How much does a Mississippi contractor license bond cost?
The state of Mississippi doesn’t require all contractors to get bonded. Only certain cities in Mississippi have a bond requirement, with bond amounts varying depending on the city.
The following cities and counties in Mississippi currently require contractors to obtain a contractor license bond in order to perform work.
- City of Southaven
- County of Rankin
- Tate County
Most of these cities require a $5,000 bond for contractors, while some determine the bond amount on an individual basis. Tupelo is an exception– requiring mechanical contractors to obtain a $10,000 bond.
The cost of obtaining any of these bonds is determined by the issuing surety company. When you apply with the surety, you will be offered a rate to pay in order to get bonded, generally a small percentage of the total bond amount. For most contractor bonds required in Mississippi, your cost may be as little as $100.
The exact rate at which you get bonded depends on various financial factors, most importantly, your personal credit score. Your financial statements, liquidity, and even industry experience also matter. Applicants with a high credit score– one above 700 FICO– are typically offered the lowest rates.
Options for applicants with bad credit
If you have a low credit score, this should not deter you from applying for a bond. Through our Bad Credit Program applicants with lower scores can apply for a Mississippi contractor license bond just as easily as anyone else.
The only significant difference between getting a bond under this program and one with a higher credit score are the rates. Bond rates under this program are slightly higher due to the increased risk in bonding applicants with lower credit scores.
By obtaining a bond– even at a slightly higher rate– contractors can work on improving their credit score, which can influence their bond rate when they renew their bond.
What is the purpose of this bond?
Contractor license bonds are a legal form of guarantee that contractors will comply with state contractor laws and regulations. This is why they’re a licensing requirement in many states. They secure protection to those parties that are affected by contractors who act dishonestly and do not comply with state regulations.
The Mississippi contractor license bond constitutes an agreement between the contractor, the state or city licensing body, and the surety bond company that backs the bond financially. By getting licensed and bonded, the contractor agrees to comply with the conditions of the bond and of state regulations. If the contractor does comply, then he or she must only pay a small sum in order to get bonded: the bond premium.
Yet, if a contractor violates the bond agreement, a claim can be made against their bond. This will require the surety to step in and investigate the situation. If there is cause for a claim, the surety will proceed with compensating claimants, up to the full amount of the bond. When this occurs, the contractor will have to repay the surety for the compensation it has extended.
Typically, reasons for a claim against a Mississippi contractor license bond include:
- Violating the Mississippi state code and regulations
- Losses and damages suffered by the public or state due to contractor misconduct and dishonesty
- Contractors not paying obligations or taxes
How to apply for a Mississippi contractor license
There is no set of statewide licensing requirements for Mississippi contractors. Instead, they vary from city to city. When applying, you can expect to be asked to provide or comply with one or all of the items on the following list:
- Pass a pre-licensing education course or provide proof of experience and/or education
- Pass a contractor license exam
- Provide worker’s compensation or general liability insurance
- Pass a criminal background check and/or provide fingerprints
- Complete your Mississippi contractor license application
- Obtain a Mississippi contractor license bond
- Pay an application and/or licensing fee
To determine which licensing requirements apply to you, always contact your local licensing body for up-to-date information.
Call us at (866)-450-3412 anytime for more information regarding your surety bond and the bonding requirements for contractors in Mississippi. Our experts will be happy to help.