Oregon Contractors License Bonds Explained
Developers and contractors, both residential and commercial, need to hold a license in the state of Oregon before they can perform or supervise construction work.
One of the licensing requirements is that they post a contractor’s license bond. This type of surety bond is designed to protect the state, the contractor’s employees and their clients against fraudulent and unethical business practices and contract violations. To stay out of bond claims, contractors should know their obligations under the Oregon Revised Statutes as well as any specific regulations pertaining to the type of license they hold.
If you want to learn more about contractor’s license bonds in Oregon, continue reading the sections below.
Frequently Asked Questions
Who needs an Oregon contractors license bond?
A bond is required from almost every contractor in the state who performs works for $500 or more. This includes Level 1 and 2 general and specialty commercial contractors, general and commercial residential contractors, developers, and restoration contractors.
Whether you need a license (and a bond) will also depend on what kind of work you perform. Roofing, painting, landscaping, concrete, HVAC, plumbing, electrical, carpentry and tree servicing are examples of services that require a license.
Gutter cleaning, power- and pressure-washing, debris clean-up and handymen services are exempt from the licensing requirement, unless they advertise their services (online advertising counts too).
What’s the cost of obtaining an Oregon contractors license bond?
Contractor license bonds in Oregon are paid in annual premiums, comprising a certain percentage of the total bond amount. Different types of licenses call for different bond amounts. The table below contains information on total amounts by license type, as well as estimated annual premiums.
|Bond Type||Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Residential General Contractor's Limited Contractors and Developers||$20,000||$150-$300||$200-$600||$500-$1,000||$1,000-$2,000|
|Residential Specialty Contractors||$15,000||$112-$225||$150-$450||$375-$750||$750-$1,500|
|Residential Limited Contractors, Restoration Contractors and Home Inspection Services Contractors||$10,000||$100-$150||$100-$300||$250-$500||$500-$1,000|
|Commercial Developers, Level 2 Specialty Contractors, Level 2 General Contractors||$20,000||$150-$300||$200-$600||$500-$1,000||$1,000-$2,000|
|Level 1 Commercial Specialty Contractors||$50,000||$375-$750||$500-$1,500||$1,250-$2,500||$2,500-$5,000|
|Level 1 Commercial General Contractors||$75,000||$560-$1,125||$750-$2,250||$1,875-$3,750||$3,750-$7,600|
As of 2016, landscaping contractors are subject to new bonding amounts: between $10,000 and $20,000, depending on how much they charge per contract.
As you can see from the table, the premium is a small percentage of the total amount. The latter only refers to the maximum coverage of the bond.
Learn more about what factors determine your bonding costs on our “What Does a Surety Bond Cost?” page.
Can I get this bond with bad credit?
Oregon contractors license bonds are subject to underwriting consideration, meaning that sureties will want to look at your credit report and possibly your financial statements.
A bad credit score will almost certainly raise your annual premium to between 3% and 10%, but it will rarely prevent you from getting bonded. Our surety bonds agents are experts in underwriting bad credit surety bonds, so we can help you get the lowest rate despite your credit issues.
In addition to your credit score, items in your credit report are also important. Past due items are considered a red flag, whereas open bankruptcies or late child support payments may make it impossible to get bonded.
How do I apply for my contractor’s license bond?
To apply for your contractor’s license bond, you can submit our online application. You will receive a free bond quote along with instructions on how to proceed.
If everything goes smoothly, we should have your bond signed in 1-2 business days. However, we always advise our clients to start the application process early to allow for unexpected delays in processing times.
When you receive your bond form by mail, you should attach it as part of your licensing application. Keep in mind it needs to be sent out no later than 60 days after it is signed by the surety.
For any questions regarding your application, feel free to contact us at (877)-514-5146.
How do I apply to get licensed in Oregon?
It’s best to contact the Oregon Construction Contractors Board (CCB) to inquire about pre-licensing requirements you need to fulfill.
You need to specify what type of work you are going to do, register with the Secretary of State, complete 16 hours of training, and successfully pass the licensing test. In addition to the surety bond, you will also need to purchase two types of insurance: general liability insurance and workers’ compensation insurance.
What happens in case of a claim?
Surety bond claims can happen if you violate your bond’s agreement, such as failing to meet your contractual obligations. If such a violation happens, the CCB will assess your liability. If you compensate the claimant, no further action is usually necessary.
However, if you don’t pay within the given deadline, the obligee can contact the surety and seek reimbursement from it. The surety is obligated to reimburse the claimant, but will seek compensation from you afterwards. This is not only a costlier scenario, as you will have to pay for legal expenses as well, but it may make it impossible to get bonded next time you need to.
Be sure to acquaint yourself with Chapter 701 and Chapter 812 for more specific information about your obligations as a licensed contractor in Oregon.