What is an Alaska Contractor License Bond?
Throughout Alaska, several different types of contractors are required to meet specific licensing guidelines in order to work legally. Specialty contractors, residential and general contractors, and mechanical contractors all must have a valid license before working with customers. As part of the licensing process, an Alaska contractor license bond may also be a requirement.
An Alaska contractor license bond works as a form of security for both the public and the state. If a contractor fails to meet his or her obligations because of negligent work, or does not pay laborers and suppliers, a claim can be made against the bond. Bond claims can be costly because, even though the surety company providing the bond initially pays compensation to a harmed customer or party, the contractor is required to repay the claim amount.
What Does an Alaska Contractor License Bond Cost?
An Alaska contractor license bond ranges in cost based on a few different factors. First, the bond amount required by the city or county where a contractor works plays a role. Bonds may be as low as $5,000 or as high as $25,000, depending on the type of work a contractor completes for a customer. However, the full bond amount is not how much you pay for an Alaska contractor license bond.
The surety company providing your contractor bond charges a premium, calculated as a percentage of the total bond amount. This premium, which ranges from 1 to 10%, is based on your personal credit score and financial health of your business. If you have a low credit score, you pose a higher risk to the surety company, and therefore, pay a higher percentage as your bond premium.
How Do You Get an Alaska Contractor License Bond?
If you are starting the licensing process as a contractor, you will also need to begin your application for an Alaska contractor license bond. This can be done online in just a few minutes. Once your bond application details are reviewed, you receive a quote for your Alaska contractor license bond and instructions on how to finalize the process.