Broker Bond Question

When I last checked, brokers were not required to get a surety bond. I checked with my insurance company which I carry contingent cargo and with the banks and none of them knew how to go about doing this.

I also checked with trucking association as the broker certificate became useless a few years ago !.....

also... I have never been asked in 5 yrs of business by a carrier to have a surety bond. If I did get this, would all payments not have to go through this and paid from this to the carrier before I saw my share ? have tried to get info. on this for years and to no avail.

lucky I pay all my carriers on time I guess.....
 
Are you talking about the bond for your load broker's license? If so, and you are based in Ontario (or the US), yes you are required to have a bond to get a license.
About the paying part, if you are licensed, you are required to set up a trust fund so that when ABC Manufacturing pays you it goes in that trust fund and you subsequently pay XYZ Carriers from that trust fund. Whatever is left over from the transaction gets paid to TheFriendlyBroker, Inc.'s general chequing account from which you pay your water, heat, hydro, rent, payroll, etc.
 
What does using my name have to do with anything. The purpose of this board is to be able to weed out people that aren't paying, are double brokering, etc....

As mentioned, I did check on this and was told something different than what you stated. I am merely telling you what I was told and at the same time, interested in finding out about this as I was looking to do this from day one, and wasn't able to based on info. i had received.

Can anyone tell me the costs of this and what insurance company they use that will set up the trust accounts /
 
Ontario no longer requires a broker to have a surety bond. The only requirement is to have a trust account which can be set-up through your bank just like any other business account. If you are registered as a broker in the US, you still need a surety bond which can be obtained through your insurance company for a nominal fee. Mr. Ludwig's comments as to the workings of the trust account are correct. However, he fails to mention that if the broker is not paid by his customer for 45-60+ days, the payment to the carrier can be delayed by that same length of time. No money in - no money out. It would be my suggestion that carriers ask their brokers;
1) Do you abide by the present Ontario regulations and maintain a trust account?
2) If they do, will they ignore the intention of the trust account and pay the freight charges in 30 days, or another agreed term.
My company does maintain a trust account and yes, we ignore its purpose and pay our carriers in 30 days, regardless if we have received the funds from our customer. I believe you will find that most reputable brokers follow this same procedure.
 
You don't need an "official" trust account

You don't need an "official" trust account to be in compliance. You have what is called a constructive trust. Basically, it's just a liability that you have to keep track of. It's the difference between what you have in the bank and what you owe your carriers. You as the owner have a personal liability for this amount.

P.S. - All you carriers that broker loads.... you have the same liability under this law.
 
Manitoba Moose,

If you are looking for payment from a US broker and need to file on their bond:

1. Go to http://li-public.fmcsa.dot.gov/
2. Find the carrier, and view who their bond company is
3. Contact the bond company and tell them you wish to file a claim (they will provide you with the necessary form)

What will happen will be one of three things:

1. you will receive payment directly from the broker immediately, because they don't want to lose their bond.
2. you will receive payment from the bond company, or
3. the bond has been exhausted (ususally 10k), and no more payments will be issued against that bond.

Filing on a bond is first come, first serve. If a US broker has not paid within 60 days, let them know you will be filing on the their bond.

If none of these work, contact the shipper demanding payment (duplicate, if already paid to broker)...as the BOL is a binding contract between the shipper and carrier, NOT the broker.

Hope this helps.
 
From my experience, I find that some of these bonding companies are borderline crooks themselves. Safeco is very good and they co-work claims with a large insurance company in Canada, on a first come, first serve basis. I had another that tried to prorate the miles to pay as a percentage on only the miles in the States. Others will string you along and never pay.

Policing by the FMCSA of the bonding companies is pathetic. In the past, I have collected on TSS Trans-Net, Compass, RTD Cargo.
 
For an update, we did manage to file on their broker bondand are awwaiting their official response...

Questions were raised as to whether or not a bond is required. After doing exhaustive searching and a million questions later, here's what I found.

If you only broker freight in Canada (Intra) from and to a Canadian point, you do not need a broker's license.

If you are going to broker freight into or out of the U.S., then you need a broker MC permit as well as a minimum $10,000 Surety Bond.

There are literally hundreds, if not thousands of Canadian brokers and carriers out there that DO NOT have a bond or broker MC for that matter and they don't seem to give a sh** or don't understand the ramifications of not being properly licensed.

If something happens, God forbid, to a load that they brokered out and they are not covered, whats their insurance company going to tell them? I would hate to see a company or in a lot of cases a family lose everything they have for the sake of a few hundred dollars in brokerage fees.

Am I wrong in this information??
 
First, the governments are not interesting in enforcement of load brokers (Provincial, Canadian or US). Second, the US surety bond is only there to "protect" unpaid carriers to the value of the bond, $10,000 minimum (and usually maximum). Thirdly, the bond provides no protection against any other claims.

Many prudent brokers will carry cargo contingency insurance which addresses Moose's last paragraph, but it is not a license requirement. It also will revert back to the actual carrier's cargo insurance maximum, so if you have a $400,000 contingency cargo limit and use a carrier with only $100,000 cargo limit, your secondary coverage may stop at $100,000.00 and not $400,000 as you may think. Also if you are a carrier who also brokers freight, and you did not touch the freight, then only the actual carrier's cargo insurance responds - you do not have coverage under your own cargo plicy unless you have a contingency cargo covergae ryder.

I have not addressed the PL and PD liability of brokers where the actual carrier ends up in an accident - as in the $24 million jury award to the plaintiffs in the CH Robinson (as broker) judgment.

Finally
 
You must log in or register to reply here.
Top Bottom