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 required. An Alaska contractor license bond is 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, then a claim can be made against the bond.
The surety company providing the bond initially pays compensation to a harmed customer or party, but the contractor is required to repay the claim amount.
How Does an Alaska Contractor License Bond Work?
An Alaska contractor license bond functions as a three-party agreement, with all parties gaining something from the contract.
The obligee is the state organization that requires the bond be posted by the contractor so that they follow all laws and regulations. In this case, the state organization is the Alaska Department of Commerce, Community, and Economic Development.
The principal is the contractor who must post the bond to offer protection for their customers in the event that a financial issue occurs when doing business.
The surety company gives the bond to the contractor and pays any claims that get filed, but the contractor must eventually repay the claims to the surety.
Alaska Contractor License Bond Obligee Information
In the state of Alaska, nearly all contractors are required to have a valid license before performing any work on a residential or commercial basis. Part of the licensing requirements include an Alaska contractor license bond, enforced by the Department of Commerce, Community, and Economic Development. This department acts as the obligee for Alaska contractor license bonds and the contact information is as follows
Alaska Department of Commerce, Community, and Economic Development
Division of Corporations, Business and Professional Licensing
PO Box 110806
Juneau, Alaska 99811
Who is Required to Get an Alaska Contractor License Bond?
Any individual who falls into one of the following categories must have a valid contractor license and a current Alaska contractor license bond:
- Mechanical contractors
- Speciality contractors
- Home inspectors
- Residential contractors
- General contractors
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’ll receive a quote for your Alaska contractor license bond and instructions on how to finalize the process.
What Does an Alaska Contractor License Bond Cost?
An Alaska contractor license bond ranges in cost based on a few different factors. 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.
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, which is calculated as a percentage of the total bond amount.
This premium ranges from 1 to 10 percent of the total bond amount and is based on your personal credit score and the financial health of your business.
Can I Get an Alaska Contractor License Bond with Bad Credit?
If you have a low credit score, you can still obtain a contractor license bond in Alaska, but you pose a higher risk to the surety company. This means you’ll likely pay a higher percentage as your bond premium.
Expiration Date and Renewal for Alaska Contractor License Bonds
The license renewal term for contractors operating in Alaska is two years, with an expiration date on December 31. General contractor and residential contractor licenses expire on this date in even-numbered years, while mechanical and speciality contractor licenses expire on December 31 of odd-numbered years.
An Alaska contractor license bond expires at the same time as a license and must be renewed. Renewal instructions are sent from the surety company in advance of the December 31 bi-annual deadline.