No. 31502 (Amendment): R590-196. Bail Bond Surety Fee Standards, CollateralStandards, and Disclosure Form

DAR File No.: 31502
Filed: 05/30/2008, 01:37
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

The purpose of this rule is to set a minimum and maximum bail bond premium and to allow bail bond agencies to discount a certain number of bonds per year.

Summary of the rule or change:

Sections R590-196-1 and R590-196-3 are being combined into a new Section R590-196-2. The changes in Sections R590-196-3 and R590-196-5 establishes a minimum bail bond premium of 10% of the bond's face amount. Section R590-196-3 allows bail bond agencies to discount 12 bonds per year. The change also sets a maximum bond premium of 20% of the total bail amount posted per defendant.

State statutory or constitutional authorization for this rule:

Section 31A-35-104

Anticipated cost or savings to:

the state budget:

The proposed changes will have no fiscal impact on the department or the state's budget. These changes will not create an increase or decrease of fees received by the department. It could increase the workload of department market conduct examiners, depending on the number of complaints received regarding discounted bonds. It is very unlikely that this would necessitate the need for an additional department employee.

local governments:

The changes to this rule will have no impact on local governments since the rule deals solely with the relationship between the department and its licensees, bail bond agencies.

small businesses and persons other than businesses:

This rule regulates Utah bail bond agencies, the great majority of which are composed of fewer than 50 employees. The rule sets a minimum bail bond premium limit of not less than a 10% bail bond face amount. The rule also allows agencies to issue 12 bonds a year at less than the 10% minimum limit. For those agencies used to issuing more than 12 bonds a year at less than 10% of the bail bond's face amount, they will experience increased revenues.

Compliance costs for affected persons:

All but a very few consumers of bail bonds will be charged between 10% and 20% of their bail bond face amount.

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

The changes to this rule will have minimal fiscal impact on bail bond agencies. It will have no impact on bail bond agencies already charging 10% or more of the bail bond face amount. D. Kent Michie, Commissioner

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

Insurance
Administration
Room 3110 STATE OFFICE BLDG
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:

07/23/2008

Interested persons may attend a public hearing regarding this rule:

7/16/2008 at 11:00 AM, Capitol Board Room, East end of second floor of the Capitol, 400 N State Street, Salt Lake City, UT

This rule may become effective on:

07/30/2008

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

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

R590-196-1. [Purpose.

This rule establishes uniform fee and collateral standards for bail bond surety business in the State of Utah.

 

R590-196-2. ]Authority.

This rule is promulgated pursuant to Section 31A-35-104 which requires the commissioner to adopt by rule standards of conduct for bail bond surety business.

 

R590-196-[3]2. Purpose and Scope[ and Applicability].

(1) The purposes of this rule are to:

(a) establish a minimum and maximum bail bond premium;

(b) set uniform fee standards; and

(c) set collateral standards.

(2) This rule applies to any person engaged in bail bond surety business.

 

R590-196-[4]3. Fee Standards.

(1) Initial bail bond fees.

(a) Bail bond premium:

(i) minimum [fee]premium: [none;]not less than 10% of the total bail amount posted per defendant;

(ii) discounted minimum premium: a bail bond agency may charge a discounted premium of less than 10% of the total bail amount posted per defendant 12 times during any annual licensing period;

([ii]iii) maximum [fee]premium: not to exceed 20% of the total bail amount posted per defendant[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) Other 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 which ever is less.

 

R590-196-[5]4. Collateral Standards.

(1) Collateral may be provided to secure bail bond fees, the face amount of the bail bond issued, or both.

(2) If the bail bond surety accepts the same collateral to secure the bail bond fees and the face amount of the bail bond issued, then, in the event of a failure to pay bail bond fees when due, the collateral may not be converted until the bail bond is exonerated or judgment entered against the surety and the depositor has been given no less than 15 days to pay any bond fees owing.

(3) If the bail bond surety accepts different collateral to secure the bail bond fee and the face amount of the bail bond issued then:

(i) the collateral securing the bail bond fees may not be converted until payment has been defaulted under the terms of the promissory note for those fees, and the depositor of the collateral has been given no less than 15 days to make the required payment;

(ii) the collateral securing the face amount of the bail bond issued may not be converted until the bond is exonerated or judgment entered against the surety and the depositor of the collateral has been given no less than 15 days to reimburse the bail bond surety for any amounts owed to the bail bond surety.

(4) The bail bond surety, its agents taking possession of collateral, or both, will hold said collateral as a fiduciary until such time as ownership of the collateral passes to the bail bond surety.

(5) Collateral held as a fiduciary may not be used by the bail bond surety or its agents without the specific written permission of the depositor of the collateral.

(6) Should proceeds from converted collateral exceed the outstanding balance due, the bail bond surety will return the excess to the depositor of the collateral.

(7) Notice under the rule shall be deemed proper if it is sent via first class mail to the address provided by the depositor of the collateral.

 

R590-196-[6]5. 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]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.

     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:

     (1)  reasonable expense fee for mileage is IRS mileage

reimbursement standard for business miles;

     (2)  reasonable apprehension expense fees include meals at

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

at no more than coach fares; and

     (3)  reasonable collateral expense fees: actual expenses to

obtain collateral and, actual storage expenses, if collateral is in

a secured storage area.

     (4)  A late payment fee of $20 or 5% of the delinquent periodic

payment which ever is less.



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

 

R590-196-[7]6. Penalties.

Violations of this rule are punishable pursuant to Section 31A-2-308.

 

R590-196-[8]7. Severability.

If any provision or clause of this rule or its application to any person or situation is held invalid, such invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this and the provisions of this rule are declared to be severable.

 

R590-196-[9]8. Enforcement Date.

The commissioner will begin enforcing the revised provision of this rule 45 days from the rule's effective date.

 

KEY: insurance

Date of Enactment or Last Substantive Amendment: [February 10, 2005]2008

Notice of Continuation: January 7, 2005

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