Why are Right of Way Bonds Required?
Right of Way bonds are designed to protect municipalities and the public. When construction or development affects public property such as streets, sidewalks, or utility corridors, the governing agency needs assurance that the area will be restored to its original or acceptable condition. The ROW bond ensures there is financial recourse if the bondholder fails to meet their obligations.
Who Needs ROW Bonds?
Right of Way bonds are typically required for:
- Contractors working within city easements or roadways
- Developers installing or modifying public infrastructure (e.g., curbs, gutters, street cuts)
- Utility companies performing maintenance or installation work in public right of ways
Any individual or company pulling a permit to work in a public right of way is likely to need this type of bond.
Common Projects That Require ROW Bonds
- Road or sidewalk construction and repairs
- Utility line installation (water, sewer, electric, telecom)
- Driveway tie-ins or curb cuts
- Landscaping or grading that affects public access
How Do Right of Way Bonds Work?
Like other surety bonds, a right of way bond is a three-party agreement:
Principal: The contractor or developer obtaining the permit.
Obligee: The government agency requiring the bond.
Surety: The company issuing the bond
If the principal fails to restore public property or violates terms of the permit, a claim can be filed. If the claim is valid, the surety pays for the damage up to the bond amount and the principal must then reimburse the surety. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.
Underwriting Requirements
Underwriting depends on the bond amount and risk level. Smaller bonds are often issued instantly or with a simple credit check. For larger bonds, financial statements and additional vetting may be needed for underwriting.
How do I get a Surety Bond?
Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.
All information provided is subject to change.