If you or a loved one needs to bail out of jail, you have a few options. Cash bonds are straightforward, but surety bonds are a little more complicated.
Securing a surety bond can be an excellent option for those who need more money to pay a cash bond. Here’s how it works.
What Is a Surety Bond?
Unlike an insurance policy, which guarantees the insured against financial loss, a surety bond secures the fulfillment of an obligation. If the bonded principal doesn’t fulfill their obligations, harmed parties can file claims against their bonds to recover restitution. The issuing surety company will pay valid claims, but they expect the bonded principal to reimburse them in full.
Obtaining surety bail bonds Surry County NC is a three-party agreement between you, the bondsman, and the surety company that backs the bond. The bondsman assumes the economic risk of posting your bond, and they require a non-refundable fee called a premium from you to do so.
This fee is usually a fraction of the amount you need to post with cash. The surety company assesses the risk of each applicant by considering their past financial and legal history. The underwriting process is similar to that of determining an auto insurance rate. It considers various factors like the type of bond, the amount of the bond, and your risk factor.
How Do Surety Bonds Work?
Generally speaking, surety bonds work between three parties: the principal, obligee, and bond issuer. Obligees are often government agencies, but commercial and professional parties can also be bonded to assure customers of their quality of work. The bond issuer, also known as the surety, assumes the risk of reimbursing the obligee should they suffer a loss due to contract fulfillment.
Regarding bail bonds, surety bonds are collateral for the defendant to secure release. They allow a bail bond agent to reduce the amount of cash they need upfront for their clients, which helps everyone involved.
A bail bondsman is typically referred to as an agent or broker. This is because they act as a middleman between the client and the bond company, working to assess each person’s financial history. This helps them determine how much risk each person poses to the surety and charge accordingly. The process is similar to insurance underwriting for vehicle insurers.
How Do I Get a Surety Bond?
Once you know your specific bond requirement, find a licensed surety bond agency. Look for one with expertise in your particular bond type and competitive pricing. They should also have an online application that is fast and easy to fill out.
You will typically need to provide personal information and a credit check as part of the application process. Larger agencies may have access to high-risk pools, allowing them to give bonds to applicants with less-than-perfect credit.
Once your application has been approved, you must pay a small percentage of the total bond amount. This is called the bond premium. Often, the size of your premium depends on your personal and business credit score. As a result, the more you can do to improve your credit profile, the lower your premium will likely be.
How Much Do Surety Bonds Cost?
A surety bond can be far more affordable than paying the entire bail amount. The premium is typically 10% of the total bail amount.
Several underwriting factors determine the cost of a surety bond, including an applicant’s credit score and financial history. The size of the bond is also a factor. More significant bonds tend to cost more, carrying more risk for the surety company.
A business’s industry and its licensing history also impact bond costs. Companies with more experience and a good track record are considered lower risk by surety companies.
Unlike cash bonds, where the defendant’s friend or family member puts up collateral, the bail bond agency takes on the entirety of the risk of the case. They’re responsible for calling the defendant before each court date and checking in to ensure they’re on their way to the courthouse. They may also require a personal guarantee or security deposit. This ensures they’ll be paid back if the defendant skips their trial or fails to show up for a court date.