Underwriting, Collateral, and Indemnity Agreements
Underwriting
Underwriting a bail bond means assessing flight risk and the indemnitor's ability to pay the full bond amount. Factors include charge seriousness, prior failures to appear, community ties, employment, criminal history, and the indemnitor's income and assets. Collateral is security for the indemnity; it is not a substitute for a signed indemnity agreement.
Collateral and indemnity
- Take only collateral you can value, verify ownership of, and legally liquidate.
- Document condition, liens, and estimated value on a collateral receipt.
- Hold collateral separately; commingling it with business or personal funds is prohibited.
- The indemnity agreement should identify the indemnitor, bond amount, and reimbursement obligation.
- Return collateral promptly after exoneration, less authorized costs.
Worked example
An agent accepts a car worth $8,000 as collateral for a $20,000 bond, taking only a verbal promise and no title lien. Reasoning: collateral coverage is insufficient and undocumented, and the agent has no security interest. The indemnitor still owes the full $20,000, but the agent cannot easily collect. The file is also examination-deficient because the collateral transaction was not documented.
Traps
Valuing collateral at the owner's asking price. Accepting property you cannot legally possess or sell. Failing to obtain a co-signer's indemnity. Returning collateral before the bond is exonerated.