bonds, so you can keep one agency as your work grows.
Related guide: License and project bonds for contractors
Bid bonds →
Most public bids, and many private ones, require a bid bond (often 5% to 10% of the bid) with your proposal.
Performance bonds →
Once you win, the owner usually requires a performance bond guaranteeing the job gets finished in Kentucky.
Payment bonds →
Guarantees your subcontractors and suppliers get paid. Usually required alongside the performance bond on public work.
Performance & payment bonds →
Most public contracts ask for both bonds together, each commonly at 100% of the contract price.
Frequently asked questions
Does Kentucky require a contractor license bond?
The state licensing sources we checked do not list a statewide contractor license bond. Confirm your situation with DHBC.
What are Kentucky's contractor license requirements?
DHBC licenses specific trades — plumbers, electricians, boiler contractors, sprinkler and fire alarm contractors, and building inspectors — and the licensing statutes for HVAC, plumbing, electrical, fire sprinkler and elevator contractors set insurance, not a bond.
What insurance does a Kentucky HVAC contractor need?
At least $500,000 general liability and $300,000 property damage, and no HVAC license is valid without it. That state insurance also exempts you from separate insurance under local licensing laws.
What insurance does a Kentucky electrical contractor need?
A general liability policy of at least $1,000,000. Electrical licensing is statewide and supersedes city and county electrical rules, except zoning and occupational payroll taxes.
What is the Kentucky encroachment permit bond?
It is a Transportation Cabinet permit bond for work in a state right-of-way, and when a performance bond is required its amount equals the estimated cost of the work. It is submitted on form TC 99-7, or a cashier's check may be used in lieu.
Is the encroachment bond a fixed amount?
No. The Department sets the indemnity per permit, the performance bond equals the estimated cost of the work, and some permits may not require an indemnity.
Do local governments in Kentucky require their own bonds?
Cities and counties may set their own licensing and bond rules, so check with your local building or licensing office.
How much does an encroachment permit bond cost?
What you pay is a small share of the bond amount, set by the surety from your credit and business details.
Sources
- Department of Housing, Buildings and Construction (DHBC)
- KRS 198B.668 (HVAC contractor insurance)
- KRS 318.030 (master plumber insurance)
- KRS 227A.060 (electrical contractor insurance)
- KRS 227A.020 (electrical licensing supersedes local rules)
- KRS 198B.595 (fire protection sprinkler contractor insurance)
- KRS 198B.4027 (elevator contractor insurance)
- Kentucky Transportation Cabinet, Permits Manual
- Form TC 99-7, Encroachment Permit Bond
- 603 KAR 5:150 (incorporates the Permits Manual)
Working near a state line? See our contractor license bond pages for Tennessee, Indiana, Ohio and West Virginia.
Related guides: Kentucky auto dealer bonds, bid bonds, bond vs. insurance, contractor bond cost guide, Illinois contractor license bonds, get a quote, how to get a surety bond, contractor license bond requirements by state, general contractor bond requirements, Kentucky notary bonds, payment bonds, performance bonds, surety bond cost, contractor bond calculator.
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