$75,000 Broker Bond Brings Uncertainty!
Mr. Collier says that for many brokers and forwarders, the BMC-84 bond is the only choice because of the difference in financial commitment required. It’s crucial to fully research options in bond programs, as terms and rates can vary widely.
But when you work in the Freight Brokerage Industry every day, as Mr. Milton Collier does, then you can understand why the Highway Bill is very important.
Mr. Milton Collier, specializes in working with shippers all over world. He is known for his work as a Trainer of Freight Brokers and his book “Good Economy! Bad Economy! The Right Career”. His website is www.MiltonCollier.com.
At the end of the day congress raised the bond to help fight the widespread fraud that has plagued the industry for years. However, the new requirement has created some problems in some areas.
Effective October 1, 2013, every freight broker and forwarder must provide proof of their $75,000 bond; otherwise they will lose their license. While larger brokers will likely have no problem with the increased amount, smaller brokers may be unable to continue their business.
Some sureties have already begun to cancel brokers’ bonds in anticipation of the new requirement. In some cases, the broker may be unaware their bond has been cancelled until they receive a formal notice. Whenever a surety cancels a bond, the broker has 30 days to secure a new one or lose their business.
As part of the Highway Bill, the U.S. Department of Transportation will require all sureties to submit cancellations online. Following a cancellation, sureties must pay any unchallenged claims within 30 days. If a broker or forwarder fails, sureties have to publicly advertise for claims for 60 days following the failure or cancellation…
Mr. Collier says that for many brokers and forwarders, the BMC-84 bond is the only choice because of the difference in financial commitment required. It’s crucial to fully research options in bond programs, as terms and rates can vary widely. Some sureties will require personal and business financials with cash verification, years of experience and even collateral, while others will allow greater flexibility in the underwriting process.
Collier & Associate