No. 33387 (Amendment): Rule R590-196. Bail Bond Surety Fee Standards, Collateral Standards, and Disclosure Form

(Amendment)

DAR File No.: 33387
Filed: 02/16/2010 08:23:10 AM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being changed at the request of the Bail Bond Oversight Board and the Utah bail bond industry. The change sets a minimum premium percentage for bail bonds at 10%. Currently, there is no minimum.

Summary of the rule or change:

The changes goes from no minimum premium for a bail bond to a minimum premium of 10% of the bond amount.

State statutory or constitutional authorization for this rule:

• Section 31A-35-104

Anticipated cost or savings to:

the state budget:

The changes to this rule will have no effect on department or state budgets. It will not change revenues or increase expenses. It will increase workload for a time while the department reviews bail bond form filings showing the change in the minimum fee. However, this increased work will not require the hiring of part time or full time help.

local governments:

The changes to this rule will affect the relationship between the bail bond licensee and the department but will have no effect on their relationship with local governments.

small businesses:

The changes to this rule will affect bail bond agencies and some surety companies. The 19 bail bond agencies that financially back themselves and are not backed by surety companies will need to change their bail bond forms to show the change in the minimum premium percentage. This would be a fairly minor change in the form but result in costs for printing and paper costs. The 21 agencies backed by surety companies will not be responsible for changing and filing the forms with the department. Bail bond agencies who have charged less than 10% of the bond amount will have to increase their premiums thus potentially increasing their revenues. Agencies that have not charged less than the 10% will probably see little, if any difference in revenues. What the change in the minimum bond premium will do to competition in the bail bond marketplace is yet to be seen. It could have a positive effect on the financial stability of bail bond agencies.

persons other than small businesses, businesses, or local governmental entities:

Surety companies that provide financial backing for the 21 bail bond agencies will be required to change and refile their bail bond forms with the department. They will also need to provide the agencies they back with these forms which will incur costs to the company. Consumers will no longer be able to purchase bail bonds for less than 10%.

Compliance costs for affected persons:

Surety companies and agencies who create policy forms will need to change them to show the new minimum premium then publish and file a sample with the department. Those charging less than 10% of the bond amount for premium will have to increase their premium.

Comments by the department head on the fiscal impact the rule may have on businesses:

The impact of this change will vary among agencies and companies. It will depend upon whether or not the agency is backed by a surety company; how much surplus stock bond forms an agency has on hand and will have to replace; and on how frequently the agency charged less than 10% for a bail bond.

Neal T. Gooch, Appointed Insurance Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

03/31/2010

Interested persons may attend a public hearing regarding this rule:

• 03/17/2010 11:00 AM, Senate Building (behind the Capitol), Beehive Room, 420 N State Street, Salt Lake City, UT

This rule may become effective on:

04/07/2010

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-196. Bail Bond Surety Fee Standards, Collateral Standards, and Disclosure Form.

R590-196-4. Fee Standards.

(1) Initial bail bond fees.

(a) Bail bond premium:

(i) minimum fee: [none]not less than 10% of bond amount;

(ii) maximum fee: not to exceed 20% of bond amount.

(b) Document preparation fee may not exceed $20 per set of forms pertaining to one bail bond.

(c) Credit card fee may not exceed 5% of the amount charged to the credit card.

(2) Additional fees.

(a) These fees are limited to actual and reasonable expenses incurred by the bail bond surety because:

(i) the defendant fails to appear before the court at any designated dates and times;

(ii) the defendant fails to comply with the court order; or

(iii) the defendant or the co-signer fails to comply with the terms of the bail bond agreement and any promissory notes pertaining to that agreement.

(b) Reasonable expense fee for mileage is the Internal Revenue Service standard for business mileage.

(c) Apprehension expenses such as meals, lodging, commercial travel, communications, whether or not the defendant is apprehended, are limited to actual expenses incurred and must be reasonable, i.e., meals at mid-range restaurants, lodging at mid-range hotels, commercial travel in coach class, etc.

(d) Reasonable collateral expense fees:

(i) actual expenses to obtain collateral; and

(ii) storage expenses if in a secured storage area, limited to actual expenses.

(e) A late payment fee of $20 or 5% of the delinquent periodic payment whichever is less.

(f) If a fee is charged by the court or the jail to process a bail bond, the actual fee charged may be passed through to the defendant or the co-signer.

 

R590-196-6. Disclosure Form.

The bail bond surety and its agents will use the following disclosure form or a form that contains similar language.

 

TABLE

XYZ Bail Bonds Disclosure Form

1234 South 1234 East, Salt Lake City, UT 84444:

801-123-4567 fax: [phone]

Defendant.......................Co-Signer......................

Court...........................Charge.........................

