Insurance Company Abandonment: How To Protect Yourself.
- Date: October 16, 2014
- Author: Daniel Brittain Dugger
You grab a power out of your file cabinet and head to the jail to meet a cosigner, only to learn your insurance company has been suspended. Now what?
If you are new to the business and are underwritten by an insurance company, the concept of insurance company abandonment may be new to you. Depending on the insurance company you have selected, it may never apply to you.
Insurance company abandonment occurs when an insurance company underwrites more than one bail bondsmen in a jurisdiction and your ability to obligate yourself and that insurance company is frustrated due to the insurance company's decision to not satisfy a final forfeiture, leading to their suspension.
Bail Bond Software Solutions recently completed the design and development of a system that allows for the management of the bail bondsmen and insurance companies authorized to write in a particular jurisdiction. During the implementation, Bail Bond Software Solutions learned of seventy-five thousand dollar forfeiture absolute that remained unpaid. Multiple attempts were made to cure the breach of the contract of adhesion between the jurisdiction and the bondsmen as well as insurance company. Ultimately, the bondsman and insurance company were suspended. As a consequence of the insurance company's suspension, all bondsmen were suspended as well. Thankfully, most of them were able to continue to write on other's paper. However, there were some that were out of business.
After close to five months of being suspended, the defendant was finally rearrested by local law enforcement.
How to protect yourself.
- Language To Look For: Ensure that any contract you execute contains language that speaks to the satisfaction of forfeitures entered against another bondsman so that you can continue to operate your business. Ensure that there is a certain period of time in which they have to satisfy the forfeiture.
- Direct Contracts With Multiple Insurance Companies: Although it may require the pledging of more collateral upfront, having a direct contract with an insurance company will serve you better in the long run. Having a direct contract will help you establish a relationship directly with the insurance company which will help in situations where you are needing powers overnighted or large bond approval. Writing through multiple insurance companies will help obviate a situation in which your business is shutdown due to another bondsmen's failure to satisfy a forfeiture. Insurance companies are competitive and having the ability to write through many will allow you to negotiate contract rates.