Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Oregon contractor bond needs.
What Are They?
Several different types of contractor bonds may be required in Oregon depending on a given contractor’s specific circumstances.
In Oregon, you must purchase a contractor license bond as a prerequisite for obtaining either a residential or commercial contractor license. Contractor licenses are issued at the state level by the Construction Contractors Board (CCB). If you do both residential and commercial work, you’ll need both types of licenses, each of which requires an Oregon contractor license bond.
There are eight different classes of residential contractor licenses:
- Five of them require a $10,000 license bond.
- One of them requires a $15,000 license bond.
- Residential general contractor licenses and residential developer licenses require a $20,000 Oregon contractor license bond.
The five different classes of commercial contractor licenses require license bonds ranging from $20,000 to $75,000.
A contractor license bond is a contractor’s guarantee to comply with all state laws governing Oregon’s construction industry. It provides financial protection for both the state and for consumers who experience a financial loss due to the unlawful or unethical actions of a state-licensed contractor.
Other Oregon contractor bonds include (but are not limited to):
- Bid bonds, which guarantee that a bidder on a construction contract will accept the job if it is awarded. It also provides assurance that the bidder will be able to obtain a performance and payment bond if required.
- Performance bonds, which guarantee compliance with contract terms and provisions and completion of the job according to the contract.
- Payment bonds, which guarantee payment of subcontractors, workers, and suppliers according to the terms of the contract.
Oregon contractor bonds provide a source of funds for compensating those with valid claims for financial damages.
Who Needs Them?
Anyone applying for licensure as a contractor in Oregon must purchase the applicable Oregon contractor license bond, which must be renewed at every license renewal. Licensed contractors bidding on public works projects will need to purchase bid bonds, performance bonds, and payment bonds as required by the state agency that “owns” the project. Increasingly, private project owners also are requiring these Oregon contractor bonds.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
Every Oregon contractor bond is backed by a surety bond agreement that establishes a legally binding contract between the project owner (known as the “obligee”), the contractor (the “principal”), and the bonding company (the “surety”) underwriting and issuing the bond. The principal’s violation of the terms of the agreement can result in the injured party filing a claim against the bond. If the surety finds a claim to be valid and is unable to negotiate an amicable settlement, the principal is legally obligated to pay the claim.
It’s common practice for the surety to pay a claimant directly, despite being indemnified against any legal responsibility for claims. In essence, the surety advances the funds to the principal, who must then repay that debt.
What Do They Cost?
Oregon contractor bonds are sold for an annual premium that is a small percentage of the required bond amount. The surety’s underwriters determine what the premium rate will be based largely on the principal’s creditworthiness, as the surety’s main concern is the risk associated with paying claims on behalf of the principal.
A high personal credit score and other indicators of financial strength should earn you a premium rate in the range of 1-3% of the bond amount.
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Our surety bond professionals will get you the Oregon contractor bond you need at a competitive rate.