75 K Surety Bond for Brokers

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Broker101

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Oct 26, 2018
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Hi Guys,

Happy Holidays!! Hope this post finds you well.

For CDN freight brokers who will operate in the US as well - any suggestions on whom is a good company for to get the bond?

For new startups what should we expect the premiums to be around approx.

Thanks
 
Speak to your insurance broker, they should have a good idea of who to use. It might also be a good time to discuss with them, all of your insurance needs, I.e. contingency cargo, Errors and Omissions, etc. Whomever you decide to go with, they will require a copy of your latest financial statements. They are looking for equity in your company and a history of profitable operation. Yes, difficult for a new entity. You may be asked to put up some personal equity. I think our last premium had risen to approx 4K annually.
 
Loaders sums it up well. Ours is 3k per year and we needed to supply a 36.5k letter of credit from the bank as well when we started out as there wasn't much in the financial statements in the first year or two. Once you build up equity, they will let the letter of credit slide. The other option is a 75k trust account.
 
We have access to a bond company that is going to cost you aproximently $995.00 USD per quarter. Less if you put money in trust or pay yearly instead of quarterly.
 
Everybody who has a Load broker Bond or who is looking for one should be calling PSTC and talking to Tatiana or Derek.
They have access to a US broker who gets this done with very little financial requirements. The primary market in Canada for this (The guarantee company of North America) does about 95% of operations in Canada. But their financial requirements are often too tight for fleets under 20 trucks.
My 2 cents
 
Thanks for the replies so far. You guys are always helpful.

I cam across some info on the insurance and wanted to run it buy you guys for any comments - "as a broker only we would not be responsible for either the carrier or the shipper's insurance requirements. Meaning that each part has to have its own insurance to cover any miss happenings that may occur. We are basically only the middle man in this. This would have to be contractually agreed upon by both the carrier and shipper prior to the said transaction taking place."

Any thoughts on this - would you say its accurate or is there something that is missing. I feel its a bit to simple.
 
Broker101 said:
Thanks for the replies so far. You guys are always helpful.

I cam across some info on the insurance and wanted to run it buy you guys for any comments - "as a broker only we would not be responsible for either the carrier or the shipper's insurance requirements. Meaning that each part has to have its own insurance to cover any miss happenings that may occur. We are basically only the middle man in this. This would have to be contractually agreed upon by both the carrier and shipper prior to the said transaction taking place."

Any thoughts on this - would you say its accurate or is there something that is missing. I feel its a bit to simple.
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Pick your words carefully.. You are not responsible for the freight should damage occur (as you're not the carrier/shipper). However, in the event you provide incorrect instruction to the carrier such as; temperature setting, loading or location (just a few examples), you could be liable and your Errors & Omissions policy would likely be called upon.

Brokers often carry contingent cargo insurance for exclusions in the carriers policy (ie; money/buillion, reefer breakdown, alcohol, or unlisted vehicles). This acts as a 'contingency' only - not a primary policy. Nor does it cover a difference in conditions (from carriers $2/lbs to the actual declared value).

You should be asking for a "Direct Damage Cargo" policy for any shipments which require full values to be insured. That would act as the primary insurance and in the event of a loss would pay out. It would then be the responsibility of that insurer, to hunt down the responsible carriers insurance and 'subrogate'.

PM me if you want help...
 
A freight broker is a middle man and as such, has no insurable interest in the shipment. Nor are they a party to the contract of carriage, commonly referred to as the Bill of Lading. Many brokers spell that out in either their published information, website, or in their contracts and communications with their customers. As Trkinsure mentioned, there are insurance products available to freight brokers to help minimize their exposure in the event of a mishap and most professional brokers make use them. Talk to your insurer to see if there is anything you are missing. If your broker isn’t familiar with transportation, speak to someone else, it is too important to your business to ignore.
 
Isn't it easier to use the end carriers insurance? Or do you need to hide that an end carrier exists? I don't have insurance for when i act as a broker. My trucks are covered for cargo.
 
Henry said:
Isn't it easier to use the end carriers insurance? Or do you need to hide that an end carrier exists? I don't have insurance for when i act as a broker. My trucks are covered for cargo.
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Hi Henry, depending on your insurance provider - you may already have “contingent cargo” on your policy. Some companies add it on via endorsement, some built into the wordings.

The exposure is still there. Imagine how pissed your customer would be upon realizing the carrier you hired, failed to disclose a vehicle to the insurer/broker? The insurer denies the claim and you now need to do the song and dance to try and save that relationship. While you can’t be held liable for that mishap, your customer I’m sure would feel much better knowing there was a safe guard in place to protect them (ie: contingent cargo).
 
Henry, if the carrier you give your freight to fails to keep his insurance in good standing, I.e. fails to make his premium payment etc., and there is an accident and/or freight claim, you, as the freight broker, could be in a serious problem. Having contingency cargo insurance protects brokers inthis instance. Something you should have if you don’t already. If you are not familiar with products such as these, you and or your boss should do some investigating.
 
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loaders said:
Henry, if the carrier you give your freight to fails to keep his insurance in good standing, I.e. fails to make his premium payment etc., and there is an accident and/or freight claim, you, as the freight broker, could be in a serious problem. Having contingency cargo insurance protects brokers inthis instance. Something you should have if you don’t already. If you are not familiar with products such as these, you and or your boss should do some investigating.
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Alright. I did not know that. I thought when carriers and the insurance supplied me with proof , as we are named as an insured, they would have to advise me in writing.
I will let my owners know right away. Even though i am on vacation.
 
Henry, sometimes people are not truthful and /or honest. If you are a manager at your firm, managing and controlling risk should be one of your most important functions. You and your boss should look into any product that helps in those efforts and contingency cargo insurance is certainly one of them.
 
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I agree... unless you have very deep pockets and don't mind losing alot of money occasionally, then risk minimization needs to be front and center to everything you do.
 
Thank you. I think we are under an incorrect assumption then. We believed that the insurance company had to notify us in writing if the carrier no longer held insurance.

Thanks for your info.
 
They will, but will it be before or after the accident? The point here is that most carriers are up standing companies that play by the rules. For the few that aren’t, you have insurance.
 
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loaders said:
They will, but will it be before or after the accident? The point here is that most carriers are up standing companies that play by the rules. For the few that aren’t, you have insurance.
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They will “endeavour” that is a legal way that’s been tested in court to basically say “we’ll do our best!”

But brokers add on certificate holders and I can tell u from experience, none of the top tier brokers would normally send this.
 
^^^ He's right. Happened to us many years ago. We were insured with one company and had to get an extension, then cancelled that company and went to another broker and insurance company. Neither the first company or broker ever notified anyone of the cancellation.
 
Anyone using ''International Sureties'' out of New Orleans for there bond. They are offering coverage for $750 usd for the year, through Aspen America Ins. Too good to be true or am I being ripped by my current agent for $3300 cdn
 
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