Alaska has a very straightforward contractor licensing process. There are some very unique requirements compared to other states because of Alaska's environment. This short article will highlight the four steps to get your contractor license application filled out correctly so it can be accepted and your license issued.
Here's what this article covers:
- An overview of the Alaska license classifications
- Step 1 - Getting the business structure information
- Step 2 - Purchasing the necessary business insurance
- Step 3 - Purchasing the required contractor license bond
- Step 4 - Application fees and license renewal
The Alaska Contractor License Classifications
General Contractor
A general contractor classification can perform:
- New home construction
- Commercial construction projects
- Residential remodeling projects
A general contractor must get a Residential Contractor license and/or a Residential Contractor Endorsement if they are:
- Overseeing new home construction projects
- Or remodeling when work totals over 25% of the value of the home
Residential Contractor
A residential contractor is a contractor who:
- Has the Residential Contractor Endorsement
- Or they have an individual who has the Residential Contractor Endorsement on their team
This classification can bid on and accept any construction project of a privately owned residential property from one to four units in size.
The total amount of the project must be greater than 25% of the total value of the property.
Residential Contractor Endorsement
To obtain the Residential Contractor Endorsement, an individual must:
- Pass a 16 hour cold climate course
- Pass the residential contractor endorsement exam
This license is not allowed to perform work independently. They must be assigned to a General or Residential Contractor or hold a General or Residential Contractor license themselves.
Specialty Contractor
This license can specialize in not more than 3 of 37 available specialty trades.
If the contractor wants to perform work in more than 3 trades, they will have to apply for a General or Residential Contractor classification.
Click here to find a list and description of all the available trades, but here are a few examples:
- Access flooring
- Carpentry
- Demolition
- Drywall
- Marine
- Masonry
- Painting
- Sheet metal
Electrical Contractor
This is a contractor who has Electrical Contractor or Communications Contractor listed as one or their three trades.
However, to qualify as an Electrical Contractor, an Electrical Administrator license must be assigned to the Specialist Contractor license as an additional license.
Mechanical Contractor
A mechanical license performs work involving:
- Plumbing
- Sheet metal
- Refrigeration
Similar to the Electrical Contractor, a Mechanical Administrator license must be assigned to the Mechanical Contractor license in order to perform work.
If you're going to be installing mechanical controls, you'll need both the:
- Electrical Administrators license
- Mechanical Administrators license
Handyman Contractor
A handyman is a licensed contractor who can work on any project as long as the aggregate (sum total) of the project does not exceed $10,000.
The aggregate includes:
- All labor
- Project materials
- Other miscellaneous items required to complete the project
4 Steps To Complete Your Alaska Contractor License Application
Every license classification has similar steps except for obtaining the Residential Endorsement license. This will be detailed after covering the four steps.
Step 1 - Business Structure
Make sure you use the correct business name as registered with the Department of Commerce, Community, and Economic Development.
Whether you're business entity is an LLC (Limited Liability Company) or Corporation, you'll need ensure:
- The business is officially registered with the Corporations Division of the Divisions of Corporations, Business, and Professional Licensing
- The entity number registered with the Corporations section must be on the application
- The legal names, address, social security numbers, date of birth, and percentage of ownership for all owners, officers, and/or members must be on the application
Again, make sure you use the exact name for your business through the entire application process. This is especially important when we get to the surety bond requirement.
If you're using a "doing business as" (DBA) name, you'll list this on the application as well. These DBA name or names are registered with the Corporations Division.
Step 2 - Obtain Necessary Business Insurance
Business Liability Insurance
- At least $20,000 coverage for damage to property
- At least $50,000 coverage for injury (including death) to any one person
- At least $100,000 coverage for injury (including death) to more than one person
The Certificate of Insurance Coverage from the insurance provider must be provided with the application.
Workers Compensation
If you're business has employees or your business is a Corporation or LLC, you must show proof of workers compensation insurance. Officers and members of an LLC or Corporation are required to be covered by a workers compensation policy.
The certificate of insurance must include:
- The name of the insured (exactly same name as used throughout the application)
- The doing business as name if applicable
- The name of the insurance provider
- Policy number
- Commencement date
- Expiration date
The insurance documents must be dated no more than 30 days from the date received at the Division's office for review.
If you plan on using workers but you want to classify them as "independent contractors", you must first work with the Alaska Workers' Compensation Division Special Investigations Unit.
Step 3 - Purchase a Contractor License Bond
What is a Contractor License Surety Bond?
A surety bond is an insurance document, but with some key differences from a typical insurance policy.
If this is the first time you're getting licensed as a contractor, it's probably the first time you've purchased a surety bond.
At a high level, a surety bond is a type of insurance you, as the contractor, are required to purchase as a financial guarantee that you will follow the building codes and regulations in Alaska and that you'll follow through on your contracting obligations to your customers.
