Operating a Bail Bond Business

Agency Contracts

Regardless of qualifications, aspiring limited surety agents are required to enter into an Agency Contract with a surety company to gain the authorization to issue bail bonds. This stipulation does not apply to professional Bail Bond Agents.

The term "bail bond agency" as defined by the Florida Statutes, refers to either a physical location where a licensed agent operates and maintains mandatory records as per sections 648.34 and 648.36, or an entity that either charges a fee for releasing an accused from jail or engages in activities reserved for licensed bail bond agents.

In legal terminology, "agency" denotes a relationship where an individual (the agent) acts on behalf of another (the principal) with the principal's authorization, often involving fiduciary responsibilities. This definition aptly describes the connection between limited surety agents and their insurers, as outlined in Florida Administrative Code 648.25(1), which describes a bail bond agency as a venue where licensed agents conduct bail bond activities.

Under Florida Statutes F.S. 648.30, acting as a bail bond agent without the necessary qualifications, licensure, and appointment is prohibited. Agency contracts, being comprehensive documents tailored to each company's requirements, contain several critical clauses, including:

  1. Appointment of Agent: The company appoints the agent to act on its behalf, with the appointment needing to be registered with the Department of Financial Services, accompanied by payment of fees and monthly updates of current appointments.

  2. Preliminary Requirements: Before appointment, the insurer must submit a statement or affidavit regarding the appointee's background and moral character, or by facilitating an appointment, the entity attests to the department that such evaluation has been conducted affirming the appointee's suitability for the bail bond business.

  3. Acceptance and Registration: The agent agrees to the appointment and must register with relevant local authorities before issuing any bonds, providing proof of their appointment.

  4. Commission and Build-Up Fund: Details the commission structure and mandates a portion of premiums be allocated to a fund designed to cover potential losses, with regulations on the management and refund of these funds.

  5. Managing General Agent (MGA): Identifies the MGA's role and authority over the bail bond agent, distinguishing between general agents and MGAs as defined by statute.

  6. Duties and Authority: Specifies the agent's permitted and expected actions on behalf of the company, including the execution of surety contracts, highlighting the importance of actual and apparent authority in these roles.

Upon finalizing these contracts and securing licensure, the surety company will register the agent's appointment with the Department of Financial Services. While Florida law allows limited surety agents to be appointed by multiple insurers, companies often impose contractual limitations to manage their risk and ensure fidelity.

The Bail Bond Office

Florida Statute 648.34 and Rule 69B-221.051 of the Florida Administrative Code set forth regulations regarding the operation of bail bond offices, focusing on aspects such as location, hours of operation, entrance requirements, signage, and ownership:

  1. Location: While the specific location of a Bail Bond Agent's office is not the primary concern of the Department of Financial Services, the law and administrative rules mandate that the office be "accessible to the public." Locations that may impede easy public access, such as having to traverse a salvage yard or navigate an alley behind an adult movie theater, may not be deemed "accessible." It's also important to note that local zoning laws typically impose more stringent restrictions on office locations than the state regulations.

  2. Hours: Rule 69B-221.051 specifies that bail bond offices must operate during "normal business hours," defined as at least eight hours daily between 8:00 a.m. and 6:00 p.m., Monday through Friday, excluding legal holidays. Furthermore, Statute 648.44 restricts in-person or telephone solicitation activities by bail bond agents to the hours outside of 9:00 p.m. to 8:00 a.m., particularly in domestic violence cases, at the residence of the detainee or their family. Any solicitation activities must also adhere to specific telephone solicitation regulations outlined in sections 501.059(2) and (4), 501.613, and 501.616(6).

  3. Entrance: According to Rule 69B-221.051, the entrance to a bail bond agency must offer straightforward access to the public, allowing entry directly into the Bail Bond Agent's office without the necessity of passing through another business or any residential area.

