Electrical Vehicle (EV) Charging Station Performance Bonds
Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your electrical vehicle charging station performance bond needs.
What is an Electrical Charging Station Performance Bond?
An electrical vehicle (EV) charging station performance bond is a surety bond that ensures that contractors building EV charging stations live up to their contractual obligations. That means ensuring installation is done in accordance with applicable statutes and codes, as required by the terms of the surety bond agreement. Failure to do so can cause the project owner to incur a financial loss from having to redo substandard work or even hire another contractor in the event of a default.
An EV charging station performance bond ensures that funds will be available to compensate the project owner (the bond’s “obligee”) for damages suffered as a result of the unlawful, unethical, or negligent actions of the contractor (the bond’s “principal”).
Who Needs It?
As the demand for EV charging stations grows and installation contracts increase to keep up with that demand, it’s becoming more common for project owners to require contractors to purchase performance bonds. The obligee sets the required bond amount, often for the full value of the contract.
How Does It Work?
The third party to the legally binding surety bond agreement, in addition to the obligee and the principal, is the “surety,” the company authorizing the EV charging station performance bond. When the surety receives a claim against the bond, an investigation is conducted to ensure the claim’s validity, and the surety may try to negotiate a settlement.
The principal is legally obligated to pay a valid claim or a settlement if all three parties agree to one. But in practice, the surety will typically pay the claim initially and then be reimbursed by the principal. That way the claim is paid promptly, and the principal gains a little time to repay the resulting debt to the surety.
What Does It Cost?
The surety’s main concern is always the risk inherent in paying claims on behalf of the principal and waiting for reimbursement. That’s why the creditworthiness of an applicant for an EV charging station performance bond is so important in determining the appropriate premium rate.
The primary indicator of low credit risk is a high personal credit score. A principal with a high credit score typically will be assigned a premium rate in the standard market range of 1-3%. That would make the annual premium for a $100,000 EV charging station performance bond in the vicinity of $1,000 to $3,000.
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