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Surety Bonds for Canadian Brokers

Discussion in 'Insurance' started by ShawnR, Oct 7, 2013.

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  1. ShawnR

    ShawnR Site Supporter

    FMCSA is giving themselves 30 days grace period, but that's for them not the public.

    who ever doesn't have the new bond should get it asap!

    plenty of affordable options out there!!!
     
  2. loaders

    loaders Site Supporter

    As of Oct 1, 2013, all licensed property brokers must have a 75K bond on file with the FMCSA. No news re: the injunction. Just went through the whole ordeal last week, and also found out my BOC 3 filing was out of date. All is current now.
     
  3. PackRat

    PackRat Site Supporter

    Has there been any updates with respect to the injunction? Any updates at all?
    PR
     
  4. ShawnR

    ShawnR Site Supporter

    LOL - ok there jokster
     
  5. Freight Broker

    Freight Broker Well-Known Member

    No joke my friend... I make sure I'm golden with my customers and my carriers, and the rest pretty much takes care of itself. BTW...I'm adding another high-tech gadget to my office...a really big (HUUUUUUUUGE!!!!) screen TV that will take up most of one wall. My thinking is that I can watch some educational TV in those few moments I have sometimes between moving loads. Some really good sales stuff to watch, for example. Beats snoozing on the couch ya know.. :cool:
     
    Last edited: Sep 6, 2013
  6. ShawnR

    ShawnR Site Supporter

    haha, not sure if that's a joke or not, but if you do have the $75k Bond then good! That's what I've been saying for a while, the $75k Bond is not so hard to get! Just run a good business and you'll be good to go. If you run a tight cash flow paying out 60-90 days and breaking promises then too bad, maybe you shouldn't be brokering freight and handling other people's money!
     
  7. Freight Broker

    Freight Broker Well-Known Member

    Hey, don't paint all of us little basement brokers with the same brush! I'll bet that my very nice basement home office complete with couch and frig compares very favorably with the average run down mildew infested strip mall office that most "pros" waste hundreds of hours every year commuting to and from. My typical day: I'm at my desk and working by 6:30 am.. My lovely wife brings me breakfast at around 8:00 am.. a REAL breakfast with EGGS, TOAST, JUICE, COFFEE (none of that fast food take out CRAP).. OH!!!! and speaking of wife, she too had nothing on but her undies this morning...ahum...so I got laid up (so to speak) for an hour (my handy office couch) but worked through lunch, and by around 2:00 pm was back on track for the day. Ah...the distractions of a home office.. Frankly it would SUCK to work in a cubicle at, say, TQL or CH or one of the other "real" brokerages. BTW.. I got my 75K bond a long time ago...is that still in an issue? ... good grief. Working from my little basement office is literally heaven on earth!!! Between all the food, wine, sex and rock and roll I still make well into the seven figures in sales... without even leaving my not so humble abode!!!!! Don't knock it until you've tried it!!!
     
  8. lowmiler88

    lowmiler88 Site Supporter

    That James Lamb is really out there I would not be associated with him.
     
  9. ShawnR

    ShawnR Site Supporter

    from what I hear & see this won't have time to go through by October 1, so it probably won't workout for their suit...

    we'll see what happens after October 1.
     
  10. SCAM CHASER

    SCAM CHASER Site Supporter

    July 2013 - The Association of Independent Property Brokers & Agents has filed a federal lawsuit against the $75,000 bond provision of the Moving Ahead for Progress in the 21st Century Act, commonly referred to as MAP-21.

    Part of MAP-21, which was signed into law on July 6 and will take effect on Oct. 1, was amended to require each broker to have “minimum financial security” of $75,000, versus the currently required $10,000, and to enable the Department of Transportation’s Federal Motor Carrier Safety Administration, which regulates property brokers, to set the actual amount of the bond through rulemaking.

    As a result, AIPBA, which represents small to mid-sized property brokers, is arguing that the $75,000 bond amount required is unconstitutional.

