As a licensed residential contractor, you not only work in details and projects, you build your clients' dreams. With your commitment to follow through and your attention to detail, your company can create residential construction products that satisfy your clients. However, if a client is unsatisfied and feels like you did not work in their best interest, they need to have a seek compensation. A surety bond shows your clients that you do excellent work, and it reassures them that they will be compensated if you do not follow through.
Short on time? Check out our Contractor’s License FAQ page.
What is a Residential Contractor Bond?
A residential contractor bond is a surety bond, a type of protection for your clients. If your company makes errors on the job, fails to complete a project, or otherwise makes mistakes that cause financial harm to your clients, the surety bond will protect your clients and provide compensation. Your company seeks the bond, and it is called the principal. A surety bond is an agreement between the principal, the surety company, and the state agency requiring the bond. The surety company provides the bond to protect the client. If the client needs to be compensated, your company is responsible for reimbursing the surety company.
Who Needs an Oregon Residential Contractor Bond?
Residential contractors are responsible for a wide variety of work, including residential renovations and new construction work. As a contractor, you work indoors and out to ensure that your clients have a home that makes them proud.
Most of the time, your clients are satisfied with work. Occasionally, a client may feel that you did not complete the work appropriately or that you made an error. In this case, your client may seek financial compensation. The surety bond is there to ensure that compensation is available. In Oregon, a residential general contractor must provide a bond of $20,000 and file this under chapter 701 of the Oregon Revised Statutes as a condition of your general contractor's license. If you are a residential limited contractor, your bond amount is $10,000.
How Do You Get an Oregon Residential Contractor Bond?
While the surety bond covers you for claims of $10,000 to $20,000, you do not need to pay the entire amount. Your company pays a percentage of the total bond amount. The percentage rate that you pay may depend on your business and credit history. The surety underwriter will assess your company's history of claims, your credit history, and your business history. The total amount that you pay will vary from one to fifteen percent of the total bond amount.
When you're a contractor working in residential construction, you need to ensure that you protect your clients' interests using a surety bond. To get your residential contractor bond, contact Surety Solutions. Our OneClick application process gives you multiple quotes so that you can find one that works for you.