Alaska Collection Agency Bond: A Comprehensive Guide
This guide provides information for insurance agents to help Collection Agencies obtain Alaska Collection Agency Bonds
At a Glance:
- Average Cost: $125 per year or $13 per month based on the collector’s credit
- Bond Amount: $5,000
- Who Needs It: All individuals and business entities seeking to obtain a collection agency license in the State of Alaska
- Purpose: To ensure the public will receive compensation for any damages should the collection agency fail to comply with licensing law
- Who Regulates Collection Agencies in Alaska: The Alaska Division of Corporations, Business and Professional Licensing
Alaska Statute 08.24.090 requires collection agencies operating in the state to obtain a license with the Division of Corporations, Business and Professional Licensing. The Alaska legislature enacted the licensing laws and regulations to ensure that collection agencies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, collectors must purchase and maintain a $5,000 collection agency surety bond or deposit cash to be eligible for licensure.
What is the Purpose of the Alaska Collection Agency Bond?
Alaska requires collectors to purchase the Collection Agency Bond as part of the application process to obtain a collection agency license. The bond ensures that the public will receive compensation for financial harm if the collector fails to comply with the licensing regulations. In short, the bond is a type of insurance that protects the public if the collector breaks licensing laws.
How Can an Insurance Agent Obtain an Alaska Collection Agency Surety Bond?
BondExchange makes obtaining an Alaska Collection Agency Surety Bond easy. Simply login to your account and use our keyword search to find the “collection” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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Is a Credit Check Required for the Alaska Collection Agency Bond?
Surety companies will run a credit check on the owners of the collection agency to determine eligibility and pricing for the Alaska Collection Agency bond. Collectors with excellent credit and work experience can expect to receive the best rates. Collectors with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the collector’s credit.
How Much Does the Alaska Collection Agency Bond Cost?
The $5,000 Alaska Collection Agency surety bond can cost anywhere between $125 to $250 per year or $13 to $25 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on the $5,000 bond requirement.
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|550 – 599||$200||$20|
|500 – 549||$250||$25|
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Alaska Define “Collection Agency”?
To paraphrase Alaska Statute 08.24.090 a collection agency is any business entity that collects or solicits the right to collect payment on behalf of another. Exemptions to this definition include:
- Credit men
- Banks and other lending institutions
- Title insurers
- Licensed real estate brokers
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Collection Agencies Apply for a License in Alaska?
Collectors in Alaska must navigate several steps to secure their collection agency license. Below are the general guidelines, but collectors should refer to the Application Form for details on the process.
License Period – The Alaska Collection Agency License is valid for two years from the date of issuance and must be renewed before the expiration date. All collection operator licenses expire on June 30 of even-numbered years (2022, 2024 etc.)
Step 1 – Obtain a Business License
All businesses operating in the State of Alaska must obtain a business license with the Alaska Department of Commerce, Community, and Economic Development. Collectors can obtain a business license here.
Step 2 – Purchase a Surety Bond or Deposit Cash
Collection agencies must purchase and maintain a $5,000 surety bond or deposit cash
Step 3 – Hire an Operator
Collection agencies must employ a licensed collection agency operator who manages the operations of the collection agency. Agencies must employ a licensed operator for each branch location. To become licensed, operators must complete the required application.
Step 4 – Complete the Application
All collection agency regulatory license applications should be mailed to:
Collection Agency Program
PO Box 110806
Juneau AK 99811-0806
Collectors must pay the following fees when submitting their license application:
- $50 licensing fee
- $50 application fee
Collection agencies must submit a separate application for each branch office.
How Does an Alaska Collection Agency Renew Their License?
Collectors can renew their license online here. All renewal applications must be completed in their entirety and include a $50 licensing fee. The Alaska Collection Agency License is valid for two years from the date of issuance and must be renewed before the expiration date. All collection operator licenses expire on June 30 of even numbered years (2022, 2024 etc.)
What Are the Insurance Requirements for the Alaska Collection Agency License?
The State of Alaska does not require collection agencies to obtain any form of liability insurance. Collection agencies must purchase and maintain a $5,000 surety bond or deposit cash.
How Do Alaska Collection Agencies File Their Bond?
Collectors should mail the completed bond form, including the power of attorney, to the following address:
Collection Agency Program
PO Box 110806
Juneau AK 99811-0806
The collection agency surety bond requires signatures from both the surety company that issues the bond and the collector. The surety company should include the following information on the bond form:
- Legal name of entity/individual(s) buying the bond
- Surety company’s name and address
- Date the bond is signed and goes into effect
What Can Collectors Do to Avoid Claims Against the Alaska Collection Agency Bond?
To avoid claims on the Collection Agency Bond, collectors must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Ensure that money collected is paid to the proper parties
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Collection Agencies in Alaska?
Alaska does not require collection agencies to obtain any form of liability insurance. However, most reputable agencies will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability or workers’ compensation insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Alaska Collection Agency Customers?
Alaska conveniently provides a public database to search for active collection agencies in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
What other Financial Service Bonds are Required in Alaska?
Alaska requires businesses to purchase specific bonds correlating with their license type. Below are all the different financial services bonds required by the State of Alaska:
- Money Transmitter: $25,000 bond limit plus an additional $5,000 for each branch location. The bond amount may not exceed $150,000
- Deferred Deposit Advance License: $25,000 bond limit
- Mortgage Licensee: $75,000 bond limit