This surety bond, typically called a contractor license bond, is insurance you purchase to protect your customers.
It's unfortunate but there will be licensed contractors who purposefully commit illegal or fraudulent acts to increase profits or steal money.
Examples of these actions include:
- Overcharge or steal customer deposits
- Fail to start or finish projects
- Fail to complete projects following all regulations
- Fail to use the materials laid out according to the contract
- Fail to pay the subcontractors they hire
The surety bond provides a level of financial protection to the customer if a contractor is found guilty of any of these actions. The limit of this protection is the bond coverage amount.
What is the Alaska Contractor License Bond Amount?
Each license has its own amount.
| License Classification | Bond Amount | Click to Get a Quote |
|---|---|---|
| General Contractor | $25,000 | |
| Residential Contractor | $20,000 | |
| Specialty Contractor | $10,000 | |
| Mechanical Contractor | $10,000 |
Again the bond amount is the maximum financial protection available to customers. The price to purchase the surety bond is determined by a surety.
A surety is an insurance company that underwrites contractor bonds. And just like normal insurance, rates will vary from one surety to the next.
This is why working with a specialized surety agency like Surety Bonds Direct can save you, potentially, hundreds of dollars purchasing your Alaska contractor license bond.
How Much Does a Contractor License Bond Cost?
A specialized surety agency, like Surety Bonds Direct, works with multiple A-rated sureties and price shop for you to find the lowest rate available in the market for your surety bond need.
The surety will consider 3 factors when doing their assessment:
- Your or all ownership individuals personal credit
- Business and industry experience of ownership
- Any prior claims of ownership has been licensed in the past and if there were any claims
BOX: The rate multiplied by the bond amount is the price you pay.
As an example, let's use the $25,000 general contractor license bond. The table below will show you a variety of rates from excellent to average.
| Bond Amount | Surety Bond Rate | Price You Pay |
|---|---|---|
| $25,000 | 0.05% | $125 |
| $25,000 | 1.0% | $250 |
| $25,000 | 2.0% | $500 |
| $25,000 | 3.0% | $750 |
As you can see the price is a small fraction of the bond amount. And keep in mind, rates can vary from surety to surety, use our free bond quote form to start the quote process or call a bond specialist at 1-800-608-9950.
Shopping for the lowest price for you, costs nothing and there's zero obligation to purchase once you receive your price.
Letter or Credit or Cashiers Check
The Division will accept a letter or credit or cashier's check in lieu of a surety bond. However, it's rare for a contractor to choose these options.
- Both the letter or credit and cashiers check must be for the full bond amount
- If you stop performing contracting work, both the letter of credit and cashiers check will be held by the state for a year or more in case future claims arise related to your business practices during the licensing period
Step 4 - Pay Application Fees And Submit Application
Every license classification has the same set of application fees:
- Nonrefundable application fee : $100.00
- Registration fee : $250.00
Total application fees are: $350.00
While we've gone over the steps at a high level, make sure you read the application carefully as you fill it out.
One of the most common errors is not using the exact name or the individual, LLC, or Corporation through all application documents (including the surety bond).
If there are any discrepancies, your application or surety bond will be denied, delaying the process.
Residential Endorsement Application
The application for Residential Endorsement is much shorter. Plus there is no surety bond requirement.
However you do need to:
- Pass a 16 hour cold climate course
- Pass the residential contractor endorsement exam
Furthermore, the Alaska craftsman home program or a postsecondary course in arctic engineering must be completed within two years preceding the date of the application.
Finally, you'll need the name and license number of the General Contractor the endorsement is being assigned to.
License and Surety Bond Renewal
The following contractor licenses have a license expiration date of September 30th of even numbered years.
- General contractors
- Residential contractors
- Specialty contractors (except a few, see below)
- Mechanical contractors
- Handyman contractors
The following contractor licenses have a license expiration date of December 31st of each year.
- Electrical administrator
- Mechanical administrator
- Home inspector
- Underground storage tank worker
The contractor license bond also has an expiration date. Most license bonds expire on a yearly basis.
This is another benefit of working with a specialized surety agency like Surety Bonds Direct. We will manage most of the renewal process on your behalf. Your bond specialist will contact you 30 to 45 days in advance to make sure the renewal premium is paid on time and the surety bond renewal is processed in a timely manner.
Alaska contractor bonds are continuous. This means the original bond you filed with your application will remain active as long as the renewal premium is paid. You don't have to receive a new bond or have it filed.
When You're Ready To Get Bonded Call Surety Bonds Direct
We have helped thousands of contractor's get bonded. And we will work hard to get you the lowest possible price on your contractor license bond.
Plus we can help you with any further bonding requirements you may need. It's likely you may need one of the following bonds during the course of business:
Start your license bond quote process today by using our free online quote tool. If you prefer to speak with a bond specialist to start the process, call 1-800-608-9950.
