Oregon Increases Bond Capacity Requirements
The Oregon state legislature recently passed a bill (House Bill 2922) increasing all minimum bond amounts for contractors licensed by the Construction Contractors Board (CCB) by $5,000, effective January 1, 2024. For example, the bond amount for a Residential General Contractor will increase from $20,000 to $25,000, a Residential Specialty Contractor will see the bond amount increase from $15,000 to $20,000, and a Commercial General Contractor Level 1 bond amount will go from $75,000 to $80,000, etc.
Costs of Goods, Loss Experience Behind Increase in Bond Amount
The bond increase is due to the higher cost of goods and services, which has resulted in significantly more claims and greater exposure for Surety companies. The bottom line: Claims analysis conducted over the past few years indicates that the current bond capacities for all contractor license classifications in Oregon are no longer sufficient to cover most losses.
Contractors have two options to meet Oregon’s new capacity regulations:
- Pay a prorated premium to increase the current bond to the new required limits while keeping the same bond term.
- Decline to pay a prorated premium resulting in a shortened bond term.* If you choose not to pay the additional premium, your bond term will be reduced to reflect the increase in coverage limits.
How Much Will You Owe?
In cooperation with more than 100 surety companies, the CCB has taken steps to make the transition to the new bond amount as seamless as possible for the vast majority of Oregon contractors. The Surety companies will determine the cost due based on the remaining term on existing bonds and the increased bond capacity amount. All contractors with a current and active bond will receive an invoice outlining these details in the coming weeks.
Once the Surety companies have determined the cost to increase bond limits, Go Bonds will send contractors who have a current and active bond an invoice outlining the payment option and/or new expiration date. Please expect this notice within the coming weeks.
*Contractors who choose option 2 must obtain a new bond prior to the expiration date of the shortened bond term.