How Do Bailbond Companies Make a Profit?

With $14 billion in bail bonds written every year, the bulk of that money gets collected by insurance companies. The remaining fraction that ends up in the hands of bailbond companies is comparatively small. For all the work that bailbonds people do, their profits remain meager.

Criminal justice systems that still use bail end up putting more people into custody for longer. If people can’t make bail, even for minor crimes, they could end up in jail where scuffles are route and can turn an alleged theft into an assault. To avoid these kinds of issues, the accused offer a percentage of the set bail to a bail bonds company that then fronts the rest of the money.

If the accused show up, the money is refunded. This could leave you scratching your head about where bailbond companies see a return.

Here are 3 common ways they make money.

1. Contractual Agreements

Experienced and better-known bailbonds providers are often given the opportunity for a contract with courts in the municipal region. The agree to post a bond and bound to agreements. With just a signature, their word is trusted and they can leave with the defendant.

Because either the defendant returns or the bail bonds person pays the bail amount, the court trusts the outcome. Either the court will receive payment or the rest of the trial will go off without a hitch.

This relationship makes the bonds office seem more valuable and can bring in a lot more business through this reputation and relationship.

2. Nonrefundable Fees

The standard agreement is that a defendant puts up 10% of the bail bond amount. This fee is typically nonrefundable, even when the defendant shows up.

If a bond company builds a good reputation and gets a reputable clientele, they’ll make a lot of money from this 10%. A company that consistently comes through for low flight risk clients accused of high-cost crimes can stack up funds fast.

That’s how an office like Raleigh Bail Bonds, LLC can stay above water.

3. Tangible Assets

Bail bonds offices will ask for a security or collateral from clients in order to ensure they can recover any funds lost from defendants who flee. If the court date comes up and the client doesn’t show, the bail bonds office owes the entire bail amount.

Having the title of the defendant’s car allows the company to sell something to make up for that loss.

Tangible assets come in handy when taking bets on new or risky clients.

Bailbond Companies Take A Lot Of Risks

Despite the fact that they do make some money, they take a certain amount of risk when they cover for a client. Making sure they can cover court fees in the case of a client going MIA is what ensures they don’t go under when their clients mess up.

If you’re interested in finding out more about bail bonds or the legal framework around them, check out our other articles on dealing with criminal charges.