The Office of General Counsel issued the following informal opinion on September 25, 2001, representing the position of the New York State Insurance Department.
Re: Fees for Bail Bond
May a bail bond provider require a criminal defendant to pay an additional fee, for a call-in tracking system, that results in the payment of an aggregate amount in excess of the statutorily set premium for a judicially imposed bond?
N.Y. Ins. L. § 6804 (McKinney 2000) limits the premium and compensation which a bail bond provider may charge a criminal defendant to a percentage of the judicially imposed bond amount. Therefore, any fees in addition to the statutorily allowed amount are prohibited. Assuming that such tracking system is in compliance with any and all other applicable statutes, a bail bond provider may impose such a requirement, but cannot charge an amount in addition to the statutorily set premium to cover such service.
The inquirer started as an electronic security company that evolved into a bail bond company. The inquirer, according to its website, has developed a highly engineered interactive voice response system designed to assist the Bail Bonding Industry in reducing forfeitures. The service requires the defendant to periodically check in from a specified location to ensure they remain in the area. The inquirer has proposed selling this service to bail bond providers, and has inquired whether the cost for this service can be passed from the bail bond provider to the criminal defendant.
Although the question was not specifically framed as such, it appears the issue is whether bail bond providers may cover the cost of this service by charging a fee in addition to the statutorily set premium.
The relevant statute is N.Y. Ins. Law § 6804 (a) and (b)(1) (McKinney 2000) which sets the premium which a bail bond provider may charge for a bail bond. N.Y. Ins. Law § 6804 (McKinney 2000) states in the relevant part:
(a) The premium or compensation for giving bail bond or depositing money . . . as bail shall not exceed ten per centum of the amount of such bond . . . in cases where such bonds . . . do not exceed the sum of three thousand dollars. Where such bonds . . . exceed . . . three thousand dollars, the premium shall not exceed ten per centum of the first three thousand dollars and eight per centum of the excess amount over three thousand dollars up to ten thousand dollars and six per centum of the excess amount over ten thousand dollars. In cases where the amount of the bond . . . is less than two hundred dollars a minimum premium of ten dollars may be charged.
(b) No person or corporation shall: charge or receive, directly or indirectly, any greater compensation for making a deposit or giving bail, . . .
The Department has consistently held that the statutorily set premium for a bail bond includes all expenses incurred by the bail bond provider. Similarly, in McKinnon v. International Fidelity Insurance Company et al., 182 Misc.2d 517, 704 N.Y.S.2d 774 (Sup. Ct. N.Y. Co. 1999), the court held that the plaintiff could maintain a cause of action against the defendant insurance company for fraud and deceptive business practices for having been charged for "expenses" which resulted in a premium that exceeded the statutorily permitted premium for a bail bond under Insurance Law § 6804. In its decision, the court stated "[s]ection 6804(a) and (b)(1) clearly provide that the premium or compensation may not directly or indirectly be greater than the maximum premium permitted by statute."
Accordingly, the service proposed by the inquirer would be considered an expense of doing business for the bail bond provider. Therefore, the cost for using it, to the extent that such costs when combined with the premium for the bail bond, exceeds the statutorily allowed premium, may not be passed along to the criminal defendant.
For further information you may contact Senior Attorney Susan A. Dess at the New York City Office.