Oregon Contractor License Bond

Oregon Contractor License Bond

Contractors in Oregon are required by the Oregon Construction Contractors Board (CCB) to carry a surety bond to be licensed. Depending on the scope and nature of work being performed, the bond limit can vary from $10,000 to $20,000 for residential contractors and $20,000 to $75,000 for commercial contractors. The license bond is a promise that contractors will pay a court judgment brought by a claimant to the CCB if the contractor is found at fault for improper or faulty work, breach of contract, and/or nonpayment of obligations. 

PURCHASE CONTRACTOR LICENSE BOND

Jet is the only direct surety bond provider for contractors with superior defense and competitive rates available. 

How Much Is a Contractor License Bond in Oregon?

Contractor License Bonds at a $20,000 bond limit or below cost as low as $100 annually or $10 monthly. A $50,000 contractor license bond costs $250 annually or $25 monthly. The $75,000 contractor license bond costs $375 annually or $38 monthly. Bond prices expressed are not  guaranteed and are based on personal credit, experience, and the bond amount. The chart below shows the bond limit and preferred pricing that corresponds with each license endorsement.

Oregon Contractor License Bond Pricing
Bond Type Bond Limit Monthly Annual
Residential General Contractor $20,000 $10 $100
Residential Specialty Contractor $15,000 $10 $100
Residential Limited Contractor $10,000 $10 $100
Commercial General Contractor Level 1 $75,000 $38 $375
Commercial General Contractor Level 2 $20,000 $10 $100
Commercial Specialty Contractor Level 1 $50,000 $25 $250
Commercial Specialty Contractor Level 2 $20,000 $10 $100

Jet cuts out the middleman brokers and agents leveraging efficiencies from a streamlined process to offer payment options everyone can afford. Other insurance companies pay excessive commissions to agents and brokers who only add another delay in communication and possibility of error. At Jet, we work directly with you to offer personal service. 

Jet offers straightforward payment plans with no down payment that no other company offers. Traditional insurance companies offer financing options with high down payments and high percentage APRs.

How Is the Contractor License Bond Filed to the CCB?

Jet electronically files the bond to the Oregon Construction Contractor Board. A copy of the original bond will be sent to you for your records. 

The CCB requires new licensees to file the bond along with the application paperwork. You can file the application for a new license via fax, email, or mail.

Fax: (503) 373-2007
Email: ccb.info@state.or.us
Mail: Construction Contractors Board, PO Box 14140, Salem, OR 97309-5052

Why Is the Contractor License Bond Required?

The Contractor License Bond ensures that a contractor pays a damaged party following a determination order given by the Oregon Construction Contractor Board. A determination order comes from the CCB following mediation of a complaint that is found to be valid and requires monetary compensation. If the contractor does not pay the order directly, then the Surety will step in and cover payment up to the full bond amount, per Oregon Revised Statute (ORS) 701.145-146, set by the CCB. 

The bond is a form of protection for property owners, suppliers, laborers, and subcontractors should a contractor cause financial harm to those parties. It adds a level of security by ensuring that an individual can seek restitution by means of the bond if the contractor does not reimburse them for damages. The intention of the CCB is to create a safe and trustworthy market for the construction industry. 

Only one commercial surety bond is needed if you have multiple commercial endorsements, same for multiple residential endorsements. For example, if a commercial contractor already has a commercial surety bond in place, then another commercial surety bond is not required for an additional endorsement such as a commercial developer. The bond amount must be the highest bond amount required between all the commercial endorsements on the license.

Who Needs a Contractor License Bond?

All licensed residential and commercial contractors in the State of Oregon are required to furnish a Contractor License Bond per ORS 701.081 and ORS 701.084, except for a small subset of handymen work. Oregon contractors can be licensed as residential, commercial, or residential and commercial (dual). If a contractor has a dual license with a residential and commercial endorsement they must have two surety bonds, one for each endorsement. Currently, around 5,200 contractors out of the 40,000 total number of contractors in Oregon hold a dual license. 

