Why do we need Freight Broker Surety Bonds? Because these bonds are a firm financial guarantee and are required by FMCSA. A bond protects truckers hired by a freight broker by ensuring that payments for the jobs are complete.
This type of bond assures that both parties (the shipper and the owner of the goods) have completed their respective obligations as required in their agreement.
Surety bond rates vary depending on the quality of credit or other financial cases. If both are in good standing the rates will be better.
However, according to the Senate Bill S3483 which was proposed by the Owner/Operator Independent Drivers Association (OOIDA) and the Transportation Intermediaries Association (TIA), motor carriers are required to carry a $100,000 Surety Bond, although the amount of $10,000 was only required for now. This means that the largest carriers and brokers will attempt to pursue this type of shipment while the smallest brokers will find it difficult to afford a $100,000 surety bond.
There are inadequacies in some broker surety bonds. In some cases, such as when a principal might not be able to fulfill the obligation to pay, and when it turns out that the surety itself is insolvent, then the bond becomes void. Normally, this surety refers to insurance companies or banks that are verified to have sufficient fund and the required access to those funds.
In many cases, there are existing problems in low bonding requirements, for example, no criminal penalties for brokers who go out of business while still owing motor transports thousands of dollars. There should be supplementary penalties for this kind of scenario. So it will be clear to other parties, and they can also have the freedom to continue shipping their items to other brokers provided that the brokering firm still owe and reliable to pay the existing damage.
These are the few steps in acquiring Freight Broker Surety Bonds:
1. Should be in contact with the firm that supervises in accrediting the business.
2. Applications including the financial and the motor carrier codes given by the FMCSA should be completed and submitted.
3. Whenever the firm receives the application, this shall be pending for approval and quotes from surety companies.
4. Terms will be sent upon receipt of approval.
5. Freight Broker Quotes are normally received within 24hours.
6. There is a need to pay the premium and receive your Freight Broker Surety Bond.
The most vital thing you need to remember is that the commitment is a great responsibility. If you fail to commit with that certain obligation then it will reflect upon yourself and on the company you are working for. That is why there is a need for an in-depth educational training provided by the trusted and dependable schools which will assist and mold the students to develop and perform quality services for their potential clients as soon as they become a certified Freight Broker Agent.
