Oregon Performance and Payment Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Oregon performance and payment bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

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What Are Oregon Performance & Payment Bonds?

Project owners, both public and private, stand to lose a lot of money when their contractors fail to complete a construction job in accordance with the terms of the construction contract and/or don’t pay their subcontractors and suppliers. An Oregon performance and payment bond combines financial protection against both types of loss in a single bond.

The bond helps prevent losses by requiring the contractor purchasing it to operate in complete compliance with all applicable laws and regulations as well as the terms of the construction contract. It also provides a way to compensate the project owner (the bond’s “obligee”) when a loss occurs and prevents mechanic’s liens on the property.

Who Needs One?

Like the Federal Miller Act, Oregon’s “Little Miller Act” requires performance and payment bonding for publicly funded projects valued in excess of $100,000. However, the bonding requirement for public transportation projects valued at more than $50,000 is unique to Oregon. The bond amount for each type of protection (performance and payment) must be equal to the value of the contract.

Many private project owners also require contractors to furnish a performance and payment bond.

How Does a Performance & Payment Bond Work?

The obligee is one of three parties to the legally binding surety bond agreement. The others are the contractor purchasing the bond (“the principal”) and the bond’s guarantor (the “surety”).

The principal is legally obligated to pay all valid claims. The surety determines whether a claim is valid and will advance the funds to the principal to pay it if it is. The principal must subsequently repay that debt to the surety or face legal action by the surety to recover the funds.

How Much Does It Cost?

The annual premium for an Oregon performance and payment bond is the result of multiplying the required bond amount set by the obligee and the premium rate set by the surety on a case-by-case basis through underwriting. 

The main underwriting goal is to assign a premium rate that adequately protects the surety against the risk of not being repaid for claims paid on the principal’s behalf. That risk is measured largely based on the principal’s personal credit score.

A principal with a high credit score is considered a low risk to the surety, which results in a low premium rate. A low credit score signals higher risk and warrants a higher premium rate. 

The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Oregon performance and payment bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

FREE PERFORMANCE & PAYMENT BOND QUOTE

What Is a Performance & Payment Bond?

Project owners, both public and private, stand to lose a lot of money when their contractors fail to complete a construction job in accordance with the terms of the construction contract and/or don’t pay their subcontractors and suppliers. An Oregon performance and payment bond combines financial protection against both types of loss in a single bond.

The bond helps prevent losses by requiring the contractor purchasing it to operate in complete compliance with all applicable laws and regulations as well as the terms of the construction contract. It also provides a way to compensate the project owner (the bond’s “obligee”) when a loss occurs and prevents mechanic’s liens on the property.

 

Like the Federal Miller Act, Oregon’s “Little Miller Act” requires performance and payment bonding for publicly funded projects valued in excess of $100,000. However, the bonding requirement for public transportation projects valued at more than $50,000 is unique to Oregon. The bond amount for each type of protection (performance and payment) must be equal to the value of the contract.

Many private project owners also require contractors to furnish a performance and payment bond.

The obligee is one of three parties to the legally binding surety bond agreement. The others are the contractor purchasing the bond (“the principal”) and the bond’s guarantor (the “surety”).

The principal is legally obligated to pay all valid claims. The surety determines whether a claim is valid and will advance the funds to the principal to pay it if it is. The principal must subsequently repay that debt to the surety or face legal action by the surety to recover the funds.

The annual premium for an Oregon performance and payment bond is the result of multiplying the required bond amount set by the obligee and the premium rate set by the surety on a case-by-case basis through underwriting. 

The main underwriting goal is to assign a premium rate that adequately protects the surety against the risk of not being repaid for claims paid on the principal’s behalf. That risk is measured largely based on the principal’s personal credit score.

A principal with a high credit score is considered a low risk to the surety, which results in a low premium rate. A low credit score signals higher risk and warrants a higher premium rate. 

The premium rate for a well-qualified principal usually is in the range of 1% to 3%.

 

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