Understanding the Freight Broker Bond Freight Broker Bond:
If you’re new to working with freight brokers, you may be confused about the role of their surety bond. From the Carrier’s standpoint, the surety bond is in place as protection in case the broker refuses to pay for services rendered. Always verify a freight broker’s bond before accepting a load. Read on to learn more.
Instructions:
1
Visit the Federal Motor Carrier Safety Administration (FMCSA) website. Go to the Licensing and Insurance section and choose Carrier Search from the drop down menu. (You can also bookmark the link in our Resources section below).
2
Enter the freight broker’s information. It isn’t necessary to fill out the entire form. If you have the Motor Carrier (MC) or Freight Forwarder (FF) number, no other details are necessary. If you don’t, fill in as much information as you can. Hit “Search.”
3
Choose the correct broker from the formulated list. Click on “Report.” (HTML shows a snapshot of some pertinent information. Report provides full FMCSA information about the broker in PDF format).
4
Note the Authorities section. Freight brokers must have current brokerage authority for their surety bond to be valid. Be sure the broker authority listed is active; with no application pending. If the broker authority status is listed as None or Inactive, the company has no current legal standing as a freight broker. Don’t take the load; the broker bond (if any) won’t be enforceable.
5
Drop down to the Insurance Requirements section. Look for bond insurance. If the freight broker is acting in accordance with federal law, it will list bond insurance as both required and on file. It will also show the current federal minimum requirement of a brokerage surety bond. (Note: Some brokers voluntarily purchase a larger bond. The federal minimum will show regardless of actual bond value).
6
Look down the page at Active and Pending Insurance. Verify a listing for an active broker bond. (Note: If the freight broker has changed insurance companies, cancelled bonds will also show on this form).
7
Call the insurance carrier to clarify coverage if desired. Many trucking companies find this step unnecessary, because the insurance company is required by law to notify the FMCSA if coverage ends. However, a short time lag can be possible between a bond lapse and an FMCSA update. If you want to be 100% certain the bond is in effect, note the bond number and use the insurance contact information on the form.
