Utility Deposit Bonds
The utility sector is one of the most booming industries in today’s economy. The demand for utility providers will never diminish. To make sure that the market continues to flourish, the utility companies must ensure that they get complete payment for the service they have provided.
To ensure that utility providers get their complete payment from clients, there is a special type of bond called utility deposit bonds. Unlike other surety bonds, this bond protects the utility provider from payment defaulters. A utility bond works as a financial guarantee for the utility providers and ensures complete payment from the consumers.
Like other surety bonds, utility bonds bring three separate entities together. When you buy a utility bond, the principal is the consumer of the utility who purchases the utility bond, the obligee is the utility company, and the surety is the surety company providing the bond to the consumer (principal).
The surety guarantees the utility provider that the consumer or the principal will make complete payment to the utility. In case the principal defaults on the utility bill payment, the utility surety bond can be claimed. Generally, a utility bond is required from large corporations like manufacturing companies.