Construction Claim Rules in Kentucky

Statutory interest rate

8% / year default before judgment; 6% / year compounded annually after judgment

Before judgment, if a contract doesn't specify its own rate, the statutory default 'legal rate' is 8% per year. Once judgment is entered, a separate statute sets postjudgment interest at a fixed 6% per year, compounded annually, unless the judgment is based on a contract that specifies its own rate (which then controls) or a court reduces the rate for unliquidated damages. This 6% figure is roughly half the prior 12% rate, following a 2017 statutory change; treat any pre-2017 source describing a 12% postjudgment rate as outdated.

Compounding: Simple before judgment; compounded annually after judgment

Citation: KRS 360.010 (pre-judgment/contract default); KRS 360.040 (post-judgment)

Source: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=45719

Accrual: breach of contract claim

As of right if the claim is liquidated (fixed and certain); otherwise discretionary with no guaranteed date

Kentucky's leading case, Nucor Corp. v. General Electric Co., holds prejudgment interest follows automatically when the amount is liquidated, meaning made certain or fixed by agreement or by operation of law; unliquidated claims instead leave both the award and the accrual date to the trial court's equitable discretion under Restatement (Second) of Contracts § 354(2).

Citation: Nucor Corp. v. General Elec. Co., 812 S.W.2d 136 (Ky. 1991)

Source: https://law.justia.com/cases/kentucky/supreme-court/1991/89-sc-802-dg-1.html

Whether a construction claim counts as liquidated is itself a real threshold question; only liquidated claims get an automatic, non-discretionary right.

Accrual: property damage / tort claim

Same liquidated/unliquidated framework as contract claims, decided equitably under Restatement (Second) of Torts § 913

Nucor Corp. v. General Electric Co. applies the same liquidated/unliquidated distinction to property-damage claims. The court denied interest in that very case, a property-damage dispute, after weighing equitable factors including settlement history, delay attribution and how ascertainable the damages were, showing this is a genuinely case-by-case determination rather than an automatic date-of-loss right.

Citation: Nucor Corp. v. General Elec. Co., 812 S.W.2d 136 (Ky. 1991)

Source: https://law.justia.com/cases/kentucky/supreme-court/1991/89-sc-802-dg-1.html

Actual Cash Value rule

Broad evidence rule (with a repair/replacement condition-precedent nuance)

Kentucky follows the broad evidence rule: all relevant evidence of value may be considered (age, likely profit on the property, tax value, etc.). The leading opinion also held that contractor overhead and profit are not depreciable and must be deducted separately from ordinary wear-and-tear depreciation and that actual repair/replacement (or a firm intent to do so) is effectively a condition precedent before certain deductions (profit, overhead, permit costs) can be taken from replacement cost.

Citation: Snellen v. State Farm Fire & Cas. Co., 675 F. Supp. 1064 (W.D. Ky. 1987)

Source: https://law.justia.com/cases/federal/district-courts/FSupp/675/1064/1637495/

Snellen is a federal district court decision applying Kentucky law rather than a Kentucky Supreme Court opinion. It is widely cited and persuasive, but it is not the state's highest authority on the point.

ACV statute or regulation

Kentucky has adopted a regulation that statutorily defines ACV as replacement cost less depreciation and expressly states depreciation may include labor if the policy provides for it, so Kentucky's rule permits rather than restricts labor depreciation at the regulatory level, though a federal appellate decision applying Kentucky law has gone the other way for undefined policies.

Kentucky Administrative Regulation 806 KAR 12:095, Section 9(3), part of the state's unfair claims settlement practices rule for property and casualty insurance, defines actual cash value as the replacement cost of property at the time of loss less depreciation, if any and states that, if provided for in the policy, depreciation may include the costs of goods, materials, labor, equipment, overhead and profit, taxes, fees and services necessary to replace, repair or rebuild the damaged property. The same section requires the insurer to provide the insured, on request, a copy of claim file worksheets showing all depreciation deductions. This regulation does not ban or restrict labor depreciation, it affirmatively contemplates it when the policy allows it. Separately, applying Kentucky law where a policy left ACV and depreciation undefined, the Sixth Circuit held in Hicks v. State Farm Fire & Casualty Co., 751 F. App'x 703 (6th Cir. 2018), that labor should not be depreciated under those circumstances, consistent with the general undefined-term rule seen in other states, but the Kentucky Supreme Court itself has not resolved the question. The state's own regulation goes the other direction for policies that do define depreciation to include labor.

