What is a Transportation Bond?

A transportation bond is a form of insurance that guarantees payment on shipments. It is very similar to a freight broker bond (BMC-84 bond).  A freight broker bond is a form of insurance that is required by the FMCSA and protects against fraud or unethical actions by a anyone operating as a transportation broker. Some may be allowed to use a BMC-85 trust fund instead of a freight broker bond.

Before transportation brokers purchase a surety bond from an agency, they must submit themselves to a credit check, have their application approved, and go through other screening processes.

Surety Bond Definition: Millions of American businesses need permits or licenses to operate: contractors, auto dealers, mortgage brokers and even health spa operators to name just a few. Many of these businesses are required to post a bond, usually with the State, a licensing agency or the entity that is contracting the work, before being allowed to operate.

Compliance, License & Permit bonds are the hundreds of different bonds that licensing entities, usually a State or a municipality, require prior to issuing a business license. They are required to ensure the person or business obtaining the license complies with the terms of that license and the laws

Surety bonds are usually confused for insurance. It is important to realize that they are very different in the way they work and how they are underwritten.

A surety bond is a contract. There are three parties involved. The obligee is the party that is requiring the bond. The principal is the party that will perform the contractual obligation. Finally, the surety bond provider is the party that will be insuring the obligee that the principal will perform the obligations. While the bond issuer will pay the obligee in the event of a claim, it is important to know that the principal is responsible for the damages and is required to repay the bond issuer.

TFS can help you with all bonds and insurance that you need to run your transportation and logistics business.  We would be happy to guide you through all the steps and to answer any questions that you have.  Call 850.433.2294 or email us at in**@tf*****.com or you can contact our customer service team at @kevin or @d-russell right in the eTruckBook forum.  https://www.etruckbook.com/activity/ – Register for a FREE account if you are not already a member!




Post by Alyson Stasek

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