Utility Bond

What Is a Utility Bond?

A utility bond is required by utility companies, before they’ll provide you with their services. The bond is a guarantee that you will make all due payments to the company in time.

Individuals need utility bonds only in some specific circumstances. However, businesses are often required to provide the bond before the utility starts the service. Homeowners might be asked to get a utility bond if they have a track record of late payments, in order to guarantee that they won’t default on their payments.

The utility deposit bond is a contractual agreement between three parties. Your business is the principal, the utility company is the obligee that requires the bond, and the surety is the one providing it.

The utility bond is a financial guarantee bond. In most cases, surety bonds protect the consumer and are required by state or government authorities. In this case, the protection is sought by the private utility companies. Financial guarantee bonds have been unpopular with sureties because of the higher financial risk involved. Recently, however, more sureties are underwriting this kind of bonds, and the market is opening.

Don’t forget that getting a claim on your utility surety bond is not a good idea. If a claim is proven, the surety will cover all costs up to the penal sum. Afterwards, you will have to reimburse the surety in full. A claim against your bond can have a negative impact on your business, which is why you should always avoid claims.

Search for your bond in the table below or continuing reading for more information. If you can't find what you are looking for, do not hesitate to call us at 866.450.3412.

Utility Bond Cost

The cost of your utility bond depends on the bond amount that your utility company requires. Usually, it’s calculated as a percentage of their services’ estimated costs for a certain period of time.

The actual price that you will need to pay is only a fraction of the bond amount. For standard market bonding, this means a premium between 1% and 5%.

The premium that each bond applicant must pay depends on a number of criteria. The surety will calculate your bond cost based on your business’s performance and overall financial health.

The most important factor is your credit score. The higher it is, the less risky your business appears. If you also can show sufficient proof of your liquidity and assets, you’re likely to be considered a solid applicant.

Besides improving your financial and business stats, choose your bond underwriter carefully to get the best deal. Here at Bryant Surety Bonds, we foster strong relations with multiple A-rated, T-listed surety companies. This gives us a competitive advantage because we can find the best bonding option for your specific case.

If you already know the bond amount required by your utility company, you can get an estimate of your bond cost by using our surety bond cost calculator in the right sidebar. You can also consult our surety bond cost page to see how the bond premium is calculated.

Bad Credit Utility Deposit Bond Program

Just like good credit can help you lower your bond premium, a bad credit history can make it more difficult to obtain your utility bond. The same goes if you have had tax liens, bankruptcies or civil judgments. However, there are ways to get bonded, even if your financial history isn’t perfect.

We operate our bad credit surety bond program, to help applicants with lower credit scores get bonded. If you qualify for this market, you will have to pay a higher bond premium, which could go up to 17% for the utility surety bond class. The higher rate mitigates the risk to the surety of bonding your business. This is a great chance for candidates with bad credit to obtain their utility bond and start running their business. At Bryant Surety Bonds, we will consider your specific situation and will offer you the best tailor-made solution for your needs.

How to Get Your Utility Deposit Bond

If you’re wondering how to start your bonding process, just apply online for a free, no-obligations quote that you can get within minutes.

About us:

Bryant Surety Bonds

Bryant Surety Bonds, Inc. is a surety bond agency based in Pennsylvania. Licensed in all 50 states and with access to over 20 T-listed, A-Rated bonding companies, we have the contacts, expertise, and top service to provide you with a hassle-free experience, all while offering competitive rates for your surety bond.