Citation: 806 KAR 12:095, Section 9(3); Hicks v. State Farm Fire & Cas. Co., 751 F. App'x 703 (6th Cir. 2018)

Source: https://apps.legislature.ky.gov/law/kar/titles/806/012/095/

This is a case where the regulatory text and the leading court decision point in different directions depending on whether the policy defines ACV/depreciation, worth flagging clearly to avoid a one-line oversimplification. The premise that Kentucky is a labor-depreciation-restricting state does not match what the regulation itself says; the regulation as read permits labor depreciation when the policy provides for it.

Recoverable depreciation holdback

No Kentucky statute sets a holdback release deadline. On labor, the Sixth Circuit held that a policy incorporating Kentucky's regulatory ACV formula cannot depreciate labor.

No Kentucky statute or regulation governs the timing or process for paying withheld recoverable depreciation, so the policy terms control. On the related scope question, the Sixth Circuit held in Hicks v. State Farm Fire & Casualty Co. that where the policy incorporates Kentucky's replacement cost minus depreciation formula from the ACV regulation, the insurer cannot depreciate labor when calculating the ACV payment. A layperson could reasonably read depreciation to cover materials only. Kentucky resolves ambiguity in an insurance contract in favour of the insured. Kentucky's own appellate courts have not decided the question. Read together with the regulation, which allows depreciation of labor only if the policy provides for it, the practical test is what the policy says.

Citation: Hicks v. State Farm Fire & Cas. Co., 751 F. App'x 703, 707-11 (6th Cir. 2018); 806 KAR 12:095 § 9(2)

Source: https://caselaw.findlaw.com/court/us-6th-circuit/2075420.html

The link goes to the 2020 Sixth Circuit class certification decision in the same case, which sets out the 2018 holding and its reasoning.

“No damages for delay” clause enforceability

Void by statute: a delay clause can't waive the right to recover costs or damages for owner-caused delay

Kentucky's Fairness in Construction Act voids, for any construction contract entered into after June 26, 2007, a provision that purports to waive, release, or extinguish a contractor's or subcontractor's right to recover costs, additional time, or damages for delays in performing the contract that are, in whole or in part, within the control of the contracting entity. The statute expressly preserves narrower, valid delay provisions, such as ones limiting recovery to delays caused by the contracting entity's own acts or omissions, requiring notice of a delay, setting reasonable liquidated damages, or providing a dispute-resolution procedure and it does not automatically entitle a contractor to compensation for unusually bad weather that couldn't be reasonably anticipated, fire, or other act of God.

Citation: KRS 371.405

Source: https://codes.findlaw.com/ky/title-xxx-contracts/ky-rev-st-sect-371-405/

This is a broad statutory override, not a narrow public-works-only rule like some other states' versions; it applies to construction contracts generally, though federal contracting requirements may preempt it on certain federally-funded projects.

Construction contract filing deadline

10 years for a written contract executed after July 15, 2014 (15 years for older written contracts)

For a written contract executed after July 15, 2014, Kentucky's limitations period is 10 years from when the cause of action accrued. A written contract executed on or before that date is instead governed by the prior statute, which sets a 15-year period. Two deadlines sit in front of that one on most construction claims. A mechanic's lien and a payment bond claim each run on their own, far shorter clock, counted from last furnishing rather than from breach and missing either one removes the security while leaving the contract claim alive but unsecured. Check those dates first. Accrual is the other half of the question: the period runs from breach, which on a payment dispute is usually the date payment came due rather than the date the work was done.

