Most states require contractors to obtain a surety as a condition of working professionally within its jurisdiction, simply to provide some level of protection for the consumers who would make use of a contractor’s services. The state of Oregon is no exception, and it requires professionals such as electricians, plumbers and others to obtain a license and permit bond before they can offer services in the state. There are many other types of bonds, however, as will be seen in the discussion below.
What Is a Bond?
An Oregon surety bond is a kind of contract agreement between three central parties, a principal, an obligee and a surety company. The obligee is an individual or an organization requiring the principal to be bonded in order to be eligible to do a job it is offering. Some of the most common obligees in this model are government organizations.
The principal in a bond agreement is the actual contractor who will be doing the work, and is being required by the obligee to purchase the bond as a guarantee of work performance. The surety company in this scenario is a financing company that sells the bond to a principal, and acts as a guarantor in the event that any claim made against the bond. The company would have to pay some amount if a claim were to be made, and would later seek reimbursement from the principal who failed to live up to the agreement. Our team makes it easy to get bonded quickly. Whether you need an Oregon contractors bond, Oregon school bond, a payment and performance bond, or another type, we’ll gladly teach you how to get bonded in Oregon.
How Does a Bond Work?
The key component of a surety is that it provides a financial guarantee that a contractor will abide by all local rules and regulations in the performance of job-related work, and that the quality and scope of that work is in accordance with specific terms agreed to at the outset. If any of these terms are breached and the contractor fails to fully satisfy the terms of the agreement, the obligee would then have the option of pursuing a claim against the bond to cover the cost of unfulfilled terms.
Assuming the obligee can justify that claim, the obligee would be able to claim any amount of damage up to the face value of the bond, as it was originally issued. Because these kinds of claims can be made, a principal has a huge incentive to complete the terms of the agreement as specified, because even though the surety company is responsible for paying the initial claim, it would subsequently seek reimbursement from the contractor themselves. In addition, any contractor suffering a claim against his bond would have his reputation damaged professionally, and might find it difficult to secure other work in the area, even by different obligees.
Common Types of Oregon Sureties
In the broadest context, there are two main categories of bonds. The first of these are considered commercial bonds, which have by far the greater number of different sub-types within the category, and the other main grouping being construction surety bonds. Within the general category of commercial bonds, there are license and permit bonds, fidelity bonds, fiduciary bonds, court bonds, and public official bonds.
Construction bonds have several types as well, but most of these have the function of ensuring that contractors do perform specified tasks on a construction project, exactly as required, with regard to quality workmanship and full completion of a body of work. Another important aspect of construction bonds is that they require a contractor to guarantee payments to any sub-contractors involved in the work, as well as any suppliers providing materials needed for job completion. Some specific types of construction bonds are bid bonds, performance bonds, payment bonds, supply bonds, subdivision bonds and site improvement bonds.
Industries that Require Surety Bonds in Oregon
You may have noticed in the above paragraphs that the construction industry is one of the major players involved in the requirement for bonding of professional contractors. With the construction industry booming, in Oregon as elsewhere in the country, the need for construction bonds is at a high, because there is a critical need to ensure at least adequate work performance and faithful payments to all sub-contractors and suppliers involved.
Oregon government organizations at all levels are also huge consumers of sureties, since taxpayers’ money is being used to finance large government projects as well as smaller projects for local governmental organizations. As the obligee in surety bond agreements, government groups must be assured of receiving full value from a contractor for any work done, or as an alternative, to have recourse to seek financial restitution when terms of an agreement are not abided by.
How to Get Bonded in Oregon
The first step in acquiring a bond is to identify exactly which type of bond is needed for a particular job. In many cases, the obligee will specify the kind of bond necessary, since the obligee is actually the party requiring the bond in the first place. The principal involved would then search for a surety company in Oregon that can supply that particular type of bond.
Having found a surety company, the principal would then apply for a bond, submitting all necessary professional data as well as the terms in the bond agreement. The surety company then issues an indemnity agreement to the principal, which includes all the information submitted, and upon receipt of this agreement, the principal would sign it and have it notarized, then return it to the surety. When the company receives the signed and notarized indemnity agreement, a bond can then be issued to the principal.
For all your surety bond needs in Oregon, the financing company to contact is NFP. Contact us before talking to anyone else, because we go the extra mile to provide fast turnaround so you can meet bidding deadlines, and we provide the best customer service in the industry.
Our team provides affordable Oregon surety bonds and fidelity bond insurance. Each bond is prepared on a specific Oregon bond form, as prescribed by the entity requiring the bonding (known as the obligee). Below is a list of commonly requested bond types in Oregon.
Apply for your bond now by completing our online application or call us today if you have any questions about getting bonded. Quotes are always free.
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