A number of transportation industry stakeholders have been pushing for an increased freight broker surety bond amount for quite some time. This past Friday, the U.S. House and U.S. Senate conference committee finally passed the highway transportation bill it had been working on for months — a bill that increased the minimum freight broker surety bond amount from $10,000 to $75,000. Freight brokers must obtain these surety bonds before they can be legally licensed to work in the country.
The committee also included other surety-related provisions in the bill:
- Freight forwarders will now need surety bonds as well
- Surety providers will need to inform the U.S. Department of Transportation of any surety cancellation
- If a broker or forwarder should fail, surety providers have to publicly advertise for claims for the 60 days that follow the notification of failure or surety cancellation
The purpose of the increased surety amount is to help curb scamming and other fraudulent activity in the freight brokering industry. One setback, though, is it could hurt brokers’ ability to obtain the bond. Because so many claims are made against surety companies for this bond type, they were already hesitant to issue them for just $10,000. Backing a risky bond for $75,000 will cause even more hesitation for underwriters, which means stricter qualifications for applicants.
According to Overdrive Online, the Owner-Operator Independent Drivers Association and the Transportation Intermediaries Association supported raising the bond minimum to $100,000. Conversely, smaller brokers with the Association of Independent Property Brokers and Agents, who were more likely be hurt by the increase, favored a $25,000 bond minimum. In the end, the committee compromised by settling on the minimum $75,000 amount.
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