Citation: KRS 413.160 (contracts after July 15, 2014); KRS 413.090 (older contracts)

Source: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43544

Confirm which statute governs based on the contract's actual execution date; nearly all current construction contracts will fall under the newer 10-year period in KRS 413.160.

State unemployment insurance (SUTA)

Kentucky's new-employer rate is 2.7% for most industries, but new CONSTRUCTION employers pay 9.0% instead, more than three times the general rate. Experienced employers fall into two disjoint bands under Rate Schedule A: 0.3% to 2.4% for positive-rated employers, or 6.5% to 9% for negative-rated employers. The 2026 taxable wage base is $12,000.

The construction new-employer rate of 9.0% is more than three times the general 2.7% rate, so do not use a general Kentucky figure on a construction payroll. Rate Schedule A has been in effect since 2019.

Citation: Kentucky Office of Unemployment Insurance.

Source: https://ui.ky.gov/

Last checked: 2026-08-26

Workers' compensation rating

Kentucky uses NCCI advisory rates, with a state-created competitive fund, KEMI, competing alongside private carriers.

Kentucky follows the standard NCCI advisory-rate model for loss costs and classifications. Kentucky Employers' Mutual Insurance (KEMI) was created by the state legislature in the 1990s as a nonprofit competitive state fund that writes coverage alongside private insurers, it is not a monopolistic fund and employers remain free to buy coverage from any licensed private carrier instead.

Citation: NCCI Kentucky State Advisory Forum, Kentucky Employers' Mutual Insurance (KEMI)

Source: https://www.kemi.com/

Prevailing wage law

Kentucky has no state prevailing-wage law, having repealed it in 2017.

Kentucky's prevailing wage law was repealed by the state legislature in January 2017, in the same legislative session that made Kentucky a right-to-work state. Public construction contracts let by Kentucky state or local agencies are no longer subject to a state-mandated prevailing wage, only the federal Davis-Bacon Act applies and only when federal funds are involved.

Citation: Repealed 2017; Kentucky General Assembly

Source: https://ogletree.com/insights-resources/blog-posts/kentucky-becomes-the-27th-right-to-work-state-and-repeals-its-prevailing-wage-law/

Comparative / contributory negligence rule

Pure comparative fault, no bar; recovery reduced by the worker's share of fault

Recovery is reduced in proportion to the worker's share of fault, with no threshold that cuts it off. A worker 90% at fault still recovers 10% of the damages.

Citation: Ky. Rev. Stat. Ann. § 411.182

Source: https://law.justia.com/codes/kentucky/chapter-411/section-411-182/

Verified against: the rule as stated in Ky. Rev. Stat. Ann. s 411.182 and confirmed across current surveys

Non-economic damages cap

No general cap on non-economic damages

Most states cap non-economic damages only in medical malpractice actions, which does not reach a third-party construction claim. Economic losses, medical bills, lost wages, future earning capacity, are not capped by these statutes.

OSHA plan

KY OSH is a full state plan covering both public and private sector workers

Kentucky operates its own occupational safety and health program under the Labor Cabinet's Division of Occupational Safety and Health, approved under section 18 of the OSH Act of 1970. Enforcement and voluntary compliance services extend to both the public and private sectors, covering state and local government workers as well as most private sector workers. A state plan must be at least as effective as federal OSHA and may set stricter standards, so check the state rule before assuming the federal text applies. It also covers state and local government employees, which federal OSHA does not, so a public works injury is inside the state agency's jurisdiction. Citations are issued by the state agency and contested before the state's own review body rather than the federal commission, which changes where the file lives when you go looking for it. Reporting deadlines follow the federal rule: a work-related fatality within 8 hours, an inpatient hospitalisation, amputation or loss of an eye within 24 hours. For a construction claim the inspection file matters more than the citation: photographs, measurements, witness statements and the inspector's narrative are usually obtainable and are often the best contemporaneous record of the site.

