October is nearing and with it, the time for freight broker surety bond renewal is coming!
If you are already in the business, you are probably aware that now is the time for surety bond renewals for all freight brokers and forwarders. And by now, everybody in the industry should be aware they need to continue to meet the sizable $75,000 annual bond requirement.
A Little about the $75,000 Freight Broker Bond
A freight broker bond is a surety bond and not insurance for the freight broker. It is a legal document, required by the federal government, which every freight broker and forwarder needs to obtain. It is illegal to work without one, as you will not be able to receive a license.
A surety bond protects the shippers and the carriers. It ensures that the freight broker will operate in a legal and ethical manner when it comes to their customer and partner dealings. For instance, if the broker does not pay for shipments, the surety bond will cover the truckers’ losses.
The freight broker bond requirement was initiated in the 1930′s and was significantly cheaper back then. In more recent years, but prior to October 1, 2013, freight brokers had to meet a $10,000 surety bond requirement. After the signing of the transportation bill, Moving Ahead for Progress in the 21st Century Act (MAP-21), by Barack Obama in July 2012, the required freight broker bond amount was raised to $75,000.
All freight broker bonds need to be filed with the Federal Motor Carrier Safety Administration (FMCSA). Freight brokers and forwarders will file either a BMC-84 or BMC-85 form, depending on the financial security they will provide. BMC-85 is the trust fund option, which requires a $75,000 up front payment. After the bond or trust is in place, the broker can proceed with obtaining their license.
All freight broker bonds need to be renewed annually.
What changed with MAP-21?
First of all, in addition to freight brokers, MAP-21 requires freight forwarders to obtain a freight broker bond or trust.
The second big change is the increase in financial responsibility required. As mentioned above, not only is premium much higher for a $75,000 freight broker bond, but if a broker choose to go with the trust fund option, he will need to have the entire $75,000 deposited in a bank, trust fund or any other insured institution until the expiration of the bond.
MAP-21 also forbids additional, or double, brokering, so that clients will have an additional layer of security. Truckers are now allowed to receive goods from only one broker. They also are not allowed to exchange the cargo with any other trucker. Customers need to be able to track their cargo at all times.
Because the increased freight broker bond went into effect on the 1st of October of 2013, this means that the deadline for the annual renewal is approaching!
What is the Easiest Way to Get Bonded?
As leaders in the surety bond industry, at JW Surety Bonds we offer programs that will fit every client’s needs. We are the largest volume writer of bonds in the country and are able to obtain the lowest rates from the strongest bonding company partners. When it comes to Freight Broker Bonds, we provide the easiest process in the industry with our online application and no obligation instant quote.
So, if you are a freight broker or forwarder, do not wait until the last minute to get bonded. Go to our website and apply for a freight broker bond online in minutes.