Alaska Construction 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 Alaska construction bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

What Is an Alaska Construction Bond?

The different types of construction bonds all serve the same purpose—protecting a state or local government contracting authority or private project owner from financial harm when a contractor commits a legal or contractual violation. 

What Types of Alaska Construction Bonds May Be Needed?

In Alaska, contractors must be licensed at the state level.  Purchasing a contractor license bond is a prerequisite for licensure.

Alaska’s Little Miller Act requires contractors awarded government-funded construction projects to furnish both performance bonds and payment bonds. The contracting authority may also require bid bonds in competitive bidding situations. Private project owners may also require these bonds. While these are the most common Alaska construction surety bonds, both public and private project owners may require any of the following:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds
  • Contractor license bond

How Does an Alaska Construction Bond Work?

Regardless of the specific type of Alaska construction bond, there are three parties to the surety bond agreement. They are known as the:

  • Obligee—the contracting authority or private project owner requiring the bond
  • Principal—the contractor who must purchase the bond
  • Surety—the party guaranteeing the payment of claims

The principal is legally obligated to pay valid claims up to the required bond amount established by the obligee. However, as the bond’s guarantor, the surety has agreed to extend credit to the principal for that purpose. The surety will pay the claim initially to ensure timely resolution of the claim. The principal must then repay the resulting debt to the surety. Not doing so is likely to lead to the surety taking legal debt recovery steps, including suing the principal. 

How Much Does It Cost?

The principal pays an annual premium cost that is the product of multiplying the required bond amount by the premium rate set by the surety through underwriting. The premium rate will reflect the risk to the surety in agreeing to guarantee a construction bond. The main risk is that the surety might not be repaid for the debt created by paying claims on behalf of the principal. The risk of non-repayment is measured by the principal’s personal creditworthiness. 

A principal with a high personal credit score is a low risk to the surety, which results in a low premium rate. The risk is higher when the principal’s credit score is low, so the premium rate will be higher.

The premium rate for a principal with good credit 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 Alaska construction 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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FREE CONSTRUCTION BOND QUOTE

What Is an Alaska Construction Bond?

The different types of construction bonds all serve the same purpose—protecting a state or local government contracting authority or private project owner from financial harm when a contractor commits a legal or contractual violation. 

 

In Alaska, contractors must be licensed at the state level.  Purchasing a contractor license bond is a prerequisite for licensure.

Alaska’s Little Miller Act requires contractors awarded government-funded construction projects to furnish both performance bonds and payment bonds. The contracting authority may also require bid bonds in competitive bidding situations. Private project owners may also require these bonds. While these are the most common Alaska construction surety bonds, both public and private project owners may require any of the following:

  • Maintenance bonds
  • Subdivision/site improvement bonds
  • Supply bonds
  • Solar decommissioning bonds
  • Right of Way bonds
  • Contractor license bond

Regardless of the specific type of Alaska construction bond, there are three parties to the surety bond agreement. They are known as the:

  • Obligee—the contracting authority or private project owner requiring the bond
  • Principal—the contractor who must purchase the bond
  • Surety—the party guaranteeing the payment of claims

The principal is legally obligated to pay valid claims up to the required bond amount established by the obligee. However, as the bond’s guarantor, the surety has agreed to extend credit to the principal for that purpose. The surety will pay the claim initially to ensure timely resolution of the claim. The principal must then repay the resulting debt to the surety. Not doing so is likely to lead to the surety taking legal debt recovery steps, including suing the principal. 

The principal pays an annual premium cost that is the product of multiplying the required bond amount by the premium rate set by the surety through underwriting. The premium rate will reflect the risk to the surety in agreeing to guarantee a construction bond. The main risk is that the surety might not be repaid for the debt created by paying claims on behalf of the principal. The risk of non-repayment is measured by the principal’s personal creditworthiness. 

A principal with a high personal credit score is a low risk to the surety, which results in a low premium rate. The risk is higher when the principal’s credit score is low, so the premium rate will be higher.

The premium rate for a principal with good credit usually is in the range of 1% to 3%. 

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Request a quote online or call today to speak with one of our surety bond experts about obtaining an Alaska construction bond.