Handymen are required to hold a license in Oregon unless they are performing minor or inconsequential work less than $1,000. Any unlicensed handyman is not allowed to advertise or have business cards. The CCB describes the “residential limited contractor” license as a license for those who are part-time or performing handyman services; the license is limited to only $40,000 in work a year and $5,000 maximum per job.

How Can I Avoid a Claim On My Contractor License Bond?

To avoid claims against your license, it is best to quickly and respectfully handle complaints  before they get to the CCB. You should understand where complaints can come from and how to prevent those from occurring in the first place. A list of valid complaints from the public and the timelines for the public to file complaints against a contractor is available in the Oregon Statute - ORS 701.140. Below are some common examples:


Contractor Bond Claim Information
Claimant Reason for Claim Claim Timeline
Property Owner
(existing structure)
Negligent work, improper work,
or breach of contract
Within 1 year from the date
structure was substantially
completed
Property Owner
(new structure)
Negligent work, improper work,
or breach of contract
Within 1 year from the date
the structure was occupied or
2 years after substantial
completion
Employee Nonpayment of wages Within 1 year from the date
the wages were earned
Supplier Nonpayment of materials
($150 minimum)
Within 1 year from the date
the materials were sold
Subcontractor Nonpayment of materials or
labor furnished to primary
contractor
Within 1 year from the date
the work was performed
Primary Contractor
(existing structure)
Negligent or improper work,
or breach of contract from a
subcontractor
Within 14 months from the
date the contractor
substantially completed work
Primary Contractor
(new structure)
Negligent or improper work,
or breach of contract from a
subcontractor
Within 14 months from the
date the structure was first
occupied or 2 years
after completion

A Contractor License Bond claim ultimately results from a claimant notifying the CCB of an unpaid court judgment from a construction related dispute. There are several things that can occur before it gets to a court judgment, and different ways it can get there. First, when a dispute arises, the claimant can choose between handling it through the CCB, a civil court, or directly with you, the contractor.

If the claimant goes directly to you, there is an opportunity for both parties to rectify the problem before a third party gets involved. Disputes can widely vary, but in nearly all cases it will save both parties time and headaches if it is handled without a third party. However, if you cannot come to an understanding or an agreement, the claimant can choose to go to a third party such as the CCB or a civil court, or decide to let the problem go. 

If the claimant goes through the CCB, they are required to send a notice via certified mail to the contractor at least 30 days in advance before they can file a complaint with the CCB per ORS 701.133. The CCB will then determine the validity of the complaint based on the timeliness of the claim, ORS 701.143, and the types of allowable complaints per ORS 701.140 that include: negligent work, improper work, breach of contract, and nonpayment of obligations. If the complaint is valid then the CCB will conduct a meeting between the two parties to mediate the dispute. If the parties do not resolve or settle the complaint, the claimant must go to court to get a judgment and bring it back to the CCB in order to file a bond claim. 

The claimant will eventually end up in civil court if conflict resolution directly with you or the CCB does not work. The claimant can go straight to civil court without first going to you or the CCB. In that case there may be less opportunity to settle the dispute before it comes to a final judgment by the court. Once a judgment is made, you have the option to either settle and pay the judgment, or appeal the ruling. An appeal is a second chance to find a more favorable judgment from the court. 

If you are ultimately found at fault through the court process and a judgment is made against you, you then have two options: make payment or ignore it. If you choose to ignore it, the claimant can file a claim against the bond with the CCB to collect restitution up to the full bond limit.

At any point in this process you and the claimant can handle the dispute outside of the third party. The dispute can be dropped at any point as well. You will have many opportunities to plead your case to either the CCB or a civil court. There are so many options to resolve the conflict before it will get to a bond claim. However, if it does get to the end with both parties disagreeing and a civil judgment is placed against you with no more means of fighting it, then it is best to make payment on that judgment. 

At Jet, we will do everything in our power to fight for you in the claim process, but we are legally obligated to payout on the bond when the CCB receives notice of an unpaid judgment. A surety bond is not insurance; you are obligated to pay back the surety company in full for the claim amount and any fees associated if a bond claim is paid out. A bond claim can result in the CCB taking action against the license through fines or revocation/suspension of the license. With these things in mind, it is best to complete the judgment before it gets to a bond claim, and even better to handle a dispute before it gets to a court judgment. The infographic below provides a picture of the different paths in the contractor dispute process. 

