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Your Guide to Energy Broker Bonds
About one-third of the states in the U.S. have deregulated their energy markets, which means energy brokers can use competitive rates to encourage clients to switch energy providers. Government agencies in most states require energy brokers to purchase a surety bond. The experts at SuretyBonds.com understand that a number of clients are not familiar with surety bonds, so we developed this guide to bonding for energy brokers.
What is an Energy Broker Bond?
An energy broker bond is required for those permitted to act as an energy broker. Energy brokers, also known as energy consultants in the energy industry, act as intermediaries between energy producers and energy consumers.
The purpose of the bond requirement is to guarantee licensed energy brokers and consultants will follow the rules and regulations of the state they operate in. In this way, the energy broker bond protects the general public. When applying for this type of bond, perspective energy brokers should be aware of the contractual obligations and requirements they will need to comply with in order to avoid a possible bond claim.
State Specific Costs
Energy broker 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 energy broker bonds in your area or call 1 (800) 308-4358 to speak with a surety expert.
A More In-depth Look at Energy Broker Bonds
The exact protection these bonds provide depends on the legal language used on the specific contract. Each state has its own bonding requirements for energy brokers, so you must purchase a bond in every state you work in.
A surety bond is a contract between three parties. In the case of energy broker bonds, the three parties are as follows:
- The principal is the energy broker or consultant purchasing the surety bond
- The obligee is the state requiring the bond to ensure the credibility of a broker
- The surety is the insurance underwriter issuing the bond
If it is believed an energy broker did not meet the terms of the bond, then a claim can be filed on the bond to collect money for any damages or lost funds. The surety company will determine if the claim is valid and then make a payment up to the total bond amount. The energy broker would then be responsible for paying that money back to the surety company.
What’s the Fine Print?
There are a few things a perspective energy broker licensee should know about these surety bonds:
- Each state typically has their own bond form, meaning each state requires a separate license. Therefore brokers who want to operate in multiple states are required to secure and post a bond in each state they work in.
- Do not confuse Energy Broker bonds with Utility Deposit Guarantee Bonds which are used to guarantee payment of utility services.
- By definition, an Energy Broker never has title to gas or electricity, but acts as a middleman between the consumer and the energy supplier.
Get Your Bond Quickly & Easily
At SuretyBonds.com, we understand the importance of getting you your bond as quickly as possible, so our surety experts make sure to provide quick, easy and accurate bonding services. If you apply today, we guarantee to have a free, no obligation price quote to you within 1 business day. Your bond will be issued once your payment is processed. If you’re in a rush, you can choose our overnight shipping option. Get your surety bond insurance quickly, easily and accurately!