FAQ - Oregon Bond Increase
Takes Effect January 1, 2024
The information provided is general in nature and is not intended to address particular circumstances. Please consult your own legal or financial professional for further information and application to your business or individual needs.
Q: What is the reason behind the bond increase?
A: Surety bond companies typically price the license bond centered on their expected risk exposure based on past claims. As we see an increase in the cost of goods and services, this results in more significant claims. An analysis of claims by the State of Oregon over the past few years has shown that the current bond capacities for all Oregon contractor license classifications are no longer sufficient to cover most losses.
Q: Who made this decision?
Q: What are my options?
A: Contractors have two options*.
- Option 1 - Pay a prorated premium to increase the current bond to the new required limits while keeping the same bond term.
- Option 2 - Decline to pay a prorated premium resulting in a shortened bond term. *Contractors choosing option 2 will need to obtain a new bond prior to the expiration date of the shortened bond term.
Q: Can I opt out?
A: Contractors may opt out of paying the prorated premium to increase their existing bond and accept the shortened bond term, but no contractor can avoid the bond limit increase. This is a mandated requirement by the State of Oregon.
Q: What is the cost to me?
A: The Surety company will determine the cost based on the remaining term on the existing bond and the increased bond compacity amount. All contractors with a current and active bond will receive an invoice outlining these details in the coming weeks.
Q: Will you let me know when my bond expiration date is if I opt not to pay the premium?
A: Yes, the provided invoice will outline the prorated premium to increase the existing bond to the new required limits and to keep the same bond term.