Transportation Bond
If you are interested in being a freight broker, you are required by law to have a transportation bond. A transportation bond is also known as a broker's bond or a BMC-84. These bonds have a monetary value and protect the carriers and the drivers who use the freight broker service.
In 2013, Congress passed the Moving Ahead for Progress 21st Century Act or MAP-21, which has increased the bond value for all freight brokers to $75,000. Brokers can self-insure by placing this amount of money into a secured bank account that must be managed by the bank for a fee and never access the money, or they can purchase a bond policy from an insurance company.
What Is Involved In Being Bonded?
For a freight broker to be bonded by an insurance company, they must prepare the paperwork and submit to a background and credit check. Since bonds have a high value, it is crucial for the freight broker to have good credit. You can still get bonded with less-than-perfect credit, but the premiums for the bond will be higher.
Insurance companies generally charge the freight broker a percentage of the bond amount as a premium. This will be based on many factors, including credit score. Over time, especially if no claims are made against the freight broker, the percentage will decrease, and the premiums will drop.
What Happens When A Claim Is Made?
If a claim is made against your bond, your insurance company will contact you immediately. Many times the claim process can be stopped if the problem is resolved. Some companies will file a claim immediately against a bond if they have not received payment on time, only to receive that payment the next day.
You should review any claim made against you and try to resolve the issue without having to have your bond make a payment. Payments made against your bond could result in higher renewal fees or loss of your bond. Insurance companies understand that you cannot operate your freight moving business without this bond, so they are willing to work with you to resolve the issue without having to pay an actual claim.
Speak With VMC Trucking Insurance About Your Surety Bond
If you need to purchase a bond for your freight broker business, VMC Trucking Insurance can help. We are a full-service insurance company that specializes in the trucking industry. We can help you get the right bonding for your company.
VMC Trucking Insurance can also help you with all of your other trucking industry policies, such as liability insurance. Speak with one of our agents to find out how you can get the most protection at an affordable rate.
VMC Trucking Insurance is an Illinois based insurance company but offers policies in AL, AZ, CA, CO, DE, FL, GA, IA, IN, LA, MD, MN, MT, NC, NV, NJ, OH, OK, OR, PA, SC, TX, VA, VT, WA, and WI. VMC Trucking Insurance has been actively selling policies for over five years and currently works with over 50 different carriers. Call today to see how we can help you.