- 4 - premiums, and attempting to assure performance of the bonds on behalf of the surety. When petitioner writes a bond, he collects 10 percent of the face amount of the bond from a defendant as his earned premium. Pursuant to the agreement, petitioner: (1) Pays 13 percent of the premium collected to Associated, the surety, as a bond cost; (2) pays an additional 10 percent of the premium collected, or 1 percent of the face amount of the bond, to an indemnity fund known as a "Build Up Fund" (BUF); and (3) keeps the remainder of the premium.1 The surety company that issues a bond is principally liable to California for assuring a defendant's court appearance. In the event a defendant fails to appear, the surety company has to pay a late surrender fee or forfeiture to California. If a defendant is not brought to court within 180 days of a failure to appear, the court issues a summary judgment in the amount of the bond, resulting in a loss on the bond. The agreement, however, shifts ultimate liability for expenses and forfeitures on each bond from Associated to petitioner, who is personally liable for 1 During 1988, petitioner executed bonds in the amount of $5,995,543, earning premiums on such bonds in the amount of $599,554. Petitioner collected $581,567 of the earned premiums. During that year, petitioner paid bond costs to Associated in the amount of $77,942 (representing 13 percent of the premiums earned on the bonds sold) and paid $59,955 into his BUF accounts (representing 10 percent of the premiums earned on the bonds sold).Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011