Bond amount $...................Bond number....................

Initial Fees, non-refundable.

....bond premium, maximum: no more than 20%;

    minimum: [none.]not less than 10%;                     $......

....document preparation, not to exceed $20

    per set of bond forms.                              $......

....credit card fee, not to exceed 5% of amount

    charged to credit card                              $......

                                   total initial fees   $......



Additional Fees.

     (1)  Limited to actual and reasonable expenses required

because the defendant fails to appear before the court at any

designated times, or fails to comply with the court order, or

fails to comply with the terms of the bail bond agreement or

any promissory notes pertaining to that agreement.  The following

are some reasonable expense fees:

     (i)  reasonable expense fee for mileage is IRS mileage

reimbursement standard for business miles;

     (ii)  reasonable apprehension expense fees include

meals at mid-range restaurants, lodging at mid-range hotels,

transportation at no more than coach fares; and

     (iii)  reasonable collateral expense fees: actual

expenses to obtain collateral and, actual storage expenses,

if collateral is in a secured storage area.

     (2)  A late payment fee of $20 or 5% of the

delinquent periodic payment whichever is less.

     (3)  If a fee is charged by the court or the jail to

process a bail bond, the actual fee charged may be passed

through to the defendant or the co-signer.



Grounds for revocation of bond.

     Should the defendant violate any of the following, the

defendant shall be subject to immediate bond revocation and

the defendant, or the co-signer, or both, shall be subject
 to

all the costs incurred to return the defendant to the court.



Grounds for revocation include the following:

     (a)  the defendant or co-signer providing materially false

information on bail bond application;

     (b)  the court's increasing the amount of bail beyond sound

underwriting criteria employed by the bail bond agent or bail

bond surety;

     (c)  a material and detrimental change in the collateral

posted by the defendant or one acting on defendant's behalf;

     (d)  the defendant changes their address or telephone

number or employer without giving reasonable notice to the bail

bond agent or bail bond surety;

     (e)  the defendant is arrested for another crime, other

than a minor traffic violation, while on bail;

     (f)  the defendant is back in jail in any jurisdiction and

revocations can be served prior to the defendant being released;

     (g)  failure by the defendant to appear in court at any

appointed times;

     (h)  finding of guilt against the defendant by a court of

competent jurisdiction;

     (i)  a request by the co-signer based on reasons (a)

through (h) above.  Items (a) through (h) pertain to the

defendant; items (a), (c), (e) (g) and (i) pertain to

co-signers, if any.



Collateral.

     The following has been given as collateral to guarantee

all court appearances of the defendant until the bond is

exonerated:

...............................................................

...............................................................

...............................................................

     The following has been given as collateral to guarantee

payment of bond fees:

...............................................................

...............................................................

     In the event judgment is entered against the surety or the

bonding fee is not paid according to the terms of the bail bond

agreement and its promissory note, if any, following written

notice to the undersigned of such judgment or non-payment, the

undersigned authorize XYZ Bail Bonds to convert the appropriate

collateral to collect the judgment or the unpaid bond fees.

Should proceeds from the sale of the appropriate collateral be

insufficient to cover the outstanding balance due, the defendant,

the co-signer, or both, agree to be personally liable for the

difference.  Should proceeds from the sale exceed the

outstanding balance, the difference will be returned to the

depositor of the collateral.  The depositor's signature below

constitutes acknowledgment of a Bill of Sale for the

collateral.  The depositor accepts this agreement as a bill of

sale for the collateral.



     By signing below I certify that I have read and understand

this disclosure form, the bail bond agreement and its

attached promissory note, if any.  I certify under penalty of

perjury that all information given to XYZ Bail Bonds verbally

and in writing on all documents relevant to this bond are true

and accurate. The co-signer agrees that should the co-signer

request XYZ Bail Bonds to revoke the defendant's bond, with or

without probable cause, the co-signer will be responsible to

pay XYZ Bail Bonds and their agents for the time returning

the defendant to jail at the rates stated above in additional

fees.  If requested by the co-signer to revoke the bond

without probable cause, the co-signer will be responsible to

reimburse the defendant his bond fees.



Date..............................Defendant....................

Date..............................Co-signer....................

Date..............................Depositor....................

I,......................................., agent of XYZ Bail

Bonds, certify that I have given a copy of all documents

pertaining to this bail bond agreement to the defendant, the

co-signer, the depositor, or any of the above, at the time and

date said bail bond agreement was executed.

Date....................Bail Bond Agent........................

 

KEY: insurance, bail bonds

Date of Enactment or Last Substantive Amendment: [October 22, 2009]2010

Notice of Continuation: December 30, 2009

Authorizing, and Implemented or Interpreted Law: 31A-35-104

 

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