  4. Signage: Bail Bond Agents are required to display a sign at the entrance or on the door of their office that is "readable from a reasonable distance away," indicating the name of the business. Additionally, if the office is located within a building that features a directory, the business name must be included in that directory. Compliance with local sign ordinances is also advised before the procurement and installation of signage.

  5. Ownership: Only individuals who are licensed and appointed as bail bond agents are permitted to own, control, or have a financial interest in a bail bond agency. This regulation ensures that those involved in the ownership and operation of such agencies are duly qualified and adhere to the standards set forth by the industry's regulatory bodies.

Supervision

Every main and satellite office must be under the continuous supervision of a licensed and appointed Bail Bond Agent, referred to as a "primary bail bond agent." According to Florida Statute 648.25(7), a bail bond agent can serve as the primary bail bond agent for just one bail bond agency location. The primary bail bond agent bears responsibility for the management of the agency and the actions of all personnel within the agency, encompassing the conduct of other bail bond agents.

Employees

Additionally, a Bail Bond Agent is permitted to employ office staff to welcome visitors, manage telephone communications, organize files, dispatch court notifications, and undertake other essential tasks for efficient office operation. However, it is crucial for the Bail Bond Agent to ensure that the office personnel do not misuse stationery or other office resources in a manner that could be misconstrued as engaging in the solicitation or negotiation of bonds, as outlined in F.S. 648.441(1). To mitigate any potential risks, it may be prudent for the Bail Bond Agent to restrict employee interactions with defendants until after the bond issuance process is completed.

With the expansion of business, a Bail Bond Agent might consider hiring additional Bail Bond Agents or entering into a partnership. Nonetheless, adherence to specific licensing restrictions is imperative:

  1. The business must not employ or associate with any individuals specified in Chapter Four, Part One, who are barred from deriving direct or indirect financial gain from bail bonds. This group includes jail or law enforcement personnel, committing magistrates, court staff, or anyone with the authority to arrest or control prisoners, as per F.S. 648.44(2).

  2. The hiring of any individual who has been convicted of, or has entered a plea of guilty or no contest to, a felony or a crime involving moral turpitude is prohibited, in accordance with F.S. 648.44(8)(a).

  3. It is also forbidden to employ anyone who has previously been denied licensure or has had their license suspended or revoked in Florida or any other jurisdiction.

Licenses and Appointments

Within a single firm or agency, all Bail Bond Agents must be appointed by the same surety companies. Moreover, if any agent is licensed as a professional Bail Bond Agent, then all agents within the firm or agency must hold a professional Bail Bond Agent license.

Records

Rule 69B-221.055 mandates that each bail bond office is required to keep accurate and comprehensive records, including:

  1. Daily Bond Register: This register must chronologically document all bonds issued by the licensee, containing detailed information for each bond such as:

    • Power of attorney number.
    • Date the bond was executed.
    • Defendant's name.
    • Bond amount.
    • Premium charged.
    • Premium reported to the surety company (this requirement does not apply to professional Bail Bond Agents).
    • Security or collateral received.
    • Indemnity agreements.
    • Bond disposition and the date thereof.

  2. Individual Defendant Files: For every defendant, an individual file or envelope should be maintained, encompassing:

    • The original bond application.
    • Security or collateral affidavit (including a copy if not provided to the court).
    • Detailed information on the collateral, including its location and the reason for its collection.
    • Receipt issued to the indemnitor upon collateral return post-bond discharge.
    • Copies of the premium and collateral receipts.
    • Discharge of bond documentation, if issued.
    • Executed indemnity agreement copies.

Additionally, as specified by 69B-221.120(4), F.A.C., a duplicate copy of each receipt given must be retained in the file, mirroring the original in every detail including the surety company and bail bond agent's contact information. Non-compliance with this receipt duplication requirement may result in a $1,000 fine per receipt or suspension of the agent's license, according to 69B-241.170(3) and 69B-241.110(17), F.A.C.

  1. Premium Payment Records: In line with F.S. 648.295, bail bond agents are obliged to keep evidence, such as cancelled checks and report copies, demonstrating that premiums due to the insurance company have been paid. These records should be preserved for three years following payment.

