Water And Sewer Bond

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A water and sewer bond is required by a utility before a business is allowed to use their services. A utility incurs significant expense when they are setting up a new infrastructure. Therefore, a water and sewer bond offsets the risk of the business not making payments for the utility’s services.

How It Works

Water and sewer bonds are a contract between a utility, the bond issuer, and the business. The utility is the obligee as it mandates the purchase of the bond before agreeing to provide services. The bond issuer is the surety which collects a premium from the business and puts up the bond. The business is the principal.

If the business fails to make payments in a timely manner, then the utility will lead to a claim against the bond. In some ways, a water and sewer bond is a financial guarantee that the utility will be able to collect payment for its services in one way or another.

How Prices Are Calculated

Unlike other surety bond amounts, which are mostly set by state or local authorities, bond values for water and sewer bonds are set by utilities based on the cost of connecting water and sewer lines and other services.

Premiums collected by the bond issuer depend on the bond amount and an evaluation of the business’ ability to make payments. Some of the factors in this evaluation include the business’ finances, credit history, liquidity, and payment history. Typically, premiums range between 1 - 6 percent of the total bond amount.

How to Purchase A Water And Sewer Bond

At TMD Surety Bonds, we work with multiple providers to help you find the best product for your needs. Due to our experience, volume, and relationships, we find the best prices.

We work only with the most reputable surety providers and have simplified the entire process so you can focus on what matters – your business. We are known for our exceptional customer service and quick turnaround time.

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