Drain Layer Bonds

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What you need to know about Drain Layer Bonds

Popular Drain Layer Bonds

What is a drain layer bond?

Drain layer bonds (also known as drain layer license bonds) are legally binding agreements between three parties: contractors performing work on sewer systems, the local government agency responsible for regulating work on sewer systems, and a surety company.

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

Why do you need a drain layer bond?

Drain layer bonds are required in some states before being eligible to obtain a permit to work on the construction or cleaning of any subsurface structure designed to collect or transport wastewater. Some states where you need a surety bond include Connecticut, Illinois, and Massachusetts. Most states handle drain layer licensing directly while some allow local municipalities to handle licensing and regulations.

When the surety company issues the bond, they provide the government agency a guarantee that they will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the drain layer license.

If the contractor fails to meet the obligations set out by the government agency, the surety will pay out any damages up to the bond amount. The contractor is ultimately liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.

How much does a drain layer bond cost?

Drain layer surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required 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 drain layer bonds typically cost between 2% and 5% of the total bond amount. Most drain layer bonds require credit checks. During the application process, the surety company evaluates your financial strength and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a drain layer bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.

Below are the lowest premiums EZ Surety has issued for drain layer surety bonds in popular states.

  • EZ Surety has issued drain layer bonds in the State of Illinois for premiums as low as $250.