 

Oregon Contractor Dispute Process

What Happens If I Get a Claim On My Contractor License Bond?

Contact Jet upon receipt of a claim notice, and we will take a thorough review of the details. While Jet’s claims department works hard to protect contractors from claims, there is only so much we can do after a court makes a judgment against you. The contractor license bond is in place for the sole purpose of covering a court judgement brought to the CCB as a result of a construction related dispute. The contractor must make the payment of the court judgment, or risk a bond claim if it is not paid in a timely manner. Any dispute between a contractor and a claimant can be handled prior to a court judgement through direct resolution between both parties, or through mediation with the CCB. 

Once a complaint is filed against a contractor, it starts a 90-day period wherein any additional justified claim that is filed within that 90 day period has an equal right to bond reimbursement, except for a few exceptions. For residential bonds, any complaint from an owner of a structure has priority over any other claim. A claim on a residential bond is limited to $3,000 for any non-homeowner claims, ORS 701.153 (B). In commercial bond claims, priority in satisfaction goes first to those furnishing labor to the contractor, then all other claims, and finally interest and attorney fees, per ORS 701.157

Unlike an insurance policy, which protects contractors from their work causing accidental damages, the surety bond protects the public and other businesses that work with the contractor. The contractor is ultimately responsible for their actions and must reimburse the surety company for paid claims. Think of the surety as providing a letter of credit that demonstrates to the CCB that it’s safe to license you to perform construction. It is not Jet’s aim to pay bond claims, but to curb claims activity through proper education and representation of contractors.

A bond claim that is not resolved can result in the CCB revoking, suspending, or refusing to renew a license in accordance with ORS 701.102. There is also a possibility the CCB will take punitive action by placing you on probation or requiring a higher bond limit. The Oregon Revised Statute Chapter 701 has generic conditions for disciplinary action allowing the CCB to freely make their judgments on a case-by-case basis. It will help to work with the CCB during disputes so they will grant a more favorable action against your license.

How Is the Contractor License Bond Renewed?

If you are on monthly payments you don’t have to worry about renewing your bond. So long as the automatic payment comes through the bond will remain current with the CCB. There is a 30-day grace period where the bond will remain active with the CCB should a monthly installment be missed for any reason. 

The Oregon Construction Contractor Board will not back date a bond after cancellation. You should ensure payment information is updated quickly to avoid a gap in bond coverage. If you make payment after the cancellation of the bond, a new bond will be issued and there will be a gap in bonding. 

Contractors paying the bond on an annual basis need to submit payment before their renewal date. Don’t worry about putting this on your calendar as Jet will notify you with plenty of time to make payment for the bond renewal. Unlike other insurance companies, we do not require any additional paperwork for bond renewal and payment is all that is needed. The CCB does not require any renewal paperwork. 

Can I Cancel the Contractor License Bond and Get a Refund?

Yes, you can with Jet! Jet can quickly file a cancellation notice to the Oregon Construction Contractor Board and return all unearned premium. For monthly payments we will promptly stop the payment process. The bond has a 30-day cancellation provision, so it will not cancel until 30 days after Jet provides a written notice to the CCB. Premium returns at Jet take into account that 30-day period where the bond remains active as Jet is still providing coverage at that time.

If you miss a monthly payment, we will send you a notice to get that payment in before a cancellation is filed to the CCB. Life and business can be distracting and Jet’s team is understanding of that fact as we work with you if a payment gets missed. Other carriers leave management of payments to third party financing companies who have no control over bond filing, leaving you chasing down who to make payment to, how to get a bond reactivated, and more often than not dealing with people who are indifferent if your bond is cancelled. Most often these are not even the people who sold you the bond!

What Are the Differences Between Contractor Licenses in Oregon?

Other than the type of work being performed, the CCB determines how to classify contractors using years of experience, total sales, and amount of trades performed. Below is a quick definition of each class: 

Residential General Contractor: May perform or supervise an unlimited amount of construction trades for residential and small commercial projects. Required to carry a $20,000 license bond and $500,000 of liability coverage. 

