Who Needs an Oregon Contractor�s License?
In Oregon, anyone working for compensation in any construction field that involves making improvements to real property must be licensed by the Oregon Construction Contractors Board (CCB).
There are three basic types of licenses:
- Commercial (for work on both small and large commercial properties)
- Residential (for work on residential and small commercial properties)
- Dual license for both commercial and residential work
One or more endorsements must be added to any of these licenses to specify the type(s) of structures the licensee is authorized to work on. Each endorsement has certain limitations and specific bonding and insurance requirements. This article focuses on the licensing of residential and commercial licenses with a general contractor endorsement. Be aware that there are two levels of general contractor endorsement for commercial contractor licenses, differentiated by the contractor’s experience level.
What Does the Licensing Process Involve?
There are a number of steps that must be completed before submitting a license application to CCB:
- Determine the type of license and endorsement(s) needed.
- Complete pre-licensing training and pass the required exam.
- Register your business with the Oregon Secretary of State, Corporation Division.
- Purchase a surety bond in the required amount for the type of license and endorsement(s).
- Purchase general liability insurance naming CCB as the certificate holder.
- Purchase worker�s compensation insurance if the business will be hiring employees.
- Obtain state and federal tax ID numbers from the Oregon Department of Revenue and the Internal Revenue Service respectively.
- Complete the appropriate application for the type of license and endorsement.
Once all of these steps have been accomplished, you can go ahead and submit the competed application along with the original bond, insurance certificate, and application fee (currently $250 for a two-year license).
Why is a Contractor�s License Surety Bond Required?
The surety bond serves as a guarantee that the licensed contractor will conduct business in a completely lawful and ethical manner. Any failure to do so that results in a financial loss entitles the injured party to file a claim against the bond. The bond ensures that funds will be available to compensate claimants for such losses.
Residential General Contractors and Commercial General Contractors must obtain a bond in the amount of $20,000. Commercial General Contractors, Level I must purchase a $75,000 surety bond.
How Does It Work?
When a claim is filed against the bond, the surety company that issued the bond will investigate to ensure that the claim is valid. In most cases, the surety company will pay the claim and then collect reimbursement from the contractor. The terms of the bond, which specify what laws, regulations, and standards the contractor must abide by, also indemnify the surety company and make the contractor legally responsible for paying all valid claims.
Understanding the Surety Bond Process for Contractors in Oregon
The premium a contractor pays for the bond is a small percentage of the required bond amount. The surety company determines what that percentage (the premium rate) will be based primarily on the contractor�s personal credit score and business and personal financial strength. The premium rate is usually between 1% and 3% for those with good credit.
Get Bonded Today
Whatever the amount of the bond you need to obtain your Oregon contractor�s license, Single Source Insurance can get you the best premium rate possible. Request a quote online today.