    “Today we made good on our promise to AIPBA members and supporters to follow through and legally challenge the anti-competitive $75,000 broker bond,” said James Lamb, AIPBA’s president, when he announced the lawsuit. “Simply stated, we believe this is a matter of collusion by other trade groups who effected this law under the guise of ‘fighting fraud,’ who pulled a sham on the United States government.”

    Lamb said the new bond is “not related to any legitimate government purpose”; is at odds with the National Transportation Policy (49 U.S.C., section 13101); and violates AIPBA’s due process rights under the Fifth Amendment, and that the FMCSA violated the Administrative Procedure Act by not engaging in “bona fide rulemaking” to set the new bond amount.

    “We are seeking justice through the federal court system for the various small business players in the trucking industry that would otherwise be adversely affected by the impact of the arbitrary new bond,” Lamb explained. “We are confident the U.S. District Court will determine this section of MAP-21 is, in fact, unconstitutional, and will issue an injunction shortly, preventing the Oct. 1 implementation by FMCSA.”
     
  11. loaders

    loaders Site Supporter

    The point is, the cost of "insuring" my payables in the event of bankruptcy to a limit of 75K, is considerably higher than the cost of "insuring" my liability while operating a motor vehicle on the road to a limit of 1M. Not only is the cost higher, but the chances of bankruptcy, compared to being involved in an accident, are considerably less. One can only assume that the cost differential is due to there being a limited number of customers for the surety bond policy, compared to the extremely large numbers of vehicle operators requiring auto insurance.
     
  12. ShawnR

    ShawnR Site Supporter

    I don't know if that relates properly.

    If someone sues you after a car accident or the government comes down on you the result won't be the same compared to you not paying a carrier...

    I understand your point of view, however it's not apples to apples.
     
  13. loaders

    loaders Site Supporter

    That's right. However, when you think of it in terms of "insurance", it's very expensive. I drive approx. 40,000kms. per year, and although I am a safe and cautious driver, my chances of being involved in an accident are considerably higher than the chance of my business failing and my suppliers not being paid. The cost of vehicle insurance, including liability limits in excess of 1 million dollars, is just over 1K per year. Although I think the higher bond limit is good for our industry, it disturbs me that the insurance industry looks upon the new regulation as an easy way to increase profits.
     
  14. ShawnR

    ShawnR Site Supporter

    so the rate itself is cheaper per $1K since it's only 5x the cost for 7.5x the bonding.
     
  15. loaders

    loaders Site Supporter

    Our broker has informed us that the underwriters he deals with are looking for approx. 200K in working capital, cash retained in the company and profitability. The rate will be approx. $40 per $1000, for an estimated annual cost of $3000.00. This represents an increase of approx. 5 times what our rate was for a 10K surety bond. All things considered, an amount we can deal with.
     
  16. ShawnR

    ShawnR Site Supporter

    L O L, underwear reference makes me think of Walt in Breaking Bad or Cranston in Malcom in the Middle cleaning the house in his underwear hahah

    and those who are asking for 2 or 3 times capital are probably: 1 - not the right surety providers, or 2 - broker looking for coverage is horrible and must "pay to play"
     
  17. PackRat

    PackRat Site Supporter

    From what I hear, there are many that can't get the new coverage. Some of the underwriters are looking for 2 or 3 times bond working capital so 150K to 225K.
     
  18. theman

    theman Well-Known Member

    Really, the requirements for qualification is to have $75K working capital. In my opinion, even $75K isn't really enough working capital to carry accounts receivable .... decent brokers are generally paying out before they are collecting. The only brokers who won't qualify are the onesy twosies working from their basements in their underwear, and good riddance really.
     
  19. ShawnR

    ShawnR Site Supporter

  20. ShawnR

    ShawnR Site Supporter

    this is mostly myth, most brokers will be able to get it. yes the cost may be higher at first but in the end all will work out and hopefully the scum will have been eliminated.

    the "scum" being the guys that you end up posting about not paying or taking 250 days to pay, etc
     

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