America's Preferred Provider for All Types of Surety Bonds

Call Us: 888-278-7389

 
 
 
 
Request a Quote Email Us Viking Bond Service, Inc. Video Page
 

Utility Deposit Bond

What Is a Utility Bond?

In 2019, America produced 4.17 trillion kWh of electricity, according to data from the U.S. Energy Information Administration. Utility companies, including electricity and gas providers, are what literally keep the country running. Without stable sources of revenue, however, the delivery of these utilities suffers for all, which is why Utility Deposit Bonds exist. A Utility Deposit Bond is a surety bond required by some public utilities. Utility Deposit Bonds are typically used in place of an actual deposit. A Utility Bond is not always required. The utility has its own guidelines for determining when a bond may be required. Often, when a Utility Deposit Bond is required, it is required of a business that does not have an established payment history with the utility.

What Does a Utility Deposit Bond Do?

The Utility Deposit Bond, when put in place, protects the Utility. The bond essentially guarantees payment of the amounts due, up to the bond amount, for the utilities used at the location or locations. If the business fails to pay the utility, the utility can place a claim on the Utility Bond. The Surety, the entity that provides the guarantee behind the bond, will now have to pay the utility up to the amount of the bond. To understand exactly how this arrangement works, it helps to see a breakdown of the three parties involved:

  • The utility company is considered the obligee because they are the ones that require utility customers to get a utility bond. As the obligee, they are also entitled to file a claim against the bond if utility bills are not paid and receive compensation from the surety. Essentially, they are the "beneficiary" of the bond.
  • The utility customer is known as the principal, meaning they are responsible for obtaining the bond. The principal is also required to pay back the surety company for any claims it pays to the obligee.
  • The company that issues the utility deposit bond is called the surety. If claims are made against the bond, the surety conducts an investigation and guarantees the obligee will be paid for any valid claims. After the surety compensates the obligee, the surety collects the same amount from the principal.

A paid claim does not get the business off the hook for the unpaid amount; it just passes the debt collecting responsibility to the Surety. The Surety pays the utility and then attempts to collect from the business the amount paid on the claim. The business is still ultimately financially responsible for any amount paid out on a claim by the Surety.

Why Utility Surety Bonds Are Important

Having to obtain a bond before getting access to utilities can feel frustrating, especially if those utilities are for a new business trying to get off the ground. But it's important to understand why these bond requirements exist and how they actually benefit all involved. For utility companies, bonds provide some insurance that the customers they serve will pay for the utilities they consume. Even though utility companies provide a public service, they still rely on revenue to deliver that service effectively. If these companies had no way to hold customers accountable for unpaid bills, revenue would become uncertain and unpaid bills would become more common. Requiring a surety bond for a utility deposit gives the companies providing electricity or gas a guarantee (from the surety company) that bills will be paid.

The principal has to bear the utility bonds cost and also the cost of claims, but they benefit from the bond agreement too. Since utility companies know that unpaid bills won't become a financial problem, they're more enthusiastic about extending service to new customers or customers with a spotty payment history. Without the protection the utility bond provides to these companies, it may be harder for customers to access critical services. If the choice is between a small upfront cost or having no gas or electricity, it's obvious which is better. And since the utility companies have more stable revenue sources, utility delivery improves for all.

How Much Does a Utility Deposit Bond Cost?

Rates for Utility Deposit Bonds vary widely. The rates are determined based on various factors which include credit standing and may include financial standing as well. Typically, the poorer the credit, the higher the quotes are for Utility Bonds.

The best way to get a truly accurate quote for a Utility Bond is to apply for the bond and let the underwriter review the request and put a quote together. It's rare that someone is denied access to a utility bond because of their credit — after all, bonds are actually a good thing for people with bad credit. And even though a low credit score or a bankruptcy may translate to higher premiums, the cost may only be a few percentage points higher than someone with good credit.

Viking Bond Service, Inc. will always attempt to get the best rate for the bond request. In instances where the rate is high to start due to challenged credit, our renewal department can remarket the bond if there has been an improvement in credit and/or financial standing.

What Is Needed to Apply for a Utility Deposit Bond:

  • Specific Bond Form – A bond form is the actual document that contains the wording of the bond. In many cases a utility will require use of their specifically worded bond forms. Often times, we will already have a copy of these bond forms on file.
  • Bond Amount – The utility will specify the bond amount. This information needs to be passed to the Surety to get a quote.
  • Obligee Name - This is usually the name of the utility requiring the bond of you.
  • Paid Current Verification – Occasionally, a Surety may want verification that the utility is currently paid up to date. If this is required, your Viking agent will let you know.

How to Get Started with Your Utility Deposit Bond Request:

  1. Contact us to go over your bond request. Our agents will be able to tell you exactly what may be required to get a good quote for your specific bond request.
  2. Complete an application and send any required documentation. Online Application
  3. Once the application is received, an agent will work to get the best quote for the request. Typically, the quote will be obtained the same day to 24 hours.
  4. Once the quotes are received, the most favorable quote will be relayed. All Viking Bond Service, Inc. quotes are FREE with No Obligation.
  5. The last step is to simply pay the premium and receive your Utility Deposit Bond.

Viking Bond Service - Issuing Bonds Nationwide

When you need to get your utilities activated ASAP, the last thing you want to do is go searching for a good bond company. Luckily, Viking Bond Service issues utility bonds nationwide, and we make every step of the process as quick and easy as possible. If you need more information before getting started, please call us at 1-888-278-7389 or fill out the contact form on this page. If you're ready to get started, you can complete an online application anytime.

Free Quote
No Obligation

Name: First Name: Last Name: Phone: Email: Type of bond needed:
Amount: Bond State:
Are You (Choose): How did you find us?: Message Subject: Comments:

Viking Bond Service does not share or release email addresses, phone numbers or ANY other personal information to unauthorized third parties. Information is used for underwriting purposes only. View our Privacy Policy

Get Started:

Call Us: (888-278-7389)
More About Surety Bonds:
Auto Dealer Bonds, Step by Step

Get the information you need to get your Auto Dealer Bond fast and easy from start to finish.

Cyber Liability Insurance | Viking Bond Service, Inc.

Viking Bond Service, Inc. offers Cyber Security Insurance across the entire nation. Learn more about how to obtain a Cyber Liability Insurance coverage today.

What is a Performance Bond?

A Performance Bond is a type of Contract Bond. These typically involve an awarded contract. Read on to learn more.

How to get a Surety Bond

Need a Bond? Here's how to get one. Read here for information about the bonding process.

DMEPOS (Medicare/Medicaid) Bonds

A DMEPOS Bond is required of some durable medical equipment suppliers. Read on an get a FREE quote here.

Contractor License Bond Quotes

If you need a Contractor License Bond Viking can help. The process is simple and easy. We provide great rates and fast service.

FaceBook LinkedIn Twitter Manta FourSquare Yelp

Get Started:

Call Us: (888-278-7389)

Member:

Viking Bond Service, Inc. BBB Business Review NASBP Servis Key Surety Association of Arizona

Get Started:

Call Us: (888-278-7389)