New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

George E. Pataki
Governor

Gregory V. Serio
Superintendent

The Office of General Counsel issued the following opinion on November 29, 2004, representing the position of the New York State Insurance Department.

RE: Bail bonds

QUESTION PRESENTED

Is the insurance company providing a bail bond required to provide those who posted collateral in support of the bail bond, upon dismissal of the indictment, with a written release as to the obligations they had assumed?

RESPONSE

New York Insurance Law does not require the insurer providing the bail bond to issue a written release under the circumstances the inquirer provided.

FACTS

The inquirer posted a bail bond for a friend who was the defendant in a criminal case. The inquirer and the inquirer’s family members and friends put up the deeds to their houses as collateral. The indictment was dismissed and the inquirer subsequently received the deeds back from the insurer. However, the inquirer did not receive any written release terminating the terms of the bail agreement and were informed by the defense attorney in the underlying criminal case that the bail bondsman could continue placing liens against the houses in other cases brought against the same defendant without the owners’ consent or knowledge.

Analysis

The Department, under N.Y. Ins. Law Section 6802 (McKinney Supp. 2004), licenses bail bondsmen doing business in New York, but neither the statute nor its implementing regulation, Regulation 42, N.Y. Comp. Codes R. & Regs. tit. 11, Part 28 (2004) extend beyond licensing, record-keeping and compensation. They do not address private agreements that either bail bondsmen, or insurers, may enter into with those who put up the collateral for a bail bond. However, should the bail bondsman place a lien upon houses previously pledged as security for other cases brought against the defendant without the inquirer’s consent, the Department would investigate the matter when it is brought to its attention. Under N.Y. Ins. Law Section 6802(k), the Department could take disciplinary action against the offending bail bondsman for having thereby demonstrated untrustworthiness.

It would be advisable for the inquirer to review the terms of the collateral/indemnification agreement under which the deeds in question were submitted as surety for the bail bond to see if it addresses whether either the insurer providing the bail bond or the bail bondsman is required to provide a written release as to the obligations the inquirer assumed, upon dismissal of the indictment. If the agreement requires that such a release be given, then the inquirer can use the agreement to seek a release from the entity identified therein. Please note that such agreements are not insurance contracts, as defined by N.Y. Ins. Law Section 1101, and are not governed by the New York Insurance Law.

For further information one may contact Associate Attorney Barbara Kluger at the New York City Office.