Kentucky: Prejudgment Interest Rules
The short answer
Yes, but Kentucky's real dividing line is whether the claim is liquidated or unliquidated, not whether it's labeled contract or tort. A liquidated claim -- a fixed debt, a note, an unpaid contract price -- draws interest automatically at Kentucky's 8% legal rate from the day payment was due. An unliquidated claim -- most tort and property-damage claims, where the dollar amount isn't fixed until trial -- gets prejudgment interest only if the trial JUDGE decides, as a matter of equity, that fairness requires it; a jury never makes that call. Whether that interest compounds is also left to the judge's discretion rather than fixed by statute.
| Governing law | KRS 360.010 sets the general 'legal rate of interest,' which Kentucky courts apply to prejudgment interest; KRS 360.040 governs POSTjudgment interest and separately provides that a judgment -- including one that already includes an award of prejudgment interest -- itself bears its own compounding postjudgment rate going forward. Whether prejudgment interest should be awarded at all on an unliquidated claim, and who decides that question, comes entirely from case law: Nucor Corp. v. General Electric Co., 812 S.W.2d 136 (Ky. 1991) |
|---|---|
| Interest rate | 8% a year -- the 'legal rate' under KRS 360.010 -- unless a written contract or obligation sets a different rate, which then controls instead. This 8% prejudgment rate is distinct from, and higher than, Kentucky's general 6% POSTjudgment rate on most judgments under KRS 360.040(1) |
| When interest starts running | For a liquidated claim, interest runs from the date payment became due -- the date of an unpaid invoice, the maturity date of a note, the date a contract price was owed. For an unliquidated claim, there's no fixed statutory start date; the trial court sets the period case by case, weighing factors such as the date of injury, the date suit was filed, when the defendant had notice of a prejudgment-interest demand, and how soon the damages became reasonably ascertainable |
| Contract vs. tort claims | Kentucky's real axis is liquidated vs. unliquidated, not contract vs. tort by label. A fixed contract debt draws interest 'as a matter of course.' An unliquidated claim -- whether it's a tort claim for property damage or a contract claim whose amount wasn't fixed until trial -- draws interest only if the trial judge, weighing equitable factors, decides fairness requires it; the label on the claim doesn't control, only whether the dollar amount was already fixed or ascertainable |
| Mandatory or discretionary | Mandatory -- 'follows as a matter of course' -- for a liquidated claim. Discretionary for an unliquidated claim, and decided by the COURT alone as a matter of equity, never submitted to a jury: the Kentucky Supreme Court reversed a Court of Appeals ruling that would have let a jury decide the question, holding the decision belongs to the trial judge weighing considerations of fairness (Nucor Corp. v. General Electric Co.) |
| Simple or compound | Not fixed by the prejudgment-interest statute, which is silent on the question. Kentucky courts have held that while simple interest is the traditional default, it is not legally required -- a trial court may award compound prejudgment interest where the equities of a long delay in payment justify it (Reliable Mechanical, Inc. v. Naylor Indus. Servs., Inc., 125 S.W.3d 856 (Ky. App. 2003)) |
| Claims against the government | Claims against the Commonwealth generally go through the Board of Claims (the Kentucky Claims Commission), a limited statutory waiver of sovereign immunity covering only negligence claims. A single award is capped at $250,000 per claimant (or $400,000 total, divided among claimants, when one act of negligence produces multiple claims) -- but the statute expressly states this cap applies 'exclusive of interest and costs,' meaning interest is added on top of the cap rather than counted against it |
| Other exceptions | A written contract's own agreed interest rate always displaces the 8% statutory legal rate. Kentucky's Supreme Court has held that once a creditor contracts for a rate HIGHER than the statutory 8%, it permanently forfeits the right to fall back on the statutory rate later, even after the account is closed or charged off (Unifund CCR Partners v. Harrell, 2017 Ky. LEXIS 86 (2017)) |
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The short answer
Kentucky splits prejudgment interest by whether the DAMAGES are liquidated
-- fixed or readily calculable -- not by whether the claim is a contract
claim or a tort claim. A liquidated claim, like an unpaid invoice or a
fixed contract price, earns interest automatically at Kentucky's 8% legal
rate from the day payment was due. An unliquidated claim -- most personal-
injury and property-damage claims, where the dollar figure isn't fixed
until a jury or judge sets it -- draws prejudgment interest only if the
trial judge decides, weighing fairness and equity, that it should. That
decision is always made by the judge, never a jury, and even whether the
interest compounds is left to the judge's discretion rather than fixed by
statute.
Requirements one by one
Governing law
KRS 360.010 sets Kentucky's general "legal rate of interest," which courts
apply to prejudgment interest on qualifying claims. KRS 360.040 governs
POSTjudgment interest -- a different period -- and separately provides that
once a judgment includes an award of prejudgment interest, the whole
judgment then bears its own compounding postjudgment rate. Whether
prejudgment interest is available at all on an unliquidated claim, and who
gets to decide that, is settled entirely by case law, principally Nucor
Corp. v. General Electric Co., 812 S.W.2d 136 (Ky. 1991).
Interest rate
8% a year under KRS 360.010's legal rate, unless the parties agreed in
writing to a different rate -- in which case the contract rate controls
instead. This 8% figure is Kentucky's PREjudgment rate specifically; it's
higher than the state's general 6% POSTjudgment rate on most judgments, so
the two shouldn't be confused just because they sit in adjacent code
sections.
