Freight Broker Bonds
Freight Broker Bonds
Surety Bond Specialists for California Clients
Lesron Insurance has our clients’ financial needs covered with a wide array of surety bonds to ensure their business endeavors and investments guarantee task fulfillment. One essential bond we offer clients who wish to manage a freight broker business in California is a freight broker bond. Fullerton and Los Angeles, CA clients have trusted us with their bond needs for years, and our services are available to commercial customers throughout the state. Any motor carrier specializing in moving freight must have this type of surety bond to operate legally and ensure they can cover their financial obligations. With our help, you can find a suitable freight broker surety bond to stay active in this lucrative industry.
What Is a Freight Broker Bond?
It can be difficult to define what a freight broker bond is because the concept is complicated. However, a simple explanation is this bond is an agreement between three parties: the government, a bond agency, and you. This agreement acts as insurance to protect your customers’ interests. A broader way to define this surety bond is it guarantees you will fulfill specified tasks. For instance, this “just-in-case fund” is available to dip into when you are unable to honor a contract and deliver a load or pay truck drivers for a client. The Federal Motor Carrier Safety Association (FMCSA) requires you have a freight broker surety bond to operate. Reneging on an agreement hurts multiple parties involved in the supply chain, including truck drivers and the shipper. This bond protects shippers and truckers from mishaps like this and keeps events like these from occurring frequently. Lesron Insurance is ready to help entrepreneurs of all experience levels cover their expenses and obligations with impressive bond options.
What Types of Freight Broker Surety Bonds Are There?
You will see two recurring terms whenever you research freight broker bonds through a bond company: BMC-84 and BMC-85. Both of these terms describe financial agreements for brokers approved by the FMCSA. We have described the difference between these two agreements:
BMC-84 Bonds
This bond protects your customers and trucking companies against potential losses by acting as a line of credit for you if you violate FMCSA regulations. It insures those affiliated with you up to $75,000 in damages with a successful claim against you. A bond company will charge you a small percentage of $75,000 (the bond’s total value) every year.
BMC-85 Trust Fund
This option is a typical choice large firms and established brokers will undertake. A BMC-85 trust fund is arranged so that a broker fully funds the $75,000 mandated by the government into a bank account. They cannot touch these funds after depositing them.
Details About State Freight Brokers Holding a Bond
All freight brokers are required to purchase a freight broker bond in California. Anyone working as a freight broker must maintain a $75,000 freight broker surety bond for their licensing to be valid. Before 2012, the required surety bond was $10,000, but it was increased to $75,000 because industry authorities found the earlier amount no longer provided appropriate coverage for potential claims. Freight forwarders and brokers are both responsible for purchasing this surety bond or establish trust in the same amount. A freight broker surety bond is valid for one year after the date it was issued, and its annual premium is typically between 2% and 4% of the bond amount. Most small- and medium-sized companies cannot place a total of $75,000 into a trust as an alternative, so investing in a freight surety bond is often the most feasible action.
How Do I Get a Freight Broker Bond?
There are multiple requirements to purchase a freight broker bond in this state, including three necessary things you must obtain to qualify for it. You must obtain an operating authority from the FMCSA, a BOC-3 form from the FMCSA, and public liability insurance. Getting your operating authority from the FMCSA and public liability insurance is nearly the same step because you must get them at the same time. After registering as a federally approved process agent, you can contact Lesron Insurance to apply for a freight broker bond. When applying for a surety bond, we take your credit score in to account and give you a quote based on that and other factors. Having a better credit score can lead to lower charges each year for our services. We will still work with you if you have bad credit, and our team will help you find an adequate freight broker bond to cover your obligations.
Contact Lesron Insurance to Start the Process
Lesron Insurance looks forward to working with you on establishing your business as a freight broker in California. We have exceptional freight broker surety bond options and will work with you to find a coverage solution that fits your needs. Contact us today to learn more about these surety bonds and request a quote.