Utility Deposit Bond
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.
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.
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 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.