Utility Deposit Bonds can be used in lieu of security deposits required by utility providers. Jet Insurance Company offers this surety bond for businesses looking to save money by avoiding a cash security deposit. Below we address the ins and outs of the Utility Deposit Bond claims.
What Not to Do
Don’t miss a utility payment.
Who Can File a Claim and When?
The utility company is the only entity that can file a claim against the bond. The claim can only be made if the account is delinquent. The utility will detail in its contract at what point they can consider an account late—this can range from 15 to 180 days.
How Much Can a Claim Be Made For?
With most utility companies, the security deposit is set at twice the average or highest monthly bill. This is to ensure that the utility company can collect for not only the first month missed but the second month as their collection attempts continue.
The surety bond limit (also called the penal sum or bond amount) is the amount of the security deposit. In the cases of missed payments, the surety company will make payment to the utility provider for the amount past due. In no case can the utility provider make a claim on the bond that exceeds the bond’s limit.
What Happens Once a Claim Has Been Made on the Bond?
Once Jet receives a bond claim, our first duty is to respond to acknowledge receipt of the claim and then investigate to determine if it is justified. Jet’s responsibility is twofold during our investigation, we must uphold our surety agreement by providing restitution to damaged parties while simultaneously defending our clients from baseless claims.
If the claim is justified and the business still has not or cannot make the payment, then Jet will make payment to the utility company for any missed payments. Jet may have to make payments for any additional collection fees, cut-off fees, attorney fees, and court costs that the utility company paid. In some cases, Jet has as little as 10 days to make the demanded payment to the utility company.
The process does not end there. Surety companies are all indemnified by their customers against any losses. This is a major difference between surety and insurance and the only way Jet can offer their financial service. What this means is that the business that defaulted on their utility payment still needs to make recompense to Jet for any costs Jet paid. Failure to do so can lead to trouble getting utility services in the future.