When interest starts running
On a liquidated claim, interest starts on the date payment became due --
the due date of an invoice, the maturity date of a note, the date a fixed
contract price was owed. On an unliquidated claim, there's no set start
date in the statute; the trial judge decides the appropriate period case
by case, considering factors like the date of the underlying injury, the
date the lawsuit was filed, when the defendant received notice of a
prejudgment-interest demand, and how soon the damages became reasonably
ascertainable.
Contract vs. tort claims
This is Kentucky's central twist: the meaningful line isn't contract
versus tort, it's liquidated versus unliquidated. A fixed contract debt
draws interest "as a matter of course," automatically. An unliquidated
claim -- whether it's a tort claim for property damage or a contract claim
whose amount wasn't fixed until trial -- only draws interest if the trial
judge decides fairness requires it. Two claims that are both "torts," or
both "contracts," can be treated completely differently under this rule
depending on whether the dollar amount was already fixed at the time of
the wrong.
Mandatory or discretionary
Mandatory for a liquidated claim -- it "follows as a matter of course."
Discretionary for an unliquidated claim, and that discretion belongs
exclusively to the trial judge, never a jury. The Kentucky Supreme Court
was explicit on this point, reversing a Court of Appeals decision that
would have let a jury decide whether to award prejudgment interest on an
unliquidated property-damage claim, holding instead that the decision is
an equitable one committed to the trial judge.
Simple or compound
Not fixed by statute -- KRS 360.010 is silent on compounding. Kentucky
courts have held that while simple interest is the traditional default for
prejudgment interest, nothing requires it: a trial court may award
compound interest where the equities of a long delay in payment justify
compensating the prevailing party for the opportunity it lost to earn
compound returns on money wrongfully withheld.
Claims against the government
Claims against the Commonwealth of Kentucky generally must go through the
Board of Claims (now the Kentucky Claims Commission), a narrow statutory
waiver of sovereign immunity limited to negligence claims. A single award
is capped at $250,000 per claimant, or $400,000 total divided among
claimants when one act of negligence injures more than one person -- but
the statute setting that cap says so "exclusive of interest and costs,"
meaning interest is layered on top of the cap rather than counted inside
it.
Other exceptions
A written contract's own agreed interest rate always displaces the
statutory 8% legal rate. Kentucky's Supreme Court has held that once a
creditor contracts for a rate higher than 8%, that choice permanently
forecloses falling back on the statutory rate later -- even after the
underlying account is closed out or "charged off," a rule that has come up
most often in debt-collection litigation over credit card balances.
What trips people up
Assuming every tort claim is treated the same is the biggest trap in
Kentucky: whether a personal-injury or property-damage claim draws
prejudgment interest at all depends entirely on whether the dollar amount
was ascertainable before trial, not on the fact that it's a tort claim.
Confusing the 8% PREjudgment legal rate under KRS 360.010 with the 6%
POSTjudgment rate under KRS 360.040 is an easy mistake, since the two
statutes sit next to each other and both get called "the interest rate" in
casual conversation.
Assuming prejudgment interest is always simple interest is another trap --
Kentucky courts can and do award compound prejudgment interest when a case
has dragged on for years and the equities favor it.
Common questions
What's Kentucky's prejudgment interest rate?
8% a year under KRS 360.010's legal rate, unless a written contract sets a
different rate.
Can I get prejudgment interest on a Kentucky personal injury claim?
Only if the trial judge decides, as a matter of equity, that it's
appropriate -- it isn't automatic the way it is for a liquidated debt, and
a jury never makes this decision.
Does Kentucky prejudgment interest compound?
Not automatically. Simple interest is the traditional default, but a
Kentucky court may award compound interest if the circumstances -- usually
a long delay in payment -- make that the fairer result.
Can I get prejudgment interest against the Commonwealth of Kentucky?
Only through the Board of Claims, and only for a qualifying negligence
claim; any award (including interest) is subject to the $250,000
per-claimant cap, though interest itself is calculated on top of that cap
rather than squeezed inside it.
Statutes and sources
- KRS 360.010(1) -- "Except as provided in KRS 360.040, the legal rate of
interest is eight percent (8%) per annum, but any party or parties may
agree, in writing, for the payment of interest in excess of that rate."
Accessed 2026-07-05: https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=47989 - KRS 360.040(1) -- "a judgment, including a judgment for prejudgment
interest, shall bear six percent (6%) interest compounded annually from
the date the judgment is entered." Accessed 2026-07-05:
https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=45719 - KRS 49.040(1) -- "a single claim for the recovery of money or a single
award of money shall not exceed two hundred fifty thousand dollars
($250,000), exclusive of interest and costs." Accessed 2026-07-05:
https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=51453 - Nucor Corp. v. General Electric Co., 812 S.W.2d 136 (Ky. 1991) --
establishes the liquidated/unliquidated axis and holds the decision
whether to award prejudgment interest on an unliquidated claim belongs
to the court, not the jury. Accessed 2026-07-05:
https://www.courtlistener.com/opinion/1522831/ - Reliable Mechanical, Inc. v. Naylor Indus. Servs., Inc., 125 S.W.3d
856 (Ky. App. 2003) -- holds compound prejudgment interest is permitted,
not just simple interest. Citation verified via legalresearch
(courtlistener id 1384934):
https://www.courtlistener.com/opinion/1384934/reliable-mechanical-inc-v-naylor-industrial-services-inc/ - Unifund CCR Partners v. Harrell, 2017 Ky. LEXIS 86 (2017) -- holds a
creditor who contracts for a rate above the 8% statutory rate permanently
forfeits the right to fall back on the statutory rate. Accessed
2026-07-05: https://www.courtlistener.com/opinion/5447680/
Source links
Every statute quoted above, linked, with the date we checked it.