Missouri Contractor License Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Missouri contractor license bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a Contractor License Bond?

When a Missouri contractor license bond is required, the purpose is to provide some protection for the licensing authority, project owners, and the public against the financial harm caused by a licensed contractor’s nonperformance, lack of regulatory compliance, or malfeasance. When such a loss occurs, the injured party can file a claim for monetary damages.

 

Who Needs One?

Missouri-based general contractors don’t need to be licensed at the state level. However, all businesses other than sole proprietorships and general partnerships, as well as any business operating under a fictitious name, must register with the Missouri Secretary of State.

Some municipalities in Missouri have their own licensing requirements, primarily for specialty contractors such as electricians and plumbers. In some cases, obtaining a municipal contractor’s license entails purchasing a contractor license surety bond.

How Does a Contractor License Bond Work?

A Missouri contractor license bond is a three-way, legally binding contract between the local licensing authority (the “obligee”) requiring the bond, the contractor (the “principal”) purchasing the bond, and the “surety” guaranteeing the bond. In guaranteeing the bond, the surety agrees to extend credit to the principal for the purpose of paying a claim.

When a claim is filed against the bond, the surety investigates it and determines whether it is valid. If it is, the principal is legally obligated to pay it. But that does not mean the principal mails a check to the claimant. Instead, the surety pays the claim on the principal’s behalf and is repaid by the principal on an agreed-upon schedule. However, if the debt is not repaid, the surety can take legal action against the principal to recover the funds. In such cases, the principal can be held responsible for the associated court costs and legal fees.

How Much Does It Cost?

The obligee establishes the required bond amount, and the surety sets the premium rate for the bond. Multiplying those two factors determines the bond’s annual premium cost.

The surety sets the premium rate on a case-by-case basis through an underwriting assessment of the risk to the surety—specifically, the risk of not being repaid for claims paid on the principal’s behalf. The determining factor is the principal’s creditworthiness, as measured by the contractor’s personal credit score.

A high credit score is a strong indication that the risk to the surety is low, which means the premium rate could be as low as 1% or even a little less. Conversely, a low credit score is correlated with higher risk, which demands a higher premium rate. The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Missouri contractor license bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a Contractor License Bond?

When a Missouri contractor license bond is required, the purpose is to provide some protection for the licensing authority, project owners, and the public against the financial harm caused by a licensed contractor’s nonperformance, lack of regulatory compliance, or malfeasance. When such a loss occurs, the injured party can file a claim for monetary damages.

 

Missouri-based general contractors don’t need to be licensed at the state level. However, all businesses other than sole proprietorships and general partnerships, as well as any business operating under a fictitious name, must register with the Missouri Secretary of State.

Some municipalities in Missouri have their own licensing requirements, primarily for specialty contractors such as electricians and plumbers. In some cases, obtaining a municipal contractor’s license entails purchasing a contractor license surety bond.

Missouri-based general contractors don’t need to be licensed at the state level. However, all businesses other than sole proprietorships and general partnerships, as well as any business operating under a fictitious name, must register with the Missouri Secretary of State.

Some municipalities in Missouri have their own licensing requirements, primarily for specialty contractors such as electricians and plumbers. In some cases, obtaining a municipal contractor’s license entails purchasing a contractor license surety bond.

The obligee establishes the required bond amount, and the surety sets the premium rate for the bond. Multiplying those two factors determines the bond’s annual premium cost.

The surety sets the premium rate on a case-by-case basis through an underwriting assessment of the risk to the surety—specifically, the risk of not being repaid for claims paid on the principal’s behalf. The determining factor is the principal’s creditworthiness, as measured by the contractor’s personal credit score.

A high credit score is a strong indication that the risk to the surety is low, which means the premium rate could be as low as 1% or even a little less. Conversely, a low credit score icorrelated with higher risk, which demands a higher premium rate. The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

 

REQUEST A QUOTE

Request a quote online or call today to speak with one of our surety bond experts about obtaining a Missouri contractor license bond.