Mississippi Construction 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 Mississippi construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

What Is a Mississippi Construction Bond?

Mississippi construction bonds are surety bonds that provide financial protection for project owners (public or private) against the financial harm done by a contractor’s failure to comply with regulatory or contractual requirements. The contractor (known as the bond’s “principal”) must, by law, compensate the project owner (the bond’s “obligee”) or other injured party with a valid claim for monetary damages caused by violations. 

What Types of Mississippi Construction Bonds May Be Needed?

While Mississippi licenses construction contractors at the state level, that does not require the purchase of a contractor license bond. However, some local jurisdictions have licensing or permitting rules that may require bonding. 

Under Mississippi’s “Little Miller Act,” contractors must purchase performance bonds and payment bonds before entering into a contract for a state-funded construction project valued above a certain threshold level. Although the Little Miller Act does not apply to privately funded construction projects, many private project owners require performance and payment bonds anyway, particularly for higher-value projects. Any project owner (referred to as the “obligee”), whether public or private, may opt to require bid bonds in competitive bidding situations.

Other construction bonds that may be required by Mississippi project owners include:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds

How Does a Mississippi Construction Bond Work?

Every Mississippi construction bond involves a third party in addition to the obligee and principal. This is the bond’s guarantor (referred to as the “surety”). While the principal is legally obligated to pay valid claims, the surety guarantees their payment by agreeing to extend credit to the principal for the purpose of paying them. 

This is how that works. The surety will pay a valid claim on the principal’s behalf, with the understanding that the principal will repay the resulting debt in accordance with the surety’s credit terms. A principal who does not reimburse the surety can expect to become the target of legal debt recovery action.

How Much Does It Cost?

Two factors go into the calculation of the annual premium for a Mississippi construction bond—the amount of the bond, which is set by the obligee, and the premium assigned by the surety through underwriting. The premium rate is based largely on the risk of the surety not being repaid for claims previously paid on the principal’s behalf. That risk is measured by the principal’s personal credit score.

A high credit score signifies a low risk level, which calls for a low premium rate. A low credit score is seen as evidence of a higher risk level, so the premium rate will be higher. 

The premium rate for a principal with good credit 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 Mississippi construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

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FREE CONSTRUCTION BOND QUOTE

What Is a Mississippi Construction Bond?

Mississippi construction bonds are surety bonds that provide financial protection for project owners (public or private) against the financial harm done by a contractor’s failure to comply with regulatory or contractual requirements. The contractor (known as the bond’s “principal”) must, by law, compensate the project owner (the bond’s “obligee”) or other injured party with a valid claim for monetary damages caused by violations. 

 

While Mississippi licenses construction contractors at the state level, that does not require the purchase of a contractor license bond. However, some local jurisdictions have licensing or permitting rules that may require bonding. 

Under Mississippi’s “Little Miller Act,” contractors must purchase performance bonds and payment bonds before entering into a contract for a state-funded construction project valued above a certain threshold level. Although the Little Miller Act does not apply to privately funded construction projects, many private project owners require performance and payment bonds anyway, particularly for higher-value projects. Any project owner (referred to as the “obligee”), whether public or private, may opt to require bid bonds in competitive bidding situations.

Other construction bonds that may be required by Mississippi project owners include:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds

Every Mississippi construction bond involves a third party in addition to the obligee and principal. This is the bond’s guarantor (referred to as the “surety”). While the principal is legally obligated to pay valid claims, the surety guarantees their payment by agreeing to extend credit to the principal for the purpose of paying them. 

This is how that works. The surety will pay a valid claim on the principal’s behalf, with the understanding that the principal will repay the resulting debt in accordance with the surety’s credit terms. A principal who does not reimburse the surety can expect to become the target of legal debt recovery action.

Two factors go into the calculation of the annual premium for a Mississippi construction bond—the amount of the bond, which is set by the obligee, and the premium assigned by the surety through underwriting. The premium rate is based largely on the risk of the surety not being repaid for claims previously paid on the principal’s behalf. That risk is measured by the principal’s personal credit score.

A high credit score signifies a low risk level, which calls for a low premium rate. A low credit score is seen as evidence of a higher risk level, so the premium rate will be higher. 

The premium rate for a principal with good credit usually is in the range of 1% to 3%.

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Request a quote online or call today to speak with one of our surety bond experts about obtaining a Mississippi construction bond.