Citation: 29 U.S.C. § 667; KRS Chapter 338

Source: https://www.osha.gov/stateplans/ky

Weight of an OSHA violation in a negligence case

A federal OSHA violation does not support negligence per se in Kentucky; it is evidence of negligence

Kentucky's negligence per se statute, KRS 446.070, applies only to violations of Kentucky statutes and Kentucky courts read its "any statute" language to exclude federal law and local ordinances. Federal courts applying Kentucky law have held there is no negligence per se based on a violation of federal OSHA regulations. Most Kentucky construction sites are enforced by federal OSHA, so that is the usual case. Whether KY OSH's own state regulations would be treated differently is a narrower question Kentucky courts have not answered in a construction case.

Citation: KRS 446.070; Kelter v. Wasp, Inc., 2014 WL 4639914 (W.D. Ky. Sept. 16, 2014) (no negligence per se for a federal OSHA violation); McCarty v. Covol Fuels No. 2, LLC, 476 S.W.3d 224 (Ky. 2015) (general framework); Centre College v. Trzop, 127 S.W.3d 562 (Ky. 2003) (enabling-statute exception, non-OSHA context)

Source: https://law.justia.com/cases/kentucky/supreme-court/2015/2014-sc-000589-cl.html

Kentucky case law has allowed negligence per se for a regulation adopted under the exact mandate of an enabling statute in a non-OSHA context, so the KY OSH regulation question should not be assumed to follow the federal rule.

Third-party contribution against the employer

Kentucky's up-the-ladder statutory-employer protection is a real shield for qualifying contractors, so that is the threshold question on any site claim.

An owner, contractor, manufacturer or motorist that does not qualify for up-the-ladder protection may still face a civil claim. Whether the defendant qualifies is decided first.

Citation: Ky. Rev. Stat. ch. 342; Daniels v. Burkemper, 2016 WL 5874484 (Ky. 2016); Gen. Elec. Co. v. Cain, 236 S.W.3d 579 (Ky. 2007).

Source: https://law.justia.com/cases/kentucky/supreme-court/2007/2004-sc-000043-dg.html

Injury-severity gate on contribution claims

General employer immunity plus up-the-ladder protection for qualifying contractors. Intentional conduct is the exception to analyze.

Ky. Rev. Stat. ch. 342 gives the employer immunity and extends up-the-ladder protection to qualifying contractors. General Electric Co. v. Cain is Kentucky's leading decision on that protection. Confirm the intentional-conduct standard directly before relying on it. In practice exclusivity takes the direct employer off the tort table entirely, whatever the OSHA file shows. The claim runs against the other parties on the site: the general contractor, the owner, another subcontractor, an equipment manufacturer. The employer or its carrier then asserts a lien against whatever the worker recovers from those parties, so the figure the worker actually keeps is the recovery less the lien, the fee and the costs. Whether the lien is reduced for the cost of obtaining the recovery is a separate state question worth asking early, because it moves the net more than most people expect.

Citation: Ky. Rev. Stat. ch. 342; General Electric Co. v. Cain, 236 S.W.3d 579 (Ky. 2007).

Source: https://law.justia.com/cases/kentucky/supreme-court/2007/2004-sc-000043-dg.html

Distinctive state doctrine

Up-the-ladder immunity, plus a safety-linked adjustment to the benefit amount under KRS 342.165

Up-the-ladder immunity treats a general contractor as the statutory employer of a subcontractor's employees where the delegated work is a regular and recurrent part of the general contractor's own operations, which bars the third-party suit. Separately, under KRS 342.165, benefits increase by 30% where the accident is caused by the employer's intentional failure to comply with a safety statute or regulation and decrease by 15% where it is caused by the employee's intentional failure to use a safety appliance or follow posted safety rules. Kentucky recognizes the dual capacity doctrine but applies it rarely.

Citation: Ky. Rev. Stat. §§ 342.610(2), 342.700(2) (up-the-ladder liability); KRS 342.165 (safety-linked benefit adjustment)

Source: https://kycourtreport.com/defenses-workers-compensation-exclusive-remedy-and-up-the-ladder/