Understanding the Crucial Role of Surety Bonds for Freight Brokers
Car shipping brokers are required to carry an FMCSA surety bond, and to be registered with their own MC number from the department of transportation.
Freight forwarders and freight brokers offer a variety of services, such as helping shippers find the right carrier, negotiating rate terms and freight terms (including transportation insurance), preparing shipping documents like bills of lading, carrier selection (choosing the most appropriate carrier based on cost, safety history, service levels, etc.), arranging cargo insurance coverage, and facilitating customs clearance when needed. Freight forwarders and freight brokers don’t usually move goods themselves. Instead, they coordinate all the different parts of a shipment so that cargo can be delivered on time and at a low cost.
What is a Freight Broker Surety Bond?
A Freight broker surety bond, also known as BMC-84 bond or property broker surety bond, is a type of surety bond required by the Federal Motor Carrier Safety Administration (FMCSA) in order to operate as an authorized freight brokerage or freight forwarder. In essence, it’s a financial agreement between the carrier and the freight broker that ensures compliance with transportation safety laws and regulations.
The freight broker bond is issued out by a surety company, which agrees to help the carrier if it goes bankrupt, is unable to pay, or is in some other situation where payment is withheld. The bond only makes you responsible for the amount written on it. The agreement says that if there is any kind of violation, the carrier will have to pay the surety company back according to the terms on the bond.
FMCSA has many rules about safety, and one of them is that freight brokers must have a bond. It makes sure that safety rules are followed by giving both the carrier and the broker a way to be held accountable. The carrier must follow all safety rules set by the federal government.
In certain situations, a freight broker surety bond can help a carrier who has run out of money. It also protects the broker from claims from third-party customers who say the broker didn’t follow safety rules or other legal requirements.
Bond Coverage Specifics
- As part of registration, freight brokers must post a bond in the amount of $75,000
- The bond must be filed with the U.S. Code Title 49 Section 13906.
- The principal on the bond should be the broker or forwarder and the obligee should be the United States of America.
- Brokers can find the right coverage for their needs by browsing through a variety of coverages provided by the surety bond companies.
What does a freight broker bond cover?
A freight broker bond is a financial guarantee issued by a freight broker to provide shippers and motor carriers with financial protection in the event that the freight broker fails to fulfill its contractual obligations.
Conclusion
All car shipping brokers should have a bond on file. This can be checked online easily at the FMCSA site. In addition, all brokers reviewed on this site carry an active bond, even the poorly reviewed ones. We are committed to giving no space or attention to brokers operating illegally.