PURCHASE RESIDENTIAL GENERAL CONTRACTOR BOND

Residential Specialty Contractor: May perform one or two trades per residential and small commercial projects and potentially a third trade if the job is under $2,500 in labor and materials. Required to carry $15,000 license bond and $300,000 of liability coverage.

PURCHASE RESIDENTIAL SPECIALTY CONTRACTOR BOND

Residential Limited Contractor: May perform or supervise an unlimited amount of construction trades for residential and small commercial projects if under $40,000 in total sales for the year and engage in no contracts over $5,000. Required to carry a $10,000 license bond and $100,000 of liability coverage.

PURCHASE RESIDENTIAL LIMITED BOND

Commercial General Contractor Level 1: May perform or supervise an unlimited amount of construction trades for any size project and has eight or more years of experience with key employees. Required to carry a $75,000 license bond and $2,000,000 of liability coverage.

PURCHASE COMMERCIAL GENERAL CONTRACTOR LEVEL 1 BOND

Commercial General Contractor Level 2: Same as Level 1, but with four or fewer years of experience with key employees. Required to carry a $20,000 license bond and $1,000,000 of liability coverage. 

PURCHASE COMMERCIAL GENERAL CONTRACTOR LEVEL 2 BOND

Commercial Specialty Contractor Level 1: May perform one or two trades for any size project and has eight or more years of experience with key employees. Required to carry a $50,000 license bond and $1,000,000 of liability coverage. 

PURCHASE COMMERCIAL SPECIALTY CONTRACTOR LEVEL 1 BOND

Commercial Specialty Contractor Level 2: Same as Level 1, but with four or fewer years of experience with key employees. Required to carry a $20,000 license bond and $500,000 of liability coverage. 

PURCHASE COMMERCIAL SPECIALTY CONTRACTOR LEVEL 2 BOND

New businesses looking to apply for a commercial license should only apply for a level 2 license as there is no difference in the scope of work that can be performed from a level 1 to a level 2. Level 1 license holders will be paying more in insurance and bonding because of the higher limit requirements. The only possible benefit for a level 1 commercial license is in marketing to clients that you have more experience than a level 2. 

The CCB sets apart small and large commercial structures using building size and cost of the project according to ORS 701.005 (17)(a-d). Generally, small commercial structures are for jobs that are less than 10,000 square feet, or 12,000 square feet if the unit is part of a larger structure, and the total cost of construction is less than $250,000. A large commercial structure is anything that is larger than the defined small commercial or residential structure.

Note that years of experience is based on the total experience of the key employee or employees in the commercial business. Commercial contracting businesses must have one or more key employees, per ORS 701.050, with the minimum combined total amount of experience as required by ORS 701.084. There is no special requirement to be a key employee, they just simply need construction experience. The key employee will need to complete continuing education every year per ORS 701.086

More information can be found through the Oregon Contractor License Board.

What Other Insurance Is Required for Contractors in Oregon?

Every licensed contractor is required by the Oregon Construction Contracting Board to carry a general liability policy pursuant to ORS 701.073. General liability insurance covers damages or personal injury loss that is caused by the contractor. Licensed contractors must submit a certificate of insurance naming the Construction Contractor Board as certificate holder. There is a sample certificate available at the CCB website to illustrate how they would like it completed. The CCB will fine or suspend license holders that do not have current liability coverage. Only one policy is required for a dual licensed contractor. 

Workers’ compensation insurance is required by all licensed contractors with non-exempt businesses that hire or lease employees. Workers’ comp covers disability, medical treatment, and lost wages should an employee of the business get injured on the job. Non-exempt contractors must provide proof of workers’ compensation insurance to the CCB by simply providing the insurance carriers name and policy number for the coverage, and in some cases the business identification number (BIN) or federal identification number (EIN). The contractor does not have to furnish workers’ comp if they are using leased workers or temporary staffing as those companies are already providing workers compensation. 

Family owned companies that do not have employees are exempt from workers’ compensation if the partners, corporate officers, or members are all immediate family members such as parents, spouses, siblings, sons, daughters, and grandchildren. 

