Before we move on to the purpose of a freight broker surety bond, it is quite necessary to first understand what is this bond all about? There are freight brokers or transportation brokers contracting with the motor carriers or truck companies for any transportation on land. These brokers pay an annual fee to claim a bond and this bond is called a freight broker surety bond. If a freight broker is unable or fails to remit payment for rendered services as per the agreement, this bond asks the motor carriers to take direct payments from the surety bond company.
The Purpose of Freight Surety Bond:
The following statements will help you understand why this bond is required by freight brokers.
- It serves as a financial guarantee or security between FMCSA and the public.
- It obligates one to follow all the rules and regulations in the business of freight broking.
- It should not be treated as an insurance policy and hence it does not protect you. This surety bond is a legal instrument of protection and benefit to others.
- It keeps public protected from fraud, theft and any other crime of moral character on behalf of a licensed freight broker.
- It reminds you of a legal responsibility to refund the surety amount in total against a claim that was paid ever against your surety bond.
- This is a prerequisite instrument for licensing.
An applicant’s credit score does affect the approval status of the application. Example: Applications with very poor credit scores will be rejected unless there is a fair try by the party to keep the credit score in good shape. It is mandatory for the applicant to abide by the federal laws and regulations while applying for a freight broker surety bond. People with criminal history will be in question.