Business Insurance
A bond is not insurance. Here is what it actually is.
A surety bond guarantees you will meet an obligation. It protects the party requiring it, and if the surety pays out, you repay the surety.
Why An Independent Agent
Three parties, not two.
Insurance is a deal between two parties: you pay, the carrier covers your losses. A bond has three parties: you (the principal), the party who needs the bond (the obligee), and the surety. The surety guarantees you will do what you promised. If the surety has to pay a claim, you pay the surety back. A bond is proof you can be trusted, not a safety net for you.
Coverage
What we commonly place
Not every item applies to every situation. Part of our job is telling you which ones actually matter for you.
- Contractor license bonds (CCB in Oregon)
- Performance bonds
- Payment bonds
- Bid bonds
- License and allow bonds
- Notary bonds
- Fidelity and employee dishonesty bonds
- Court and probate bonds
- Motor vehicle dealer bonds
- Freight broker bonds
In Detail
The parts worth understanding
Worth being blunt about, because the misunderstanding is near-universal.
Your general liability policy exists to protect you. A bond exists to protect whoever required it, the state licensing board, the project owner, the client.
If a claim is paid on your bond, you owe the surety that money back. That is why underwriting looks so much like a credit decision: the surety is assessing whether you will perform and, if not, whether you can repay.
Contractors registering with the Oregon Construction Contractors Board must carry a surety bond, with the required amount depending on the endorsement type. Residential general, residential specialty, commercial and so on.
The CCB bond is a licensing requirement and works alongside, not instead of, your general liability policy. You will typically need both, plus workers’ compensation if you have employees. Washington has its own contractor registration and bonding regime with different figures.
Bond underwriting weighs different things from insurance underwriting:
- Personal credit history of the owners
- Business financial statements and working capital
- Years of experience in the trade
- Track record on similar completed projects
- Current work on hand and capacity
- Any prior bond claims
Smaller license bonds are often simple. Larger performance bonds on large projects involve genuine financial review, so start early rather than the week before a bid closes.
Local Knowledge
Oregon CCB, Washington L&I, two sets of paperwork.
Contractors working in both states deal with two sets of registration rules, two bonding requirements, and two workers’ compensation systems. We see this constantly among trades in the metro area. The most common problem is finding out the second state’s requirements after winning the job, instead of before bidding on it.
Start early. License bonds are often quick. Performance bonds on bigger projects need real financial review, which takes time. If a bid is coming up, call us well before the deadline.
Lisa and Keith answer the phone here. No call center, no robots. Just North Portland neighbors helping neighbors.
The Process
Is this difficult? Not with us.
Tell us about your situation
A few quick details about what you are insuring and what you have now.
We compare carriers
We shop multiple companies to find the best combination of coverage and price.
You get a clear recommendation
Straight answers, in plain language, and often same-day coverage.
Questions
Surety bonds questions
Is a surety bond the same as insurance?
No. Insurance protects you. A bond guarantees your performance to someone else, and if the surety pays a claim you reimburse the surety.
Do Oregon contractors need a bond?
Yes. Contractors registering with the Oregon CCB must carry a surety bond, with the amount depending on the endorsement type. Washington has its own separate requirements.
Does a bond replace general liability insurance?
No. They do different jobs and most contractors need both, plus workers' compensation if they have employees.
What affects the cost of a bond?
Primarily the bond amount and your credit and financial strength. Bond premium is generally a percentage of the bond amount rather than a flat fee.
Related coverage
Get your free surety bonds quote.
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