Surety Bond Trucking
In order to get or maintain a license, freight brokers are required to purchase a surety bond in the form of a freight broker bond. The necessity that freight brokers get surety bonds helps establish their reputation and protects against fraudulent activity as well as the inability to pay motor carriers or shippers in a timely way.
While freight brokers have the option to place $75,000 into a trust, doing so necessitates immediate full payment being made. In addition to this, it compels you to keep that money even after you have paid out claims.
It is strongly suggested that you obtain a broker bond, which is also known as a trucking bond, BMC-84 bond, or property broker bond. This is because obtaining a broker bond is the option that is more secure, more cost-effective, and better regulated for all freight brokers, irrespective of the size of the company or the amount of experience they have.
As is the case in the construction business, obtaining a contract in the trucking industry sometimes requires the posting of a bond. After all, many businesses see the delivery of their products as a high-risk endeavor. There are a few different kinds of bonds that are just available to those working in the trucking sector.
The Significance of Freight Bonds
The trucking sector is one of the industries that is one of the most difficult to understand. Even if it has the potential to be a prosperous company, there are still a great number of things that may go wrong with it. It is hazardous by the sheer essence of what it is. This is due to the fact that truck drivers spend hours on the road, which increases the risk of getting into an accident or something even more serious. Every time you go behind the wheel of a truck, you have an obligation to be well-prepared. This is especially true if you work in the trucking industry.
The possibility that cargo would be misplaced or stolen is another risk that is inherent to the transportation sector. When anything of value is among the belongings that are misplaced, the situation becomes much more precarious.
For instance, trucks are used to deliver high-tech items. These components have a combined price tag of many millions of dollars, and in certain cases, it is not even possible to replace them. Because of the nature of this risk, obtaining a surety bond is an essential component of doing business in the trucking industry.
Surety bonds, of which freight bonds are a subcategory, are the most common form to come across in this sector of the economy. They are comparable to standard surety bonds, but they come with a set of legal obligations that are unique to the trucking business and cannot be found in any other sector.
Freight Broker Bond Requirements
It is crucial to understand how the regulations for freight brokers are created and how you may go forward with the process. In order for company owners to receive a freight broker bond, they are required to submit an application for a freight broker surety bond as well as undergo either a credit check or a financial assessment.
In order to secure a freight broker bond, it is helpful to provide documentation that demonstrates both the company’s commercial expertise and its financial soundness. Documentation that demonstrates a healthy financial standing is helpful in securing a reasonable freight broker bond premium rate. This is because the cost of the premium is determined in part by the financial standing of the freight broker.
What a Surety Bond for a Freight Broker Is Supposed to Do
There are a few different names for freight broker bonds, including the BMC 84 bond and the ICC broker bond. In order to guarantee that licensed freight brokers and forwarders comply with all relevant rules and regulations, the BMC 84 surety bond was created.
The freight broker license bond is good for one year beginning on the day that it was submitted. In the event that either the broker or the surety company chooses to cancel the bond, the surety company is the one that is required to provide the FMCSA a notice of cancellation that is at least 30 days in length.