This bond is required for anyone who acts as a Freight Broker or property broker in the United States. It ensures the financial responsibility of the broker by providing for payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements or arrangements for the supplying of transportation by authorized motor carriers. The required bond amount is $75,000.
A freight broker or freight forwarder who operates without registering and filing a bond could incur a fine of up to $10,000.
To be issued this bond, you’ll need to provide a signed application, including business and personal indemnity, a clean credit report, and business and personal financial statements.
What is a surety bond?
A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.