Things You Need to Know About Utility Deposit Bonds
Unlike various other types of surety bonds that protect the consumer, a utility deposit bond protects the utility company by ensuring it receives a timely payment. A utility bond provides a financial guarantee that a person using the services of a utility company will pay for the utilities on time. A number of private utility companies, including water companies and power companies, demand utility bonds in certain situations. The bond is usually required from customers that are expected to use large amounts of energy, such as manufacturing companies, restaurants, campgrounds, and many others.
After obtaining the bond, if a customer fails to pay for utilities within the specified time, the utility company can file a claim against the bond. If the claim against the bond is proven, the surety agency will pay the amount of the claim and then attempt to collect compensation from the customer.
The cost of utility bonds may differ greatly from state to state due to varying regulations. Before obtaining utility deposit bonds from an agency, customers need to go through a credit check, get their application approved, and may also have to undergo various screening processes.