A Utility Guarantee surety bond guarantees the timely payment of utility bills to a utility company. It is not a state or federal requirement, but a requirement by private utility companies such as water companies and power companies. The bond is often required for several reasons: to waive a security deposit, if a company has been late or is currently late on utility payments, or if it is a new service. Utility companies will often not provide the service until the bond is in place.
The amounts vary from company to company but are often based on a percentage of the estimated cost of their services to be used over a specific period. Because failure to pay the utility company on time can result in a claim these bonds are considered financial guarantee surety bonds. While they are often easier to place than other strict financial guarantee surety bonds, good credit is an essential requirement for surety companies to write utility Guarantee surety bonds. If the credit of the business owners is not up to surety standards, they can be more difficult to place and may require collateral.
These are also known as Utility Deposit surety bonds and Utility surety bonds.