Freight broker surety bonds are purchased from authorized bond dealers by freight broker companies. A freight broker is a person who serves as a liaison between an authorized freight carrier and a company that wants to ship goods. A freight broker purchases surety bonds, as a form of insurance, and arranges the shipment. The surety bonds guarantee that both the shipper and the owner of the goods complete their obligations required in the deal.
Freight broker surety bonds have three main components. The oblige is the entity requiring the bonding; which is the freight broker. The principal person is the person performing the obligations stated in the bond, which generally refers to both the party handling the freight and the owner of the freight. The third component is the bond company that sells the surety bonds. This is the entity that guarantees the freight security bond.
All businesses operating as a transport or freight broker must purchase freight broker surety bonds, according to the Federal Motor Carrier Safety Administration, FMCSA. Many people refer to these bonds as Interstate Commerce Commission, ICC, bonds because this is what they were previously called. Freight brokers also must follow any other applicable rules set forth by the FMCSA.
The person who needs freight shipped is protected by using a freight broker. The freight broker takes on the responsibility of ensuring that the company moving the freight will fully complete all duties he is hired for. The broker also ensures that the owner of the goods fulfills any part of the contract he is required to complete. By using a freight broker, both parties in the contract are protected and his job is to determine the needs of both parties and have the action completed.
In return for providing services and arranging for the shipment of freight, brokers earn a commission. A freight broker is generally hired by a freight carrier company. This company hires the broker, who is insured by surety bonds. The broker’s job is to find goods for the freight company to ship.