US Surety Bonds

[OLD GUY]

We did some work for a company called Fair Freight Logistics out of Calgary, the credit was N/A but i saw they had an active US Surety bond for $75,000 so we took the load. Forty five days later we hadn't been paid and we were getting nowhere with them, I filed a claim on the active surety bond in January 2024. On March 23rd 2024 the Surety Bond for Fair Freight was cancelled by the Insurance company.

On June 1st I received notification from the insurance company that the $75,000 bond for Fair Freight had been exhausted by claims they received prior to our claim in January 2024, my question is why was the surety bond still active until March 2024. What recourse do we have against the Insurance provider?

I know there are a lot of smart experienced people on this site, I need some direction on how to proceed. Insurance companies have contingency insurance for unforeseen situations, do i keep harassing them or are we screwed?

thank you

 

[MLCAR]

never dealt with this type of situation and it doesn't sound like a straight forward process. Fastest way would be reaching out to the Shipper & Receiver to get paid for the move.

 

[OLD GUY]

never dealt with this type of situation and it doesn't sound like a straight forward process. Fastest way would be reaching out to the Shipper & Receiver to get paid for the move.

we already took the customer from them but they only have one or two loads a month so it will take a very long time to recover the $4,500 we lost.

 

[MLCAR]

I would'ev gotten paid first for the load in question before taking any freight from them directly. My .2 cents.

 

[OLD GUY]

The customer we now have has 750 stores across Canada, its early days and we don't have much from them yet but our foot is in the door. If i'd chased them for the money we would have an enemy instead of a customer. I get your point but i have 35 years in the business and always try to play the long game.......I'm not always right lol

 

[MLCAR]

The customer we now have has 750 stores across Canada, its early days and we don't have much from them yet but our foot is in the door. If i'd chased them for the money we would have an enemy instead of a customer. I get your point but i have 35 years in the business and always try to play the long game.......I'm not always right lol

well I think you answered your own question lol, its a tough pill to swallow but if the customer now works with you in a high capacity, think of it as a "finders fee" lol Use the situation to build the relationship it may just work out in your favor. My experience with surety claims is limited but one would imagine, the amount of red tape they'll have laid out in front of your $4500.00

 

[PackRat]

We did some work for a company called Fair Freight Logistics out of Calgary, the credit was N/A but i saw they had an active US Surety bond for $75,000 so we took the load. Forty five days later we hadn't been paid and we were getting nowhere with them, I filed a claim on the active surety bond in January 2024. On March 23rd 2024 the Surety Bond for Fair Freight was cancelled by the Insurance company.

On June 1st I received notification from the insurance company that the $75,000 bond for Fair Freight had been exhausted by claims they received prior to our claim in January 2024, my question is why was the surety bond still active until March 2024. What recourse do we have against the Insurance provider?

I know there are a lot of smart experienced people on this site, I need some direction on how to proceed. Insurance companies have contingency insurance for unforeseen situations, do i keep harassing them or are we screwed?

thank you

You're only course of action is to continue hounding them. They'll keep saying now it's exhausted (paid out) and then when you say it was still active they can/may bring in the publisher of the website that showed it as still current. And they it's ultimately what is going to happen if you pursue it....lawyers and litigation....which will be way more than your 4500 bucks....so...I know this doesn't help...but think this is where you're at. Sorry!
PR

 

[Jim L]

Are you talking about this FAIR FREIGHT LOGISTICS below? If so, you probably do not have the right one as this is one from Pennsylvania. I could not find one based out of Calgary on the FMCSA.

The bond stays in place until the insurance lapses, or the insurance company pulls the insurance. The insurance company is only on the hook for 75K max and usually for the whole amount all the time. They don't care how many claims come through - the first 75K usually get paid.

The rules changed on Jan 25, 2024. After that date, any claims to the surety must be addressed within 14 days by the broker. If not addressed there will be an immediate suspension to the Broker's FMCSA authority because the funds were drawn down to below 75K. In my experience it takes a lot longer than that to even file the claim but it's a start. Most likely the funds were depleted before that date.

Your only recourse now, if you have the correct bonding facility, is to demand the surety to review it further and provide you proof. If they do not you may need to request 'interpleader proceedings'. This is a last straw kind of deal where you ask the FMCSA to reach out and ask them to ensure compliancy of the surety. Nobody wants that. I don't have a clue on how to start one.