Why You Should Care About Freight Broker Bond Claims
You're Responsible For Bond Claims
Before any freight broker gets their bond, they must sign an indemnity agreement. The agreement is a binding contract that says you will pay back the surety company for any claims that you trigger. For example, if you don't pay a shipper as agreed upon in the contract and a claim is filed on your bond, the surety company will pay it at first. However, the indemnity agreement that you must sign means you agree to pay back the surety company for any claims you cause.
Keep in mind, the surety bond is a form of credit provided to you by the surety company, as they are guaranteeing that any potential bond claims will be paid. If you run your business ethically and properly, claims won't be an issue for you.
Leave Claims Unpaid, Lose Your Bond Forever
If you happen to cause bond claims by breaking FMCSA regulations and neglect to pay the surety company back, your bond will be canceled, you will get fined by the FMCSA and you will likely never be able to get freight broker bonds from your current surety company or any other surety company in the industry in the future. Your surety company will likely pursue you legally as well, and this is true whether it's one claim or ten that you avoid paying. As mentioned above, the freight broker bond is a form of credit, and the surety company won't continue to provide surety credit to a freight broker who doesn't hold up of their end of the deal.
If you can't get a bond due to non-payment of bond claims, the only option left to meet the FMCSA requirements and keep your license is the trust fund. Find out the major differences between the trust fund and the freight broker bond to see how this would impact you and your business.
Author: Eric Weisbrot
Eric is an industry expert that specializes in taking complex surety concepts and explaining them in terms that make sense to the general public. He also manages the JW Surety Bonds website and works with various partners to help further educate the public on suretyship using various mediums.
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