Utility Deposit Bonds

Learn more about Utility Deposit Bonds

What is a utility bond?

Utility bonds (also known as utility deposit bonds) are legally binding agreements between three parties: a utility company, an individual or business purchasing services from the utility company, and a surety company.

The utility company is the Obligee and establishes the obligations that the utility customer (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the customer.

Why do you need a utility bond?

When an individual or business signs up for service with a utility company, they are typically required to provide a cash deposit. The deposit amount usually ranges based on the expected usage of the utility. Many utility providers allow consumers to post a utility bond in lieu of a cash deposit.

Most consumers prefer a bond to cash deposit as the premium they pay for the bond is typically much lower than the amount they would have to pay in a cash deposit.

When the surety company issues the bond, they provide a financial guarantee that the utility company will receive payment for losses resulting from a customer failing to pay utility bills.

If the customer fails to pay their utility bill, the surety will pay the utility company what is owed, up to the bond amount. The customer is liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.

How much does a utility bond cost?

Utility surety bond costs vary depending on the total bond amount and the premium rate. The utility company sets the bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium. 

Premium rates for utility bonds usually cost between 1% and 5% of the total bond amount. During the application process, the surety company evaluates your credit score and financial strength. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a utility bond. EZSurety can still offer competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety issued for utility bonds in popular states.

  • EZ Surety has issued utility bonds in the State of Texas for premiums as low as $350.
  • EZ Surety has issued utility bonds in the State of Tennessee for premiums as low as $85.
  • EZ Surety has issued utility bonds in the State of Georgia for premiums as low as $85.


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