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A Guide to Utility Deposit Bonds

A utility bond guarantees that a person will pay for utilities on time. Most utility companies require this type of bond before they ever turn on the utilities. While many other surety bonds protect the consumer, the utility bond protects the utility company by ensuring it receives payment.

A utility bond, like a wage and welfare bond, is a financial guarantee. Bonding companies are currently shying away from writing financial guarantee bonds due to their incurred losses.

State Specific Costs

Utility bond costs and requirements vary greatly as the bond amounts and regulations surrounding each bond are established on a state level. Select your state below for more information about utility bonds in your area or call at 888.610.4474 or submit a bond request.


Government rules and regulations require many businesses in many different industries to obtain license and permit bonds. Meanwhile, some surety bonds, such as the utility bond, are required by certain parties to perform actions, such as turn on utilities. While general liability insurance is required of these companies, commercial insurance usually isn’t.

What Utility Bonds Do

Utility bonds are often required of utility customers that are expected to use large amounts of energy, like manufacturing companies, restaurants or campgrounds. It’s usually up to the utility company to determine which consumers need to purchase a bond. The bond ensures that these utility consumers will pay their bill in full and on time each month. If they don’t, the utility company can file a claim against the bond. If proven, the surety will pay the amount of the claim and the bonded party (called the principal) must reimburse the surety for the claim amount.

Surety Bonds vs. Insurance

When applying for a surety bond it is important to realize how it is different from commercial insurance. Surety bonds protect the interest and investments of the consumer while commercial insurance protects businesses from lawsuits.

The main difference between insurance and surety bonds is which party is financially restored. For instance, insurance returns the principal (the insured or bonded party) to where they were before the claim. Surety bonds return the bonding company to the financial condition it was in prior to the claim.

Your insurance premium has a lot to do with the amount of your deductible. The higher your deductible is, the lower your premium will be. After you pay the deductible the insurance company pays the rest, within the limits of the policy. Conversely, there is no deductible with surety bonds. If a claim is made and the bond company pays for it, then the principal must pay the full amount back to the company.

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