Alaska Contractor License 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 contractor license 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 Is a Contractor License Bond?

The purpose of Alaska’s contractor license bonding requirement is to ensure that contractors operate in accordance with the Alaska Statutes, Title 8, Chapter 18, “Construction Contractors and Home Inspectors” and all other applicable laws. The bond provides a way for project owners to be compensated for monetary damages caused by a contractor’s unlawful or unethical actions that violate the terms of the surety bond agreement.

 

Who Needs One?

In Alaska, contractors are licensed by the Division of Corporations, Business and Professional Licensing, part of the Department of Commerce, Community and Economic Development. General contractors, residential contractors, specialty contractors (electrical or communications), mechanical contractors, and handyman contractors all must be licensed.

Different types of contractor license bonds have different required amounts:

  • General contractors: $25,000
  • Residential contractors: $20,000
  • Specialty contractors: $10,000
  • Mechanical contractors: $10,000
  • Handyman contractors: $5,000

Contractor licenses and license bonds must be renewed every two years.

How Does a Contractor License Bond Work?

Every contractor license surety bond is a legally binding contract among three parties with different roles and responsibilities.

The licensing body requiring the bond, the Division of Corporations, Business and Professional Licensing, is the “obligee.” The obligee sets the required bond amount (also known as the “penal sum”), and is indemnified against any liability for financial harm that properly licensed and bonded contractors cause for the state or for project owners.

The contractor purchasing a contractor license bond is the “principal.” The principal must abide by all terms and conditions of the bond and is legally obligated to pay all valid claims.

The company serving as the bond’s guarantor is the “surety.” The surety sets the premium rate the principal will pay and agrees to extend credit to the principal if necessary to pay a claim. The surety also investigates each claim to make sure it is valid and must be paid. As the bond’s guarantor, the surety normally pays a claimant directly and gives the principal a certain length of time within which to repay that debt. The surety can take legal action against the principal to recover the funds if not repaid within that time.

How Much Does It Cost?

The annual premium for an Alaska contractor license bond is determined by multiplying the required bond amount by the premium rate the surety establishes through underwriting. The main underwriting objective is to analyze the risk of the surety not being repaid for claims paid on behalf of the principal. The primary risk measurement used is the principal’s personal credit score.

A high credit score suggests that the risk to the surety is low, which deserves a low premium rate, potentially as low as 1% or even less. A low credit score is a sign of higher risk, which warrants a higher premium rate.

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 contractor license 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 CONSTRUCTION BOND QUOTE

What Is a Contractor License Bond?

The purpose of Alaska’s contractor license bonding requirement is to ensure that contractors operate in accordance with the Alaska Statutes, Title 8, Chapter 18, “Construction Contractors and Home Inspectors” and all other applicable laws. The bond provides a way for project owners to be compensated for monetary damages caused by a contractor’s unlawful or unethical actions that violate the terms of the surety bond agreement.

 

In Alaska, contractors are licensed by the Division of Corporations, Business and Professional Licensing, part of the Department of Commerce, Community and Economic Development. General contractors, residential contractors, specialty contractors (electrical or communications), mechanical contractors, and handyman contractors all must be licensed.

Different types of contractor license bonds have different required amounts:

  • General contractors: $25,000
  • Residential contractors: $20,000
  • Specialty contractors: $10,000
  • Mechanical contractors: $10,000
  • Handyman contractors: $5,000

Contractor licenses and license bonds must be renewed every two years.

Every contractor license surety bond is a legally binding contract among three parties with different roles and responsibilities.

The licensing body requiring the bond, the Division of Corporations, Business and Professional Licensing, is the “obligee.” The obligee sets the required bond amount (also known as the “penal sum”), and is indemnified against any liability for financial harm that properly licensed and bonded contractors cause for the state or for project owners.

The contractor purchasing a contractor license bond is the “principal.” The principal must abide by all terms and conditions of the bond and is legally obligated to pay all valid claims.

The company serving as the bond’s guarantor is the “surety.” The surety sets the premium rate the principal will pay and agrees to extend credit to the principal if necessary to pay a claim. The surety also investigates each claim to make sure it is valid and must be paid. As the bond’s guarantor, the surety normally pays a claimant directly and gives the principal a certain length of time within which to repay that debt. The surety can take legal action against the principal to recover the funds if not repaid within that time.

The annual premium for an Alaska contractor license bond is determined by multiplying the required bond amount by the premium rate the surety establishes through underwriting. The main underwriting objective is to analyze the risk of the surety not being repaid for claims paid on behalf of the principal. The primary risk measurement used is the principal’s personal credit score.

A high credit score suggests that the risk to the surety is low, which deserves a low premium rate, potentially as low as 1% or even less. A low credit score is a sign of higher risk, which warrants a higher premium rate.

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