South Carolina Encroachment Permit Bond: A Comprehensive Guide
September 8, 2022
This guide provides information for insurance agents to help their customers obtain a South Carolina Encroachment Permit bond.
At a Glance:
- Average Cost: Between 0.75% to 5% of the bound amount per year
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs it: All persons applying for a permit to perform work on a South Carolina Department of Transportation (SCDOT) maintained right-of-way
- Purpose: To ensure the SCDOT will receive compensation for financial harm if the permittee damages the right-of-way and fails to make all necessary repairs
- Who Requires it: The South Carolina Department of Transportation
South Carolina requires all persons seeking to perform work on a SCDOT maintained right-of-way to obtain an encroachment permit. South Carolina enacted the permitting requirement to ensure that construction activities do not make rights-of-way unsafe or unusable. To provide financial security for the enforcement of the permitting requirement, applicants must purchase and maintain a surety bond to be eligible for a permit.
“Right-of-way” refers to the total amount of land acquired for the construction of a road as well as the public’s right to use it.
What is the Purpose of the South Carolina SCDOT Encroachment Permit Bond?
South Carolina requires persons seeking to perform work on a SCDOT-maintained right-of-way to purchase a surety bond as a prerequisite to obtaining an encroachment permit. The bond ensures that the SCDOT will receive compensation for financial harm if the permittee fails to complete the project or damages the right-of-way and fails to make all necessary repairs. For example, if your customer needs to lay pipes next to a highway and ends up damaging the highway during the installation process, then the SCDOT can file a claim against your customer’s bond if they do not either fix the damages or pay a contractor to do so. In short, the bond is a type of insurance that protects the SCDOT if your customer violates the terms of their encroachment permit.
How Can an Insurance Agent Obtain a South Carolina Encroachment Permit Surety Bond?
BondExchange makes obtaining a South Carolina Encroachment Permit bond easy. Simply login to your account and use our keyword search to find the “Permit” 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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How is the Bond Amount Determined?
The SCDOT Access & Roadside Management Standards Manual dictates that the bond amount must be equal to 150% of the estimated construction costs of the project or $5,000, whichever is greater.
Is a Credit Check Required for the South Carolina Encroachment Permit Bond?
Surety companies will run a credit check on the applicant to determine eligibility and pricing for the South Carolina Encroachment Permit 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 South Carolina Encroachment Permit Cost?
The South Carolina Encroachment Permit bond can cost anywhere between 0.75% to 5% of the bond amount per year. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below offers a quick reference for the bond cost on a $20,000 bond requirement.
$20,000 Encroachment Permit Bond Cost
|Credit Score||Bond Cost (1 year)|
|625 – 799||$200|
|600 – 624||$500|
|575 – 599||$600|
|500 – 574||$1,000|
*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.
Who is Required to Purchase the South Carolina Encroachment Permit Bond?
South Carolina requires persons seeking to perform work on a SCDOT maintained right-of-way to purchase a surety bond as a prerequisite to obtaining an encroachment permit. The SCDOT may not require a bond if they do not deem one to be necessary.
What is the Application Process for a South Carolina Encroachment Permit?
Your customers must navigate several steps to obtain a South Carolina encroachment permit. Below are the general guidelines, but applicants should refer to the SCDOT’s permitting page for details on the process.
Step 1 – Contact the SCDOT
Applicants should contact the SCDOT before submitting an application. The department will walk the applicant through the application process and answer any questions they may have.
Additionally, applicants working on larger projects (industrial parks, shopping centers, etc.) should involve both the SCDOT and their local municipal authority in the planning stages of the project, as this will significantly reduce the time it takes to receive a permit.
Step 2 – Complete a Stormwater Management and Sediment Control Plan (If Applicable)
Applicants seeking to bring stormwater runoff or sediment to a highway as part of a developed area of at least two acres are required to submit a Stormwater Management and Sediment Control plan with their application. The plan must contain design computations and detail how the applicant intends to ensure that stormwater runoff or sediment does not negatively affect the encroachment area and right-of-way. All plans must be approved by the DHEC, the local municipal government, or other relevant authorities.
If the encroachment area is less than 2 acres, the applicant need only submit a drainage plan and supporting design computations.
Step 3 – Complete the Application
All South Carolina Encroachment Permit applications should be submitted online here. Applicants that do not anticipate needing more than one permit should submit a one-time only application, whereas applicants with a continuous need for these permits (2 or more a year) should request an account from the SCDOT and submit their application from the “high-volume customers” permit portal.
Applicants must submit a drawing of the proposed project containing, but not limited to, the following information:
- Roadway the encroachment is located on
- Direction and distance to the nearest intersecting public roadways (if applicable)
- North arrow and drawing to scale
- Existing and proposed roadway geometry, pavement design (if applicable), drainage features (with flow direction), right-of-way and associated property lines, sight distance, and structures (if applicable)
- Proposed utility work
- Traffic control plan (if applicable)
- Erosion control
Additionally, applicants for encroachment permits involving bridges, culverts, retaining walls, or other significant structures must submit signed and sealed structures of the geotechnical report, hydrology report, construction plans and documents, and structural design calculations as outlined in Chapter 12 of the Access & Roadside Management Standards Manual.
Step 4 – Purchase a Surety Bond
After reviewing the application, the SCDOT will inform the applicant of whether or not they need to purchase a surety bond (limits outlined above).
Do Encroachment Permits Need to be Renewed?
No, as the SCDOT will inform the applicant of their permit’s length when issuing it. All projects must be completed before the permit expires. Permittees must apply for a new permit for each project they undertake.
What are the Insurance Requirements for South Carolina Encroachment Permits?
South Carolina does not explicitly require applicants to purchase any form of liability insurance as a prerequisite to obtaining an encroachment permit. However, applicants may be required to do so before obtaining a construction permit or obtaining approval from the local municipal authority. Encroachment permit holders may be required to purchase and maintain a surety bond (limits outlined above).
How do South Carolina Encroachment Permit Holders File Their Bonds?
Permittees should submit their completed bond forms, including the power of attorney, online in the same permit portal they used to submit their application.
The surety bond requires signatures from both the surety company that issues the bond and from the applicant. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name, state of incorporation, address, and phone number
- Bond amount
- Date the bond is signed
- Applicant’s permit numbers
- Location of the encroachment
What Can Your Customers Do to Avoid Claims Against Their South Carolina Encroachment Permit Bonds?
To avoid claims on their bonds, your customers must ensure that they do not damage any highways through the course of their projects. If your customers do damage a highway, then they must either fix the damage themselves or pay for a contractor to do so. Additionally, your customers must ensure that they complete the project and follow all the provisions of their permits.
What Other Insurance Products Can Agents Offer Encroachment Permit Holders in South Carolina?
Most encroachment permit holders will purchase liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for South Carolina Encroachment Permit Holders?
We suggest contacting the SCDOT or submitting a freedom of information request to obtain a list of active highway encroachment permits in the state. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.