A utility payment surety bond is a type of financial guarantee that ensures a person or organization will pay for utilities on time. Utility companies often require customers who are expected to use a large volume of utilities to be bonded before utility services are turned on. This protects the utility company from financial losses if the customer fails to pay their bill.
While many utility companies do not require surety bonds, when required it is typically required for businesses. Seldom are they required for residential customers. If the customer fails to pay their utility bill on time, the utility company can file a claim against the bond. The surety company will then pay the utility company the amount of the claim, up to the limit of the bond. The customer is then responsible for reimbursing the surety company for the claim amount.
Utility payment surety bonds can be a helpful way for businesses to obtain utility services in lieu of providing a cash security. However, it is important to note that utility payment surety bonds are not a replacement for paying utility bills on time. Customers who fail to pay their utility bills on time may have their utility services turned off and may be subject to late fees and penalties.
Here are some examples of when a utility payment surety bond may be required:
- A new business is opening and needs to establish utility service.
- A business is expanding and will be using a significantly higher volume of utilities.
- A business has a history of late payments or non-payment.
How to obtain Utility Payment Surety Bonds
At Surety1.com we make it easy to obtain this surety bond. Our simple, three step process is:
- Complete the easy to navigate and secure online application. 1
- Review the free, no obligation quote from one of Surety1’s professional surety bond agents, usually within one business day.2
- Sign some paperwork and pay the bond premium
Once these steps have been completed, the Utility Payment Surety Bond will be shipped to the bond applicant.
1 -The name of the applicant on the surety bond application must match exactly the full legal business name of applicant for the license.
2 -Subject to underwriter approval, based on aggregate surety bond exposure, additional underwriting information may be required.
Surety1.com is a service of AssuredPartners one of the largest and fastest growing insurance agencies in the nation. Representing over a dozen surety bond companies, Surety1.com is the premier online provider of surety bonds nationwide since 2003.