All aforementioned records must be retained for a minimum of three years following the bond's discharge or termination of liability. It is important to note that a bond could expire, indicating that although not discharged by the court, its liability has concluded.

Required Reporting

Bail Bond Agents are obligated to routinely provide their insurers with updates on the bonds they have issued, along with any other details the insurer might require. While this practice is customary, it is not explicitly mandated by law, and thus will not be further elaborated upon here.

According to Florida Statute 648.36(2), there is a requirement for professional Bail Bond Agents to submit records of their assets and liabilities.

Moreover, Florida Statute 648.365 mandates that Bail Bond Agents keep statistical records and present these documents to the department or office when requested. The specific details required on this form are extensive and beyond the scope of this discussion for practical memorization. It is advisable to refer directly to the statute (found in Appendix A) for a comprehensive understanding of the record-keeping obligations necessary for regulatory adherence. It is important to note that separate statistical reports are required for each insurer the Bail Bond Agent represents.

Furthermore, beyond the submission of statistical reports to the department or office, limited surety agents are also required to distribute a copy of these reports to each insurer they represent.

Advertising

All advertisements must prominently feature the name and address of the bond agency as registered with the Department. Including a telephone number is highly recommended, as it is the primary means by which defendants will reach out to a bail bond agent.

Under Florida Statute 648.44(1)(b), bail bond agents are prohibited from soliciting business within courts or near locations where prisoners are held. Additionally, Rule 69B-221.095 expressly outlaws solicitation on the premises of such facilities. For a comprehensive understanding of what constitutes solicitation under these regulations, reviewing the complete rule (referenced in Appendix C) is advised. However, the Department does not regard the inclusion of a bail bond agent's contact information in a jail-provided directory as solicitation.

According to Florida Statute 648.44(6), bail bond agencies are not permitted to market themselves as surety companies or suggest such an affiliation in their advertising. Ensuring the term “agency” is part of the business name can help avoid this issue. Since October 1, 2002, it has also been illegal for bail bond agencies to use names that suggest they offer discounted premium rates, with criminal penalties applicable for violations of these statutes.

Beyond these restrictions, the extent and medium of advertising are largely influenced by budget considerations. Bail bonding agencies may utilize various advertising platforms, including radio, television, newspapers, and online channels, each offering different levels of effectiveness. New bail bond agents are encouraged to invest in essential marketing materials such as stationery, envelopes, business cards, and online advertisements. Despite the array of advertising options available, “word-of-mouth” remains the most effective form of promotion, achieved through sustained effort and a steadfast commitment to maintaining a reputable business image.

Change of Address

Should a Bail Bond Agent relocate their business, it is mandatory for them to inform the following entities within a 10-day period:

  1. The Department of Financial Services.
  2. Their respective insurer.
  3. Their managing general agent.
  4. The clerk of every court where they hold registration.

Unfair Method of Competition or Unfair/Deceptive Acts or Practices

Florida Statute 626.9541 (referenced in Appendix F) outlines various prohibited practices within the realm of competition and conduct, including:

  1. Misrepresenting and falsely advertising insurance policies.
  2. Distributing false information and engaging in misleading advertising.
  3. Engaging in defamation.
  4. Participating in boycotts, coercion, and intimidation.
  5. Making false statements and records.
  6. Involving in unethical stock operations and advisory board contracts.
  7. Practicing unfair discrimination.
  8. Offering unlawful rebates.
  9. Engaging in unfair claim settlement practices.
  10. Neglecting to implement complaint-handling procedures.
  11. Misrepresenting facts in insurance applications.
  12. Twisting, or the act of making knowingly incomplete or misleading representations.
  13. Offering free insurance valued over $25.
  14. Providing free insurance, which is prohibited.
  15. Conducting illegal dealings in premiums, including charging excessive or reduced rates for insurance.

Bail bond agents must possess a thorough understanding of these prohibited practices to ensure compliance with the statute in their professional activities.