Alaska Contractor License Bond

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.