Maine Utility Deposit Bond: A Comprehensive Guide
January 31, 2023
This guide provides information for insurance agents to help their customers obtain a Maine Utility Deposit bond.
At a Glance:
- Average Cost: Between 2% to 7.5% of the bond amount per year based on the applicant’s credit
- Bond Amount: Determined on a case-by-case basis
- Who Needs it: Commercial customers that do not want to pay a cash deposit
- Purpose: To ensure the utility company receives compensation for financial harm if the business fails to pay their utility bills
- Who Requires Utility Deposit Bonds in Maine: Utility companies that provide services to the general public
Utility companies in Maine often require customers expected to generate large monthly bills to pay a security deposit before initiating service. The security deposit protects utility companies from losses if the consumer fails to pay their monthly bills on time and in full. However, certain utility companies in Maine allow customers to purchase and maintain a surety bond in lieu of depositing cash. Unlike most surety bonds, utility deposit bonds are not required by a government agency but by the utility company providing the service (unless a municipality owns the utility company).
What is the Purpose of the Maine Utility Deposit Bond?
Certain utility companies in Maine require consumers that do not wish to pay a security deposit to purchase a surety bond as a prerequisite to obtaining utility services. The bond ensures that the utility company will receive compensation for financial harm if the consumer fails to comply with the provisions laid out in the bond form. Specifically, the bond protects the utility company if the consumer does not pay their monthly bills. In short, the bond is a type of insurance that protects utility companies if the consumer fails to remit all required payments.
How Can an Insurance Agent Obtain a Maine Utility Deposit Surety Bond?
BondExchange makes obtaining a Maine Utility Deposit bond easy. Simply login to your account and use our keyword search to find the “utility” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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Is a Credit Check Required for the Maine Utility Deposit Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the Maine Utility Deposit bond. Applicants with excellent credit and work experience can expect to receive the best rates. Applicants with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the Maine Utility Deposit Bond Cost?
A Maine Utility Deposit bond can cost anywhere between 2% to 7.5% of the bond amount per year. Insurance companies determine the rate based on a number of factors, including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $10,000 bond requirement.
$10,000 Utility Deposit Bond Cost
|Credit Score*||Bond Cost (1 year)|
|650 – 799||$500|
|600 – 649||$750|
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
Which Companies Allow Utility Deposit Bonds in Maine?
The following Maine utility companies allow customers to purchase a surety bond in lieu of depositing cash:
Central Maine Power Company
Non-residential customers may purchase a surety bond instead of depositing cash. The bond amount must equal the two highest invoices of a similar business during a recent 12-month period.
Agents can contact Central Maine Power Company here.
Commercial customers must either purchase a surety bond or deposit cash before initiating service. The bond amount must equal the location’s two highest invoices during a previous 12-month period. If the location is a new construction, the company will estimate its usage based on that of a similar business.
Agents can contact Versant Power here.
Commercial customers that are required to pay a security deposit may opt to purchase a surety bond instead. The bond amount must equal either two months’ average gas usage or the gas usage for any one billing month, whichever is greater.
Agents can contact the Unitil Corporation here.
How Do Maine Utility Customers File Their Bonds?
Utility customers in Maine should submit their completed bond forms, including the power of attorney, to the company requiring the bond. The surety bond requires signatures from both the surety company that issues the bond and from the customer. In some instances, the bond will require witness signatures as well. Generally, the surety company will include the following information on the bond form:
- Name and address of entity/individual(s) buying the bond
- Surety company’s name and address
- Entity requiring the bond
- Bond amount
- Date the bond is signed
- Date the bond goes into effect
What Can Utility Customers in Maine Do to Avoid Claims Against Their Bonds?
To avoid claims on their bonds, utility customers in Maine must ensure they pay their utility bills on time and in full.
What Other Insurance Products Can Agents Offer Utility Customers in Maine?
Utility companies generally only require businesses to be bonded. As such, agents can offer their customers general business and liability insurance in addition to the utility deposit bond. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
Should Your Customer Purchase a Surety Bond or Deposit Cash?
Surety bonds are generally considered the better option for businesses, as they free up working capital that would otherwise have to be deposited with the utility company. For more information on whether your customer should purchase a bond or deposit cash, check out our Surety Bonds vs. Letters of Credit article here.