Other Contractor License Endorsements and Bonding

Public Works Bond: If you perform work on public works projects that have a total project cost of $100,000 or greater, the Oregon Construction Contractor Board requires you to obtain a public works bond for $30,000. The public works bond is supplementary and must be submitted in addition to the required contractor bond.

APPLY FOR PUBLIC WORKS BOND

Developer License Bond: Licensed commercial and residential developers in Oregon are required to provide a $20,000 bond per ORS 701.081 and ORS 701.084. Developers, as defined in ORS 701.005, are contractors that own or have interest in a property and arrange for development or improvement with the intent to sell the property. Licensed developers cannot perform actual construction work unless they are also licensed as a residential or commercial contractor. 

APPLY FOR DEVELOPER LICENSE BOND

Restricted Residential Contractor License Bond: Residential and commercial contractors that have a developer license endorsement in addition to their license do not need an additional bond. 

There are five restricted residential endorsements you can add to your license that the Oregon Construction Contractor Board offers including: home services, home energy performance score, residential restoration services, home inspector services, and residential locksmith services. This work can be added as an endorsement to an existing license, or be stand-alone licenses. Stand-alone restricted residential contractor licenses cannot perform any other construction activity than what is explicitly described for the license. Stand alone license holders must have a $10,000 bond on file.

  • Home Service Contractor: provides service, repair, or replacement under a warranty.

  • Residential Home Energy Performance Score Contractor: provides home energy performance scores.

  • Residential Restoration Services Contractor: performs routine cleaning, water removal, personal property inventory, board up services, debris removal, or other services due to damage to the structure from a disaster.

  • Home Inspector Services Contractor: performs residential home inspections of more than one structural component, ORS 701.445. Specialized inspectors only completing inspections of one structural component such as roofs or lead based paint are not required to have this license or endorsement. 

  • Residential Locksmith Services Contractor: any business who “services, installs, repairs, rebuilds, rekeys, repins, or adjusts locks, hardware peripheral to locks, safes, vaults, safe deposit boxes, or mechanical, or electronic security systems,” per ORS 701.475, except for those that are exempt. There is just an online test required to get a license, no experience is needed. There is one company with this license currently.

APPLY FOR RESTRICTED RESIDENTIAL CONTRACTOR LICENSE BOND

Construction Flagging Contractor Bond: Construction flagging contractor is the most recent stand-alone license to be offered by the Oregon Construction Contractor Bond. License holders are required to hold a $20,000 bond. This license can direct traffic flow on public roads to prevent conflict between vehicle traffic and construction near the roadway. 

Current commercial contractors and residential general contractors are not required to have this license to perform construction flagging activity. However, residential specialty or limited licenses must apply for this license to perform this work. 

APPLY FOR CONSTRUCTION FLAGGING CONTRACTOR BOND

Water Well Constructors Bond: For contractors hired to build or work on someone’s well a $20,000 surety bond is required. Landowners who build or work on their own well must get a $10,000 surety bond to cover the project.

APPLY FOR WATER WELL CONSTRUCTORS BOND

Sewage Disposal Services Bond: The Oregon Department of Environmental Quality requires that any person licensed to perform installation or pumping of septic tanks must obtain a Sewage Disposal Service Bond. For people installing septic disposal systems a $15,000 bond must be filed with the DEQ. Operations that only perform septic pumping needs to file a $5,000 bond.

APPLY FOR SEWAGE DISPOSAL SERVICES BOND

Lead Based Paint Renovator: A contractor cannot perform work on a house or child-occupied facility built before 1978 unless they are licensed for lead-based paint renovation with the CCB. This ensures contractors are using safe practices to reduce risk of lead-poisoning. 

To become licensed for lead-based paint work you must have an existing contractor license and simply complete an 8-hour training course with an accredited training provider. After the training is finished, send a completed certified lead based paint renovation contractors license application to the CCB. 

 

Residential Contractor Bond Form:

Oregon Residential Contractor License Bond Form

Commercial Contractor Bond Form:

Oregon Commercial Contractor License Bond Form