A bail bond is a financial promise to the court that you will show up for your court date. You can post a cash or a surety bond to do so.
When arrested, their release from jail often requires a cash bond. This means their bail must be paid in advance, and a friend or family member typically pays it on the defendant’s behalf. Surety bonds, on the other hand, involve three parties: the defendant, the obligee, and the surety company.
Bail Bondsmen
Whether it’s a property bond, fidelity bond, or bail bond, a surety company is an important business partner. The right agency can help you manage risks and grow your business by providing peace of mind to clients and customers.
Luzerne County bail bonds, guaranteed by insurance companies, allow defendants to escape jail pending trial. In most cases, a judge will set bail, and the defendant must contact a bail bondsman to post a bail bond.
The bondsman will charge a fee, usually 10% of the total bail amount. They also require the defendant or a loved one to secure the bond with collateral, such as cash or property. The bondsman then turns this collateral over to the surety company.
Surety Companies
A cash bond and a surety bond serve the same purpose: guaranteeing that a defendant will appear in court. The main difference is who pays and who takes the risk.
A bail bondsman posts the total amount of a bond, typically 10% of the total bail amount, in exchange for a non-refundable premium. The bail bondsman then borrows 90% of the bond amount from a surety company.
When choosing a specialty surety company, selecting one with a solid financial reputation is essential.
Fees
When you’re looking for help to bail a loved one out of jail, you will most likely come across the words “cash bond” and “surety bond.” Both are different ways of posting bail but serve the same purpose.
Cash bonds involve only two parties, the court, and the defendant. On the other hand, surety bonds involve three parties: the principal, the obligee, and the bond agent.
When you secure a surety bond, the principal pays around 10% of the full bail amount to the bond agent. In return, the bond agent guarantees the defendant’s court attendance. The bond dissolves once the trial ends, and any collateral provided is returned to the defendant. The bill also requires insurers transacting surety bond business to audit their appointed agents twice a year.
Collateral
A bail bond requires collateral from the defendant to secure their release from jail. This can be money, real estate, or stocks and bonds.
Typically, real estate is the most common form of collateral for bail bonds. This protects the bail bond company if the property’s value falls before the trial or if there are legal disputes over ownership.
Besides cash, other forms of collateral include brokerage accounts and an irrevocable letter of credit (ILOC). ILOCs are written guarantees that the financial institution will pay the surety bond company upon demand. However, ILOCs are subject to interest rates and marketplace fluctuations. Conversely, cash is a highly liquid asset and does not require these market fluctuations.
Insurance
A surety bond guarantees that a bonding company will cover the cost of a project owner or other party cannot fulfill their contractual obligations (like finishing a job, following through on a bid, or paying suppliers). Unlike insurance, which takes in premiums to pay for potential loss, surety bonds only require an indemnity agreement from the principal.
A professional or business that needs a surety bond might find the process intimidating, but it doesn’t have to be. A qualified surety bond agent can help clients with the process and ensure they receive all the protections they need. They can also ensure that claims are paid promptly, ensuring bonded parties don’t incur unnecessary financial losses. In this way, surety bonds offer more comprehensive risk management than insurance does.
