Bonding in Oregon

A surety bond is not insurance. It is a 3-party promise. The contractor (principal) buys a bond from a surety company so that a customer or worker (the obligee) can file a claim if the contractor breaks the rules that the state licensing board has tied to the bond. If the surety pays a valid claim, the contractor is on the hook to pay the surety back. The bond protects the public. It does not protect the contractor. Oregon CCB requires every licensed contractor to post a surety bond at the amount set for the license endorsement. Bond amounts were raised by the 2023 Oregon Legislature (House Bill 2922), effective January 1, 2024. Verify the current amount against the CCB licensing page before you buy, because CCB updates these figures periodically. Bond amounts by endorsement, per CCB effective January 1, 2024: - Residential General Contractor: $25,000. - Residential Specialty Contractor: $20,000. - Residential Limited Contractor: $15,000. - Residential Developer: $25,000. - Home Inspector, Home Services Contractor, Home Energy Performance Score Contractor, Residential Locksmith, Residential Restoration Contractor: $15,000. - Commercial General Contractor Level 1: $80,000. - Commercial Specialty Contractor Level 1: $55,000. - Commercial General Contractor Level 2: $25,000. - Commercial Specialty Contractor Level 2: $25,000. - Commercial Developer: $25,000. What the bond premium costs. A surety charges an annual premium, usually 1% to 3% of the bond face value for a contractor with strong personal credit and clean history. Weaker credit, prior claims, or a new business with no track record can raise the premium to 5% to 10% or more. A $25,000 bond at a 2% rate is $500 per year. A $80,000 commercial Level 1 bond at 2% is $1,600 per year. The premium is not refundable and buying the bond does not put $25,000 into an account. What claims look like. A customer, subcontractor, employee, or supplier files a complaint with CCB. CCB investigates. If the claim is found valid, the claimant can recover from the bond up to the bond amount. The surety pays, then pursues the contractor for reimbursement, including costs and fees. Multiple valid claims against the same bond are paid in order received until the bond amount is exhausted. Bond is separate from liability insurance and from the trade license for electrical, plumbing, or HVAC work. Those are administered by the Oregon Building Codes Division and have their own requirements. A contractor running a licensed electrical shop in Oregon needs a CCB bond, CCB-required liability insurance, and the BCD electrical contractor license.