How to become a licensed contractor in Alaska

August 21, 2018

So you want to be a licensed contractor? There are three things you are going to need-

  • General Liability Policy
  • Surety Bond
  • Business License

But, let’s start at the very beginning. First you have to decide what kind of contractor you want to be. The State of Alaska has 4 levels of licensing.

  • Handyman license– this license is for jobs that are under $10,000
  • Specialty contractor– this license is for your specialized contractors- your welders, plumbers, electricians, etc. The state allows you to pick 3 specialized fields- so you can be a welder, a plumber, and an electrician all under this 1 license. See the link below for the full list of all specialty contractor options.
  • General Contractor– this license is broader than the 2 mentioned above- it doesn’t limit you to a monetary amount OR to a specific area of expertise.
  • General Contractor With A Residential Endorsement– this license is for your home builders.

Once you’ve decided on the type of contractor then you need to get the applicable bonding-

Handyman – requires a $5,000 bond

Specialty – requires a $10,000 bond

General Contractor- requires a $20,000 bond

General Contractor w/Residential Endorsement- requires a $25,000 bond

What’s a bond you ask? Good question! A bond is different from insurance- with an insurance policy you pay an annual premium and in the event of a covered loss your policy will pay out the damages. End of story. A Bond on the other hand– is a guaruntee of work (of sorts). So if you are a bonded contractor, and I hire you to come in and replace all my plumbing and you just up and leave half way through the job….I can collect on your bond to get my job completed from someone else…And then the bonding company comes after YOU for the damages that they paid out.

Moving on- the next part of the license puzzle is a General Liability policy. The appropriate limit of liability is determined between you and your insurance agent. You want to be sure that your liability limit is enough to cover all your owned assets and future earnings. And you want to be sure that it’s high enough to pay for someone’s severe injury that you’ve caused- do you know that it’s over $100,000 to get medi-vaced out of Southeast Alaska these days?! Yikes! And that’s just the plane ride!

Once you have your bond and your general liability policy (oh yeah, and your business license) then you complete the State of Alaska Contractor’s Application and mail the app and your proof of insurance and bonding into the state. Processing time does take a while on the state’s end, so don’t think that you’re going to decide to be a contractor on a Friday and be able to have the proper documentation by Monday.