The Ultimate Freight Broker Bond Renewal Guide
If you’re working in the transportation industry, you know how important it is to keep your FMCSA freight broker license and freight broker bond up-to-date. Staying compliant means staying in business.
That’s why keeping track of the deadline for your surety bond renewal is key. Getting started as early as possible is crucial for ensuring your brokerage can keep its operations running without a break.
As renewing your bond can be a hassle, we’ve compiled thorough answers to the most frequently asked questions that freight brokers have as the renewal time gets near.
Wherever you are in your license cycle, these useful tips will help you plan your surety bond renewal better. This will allow you to stay on top of your game, so you can truly focus on developing your brokerage business. You can also check out the video below for a quick summary.
When should I renew my freight broker bond in 2019?
Typically, payment of the bond premium needs to get through at the latest 30 days before your bond expires. The reason for the earlier payment deadline is the bond cancellation policy of the FMCSA. Surety companies need to provide a written notice to the FMCSA 30 days before a bond is about to get canceled. This clause is also included in the freight broker bond language.
The expiration date of your freight broker bond varies. However, for the vast majority of brokers it is usually October 1, as this was the date set by the FMCSA in 2013 when the value of the bond was increased to $75,000. Then all current brokers had to renew their bond before October 1, 2013. Since bonds are valid for one year, brokers who stayed in business have to renew their bond around that time each year. For everyone else, the deadline is simply one year after they first got their freight broker bond.
The closer we get to October, thousands of freight brokers will be trying to get their bonds. This can cause unexpected delays and complications and put you at risk of bond cancellation if you postpone renewal until the very last moment. This is why we always advise dealers to start their bond renewal early.
What happens if I miss the payment renewal deadline?
If you miss the payment renewal deadline, the bond is cancelled. Thus, your brokerage’s compliance is jeopardized.
In case this happens, you can try to get your bond reinstated. However, this is a difficult and time-consuming process. There are no guarantees that you would manage to complete it before your renewal deadline. This could mean that you have to stop your operations until you’ve settled the issue.
How does the FMCSA know that my bond was renewed?
The freight broker bond filing process is done electronically, taking away all burden from the broker. Once it has been accepted by the FMCSA, it becomes visible to everyone in the FMCSA’s Licensing and Insurance Database, including the shippers and motor carriers that you work with.
The freight broker bond is continuous. It will appear as active unless your surety provider specifically cancels it because of failing to pay your renewal or having unpaid claims on it. As long as such cancellation has not been done, your bond is operational with the FMCSA.
Do I need a hard copy of the bond?
You don’t need to worry about obtaining a hard copy of your freight broker bond. Your surety will file electronically your BMC-84 form with the FMCSA. You can verify that your bond is accepted in the FMCSA’s Licensing and Insurance Database.
In case you do want to keep a hard copy for your records along with the electronic filing, you can request one from your surety provider.
How can I lower my freight broker bond cost?
When you apply for a freight broker bond, the surety examines your personal credit score, as well as business management, professional experience and overall finances. This evaluation is needed to judge the risk involved with guaranteeing for your brokering business in front of the FMCSA.
The better your credit and overall performance are, the lower the freight broker bond cost will be. That’s why it’s possible to decrease the bond price over time. Besides, just by earning experience in the field you are likely to pay less, as this is a factor sureties consider.
The most effective way to reduce the costs is to work on improving your credit score and clearing any negative items from your history, such as liens, judgments and other problematic records. It’s also important to demonstrate to your surety what steps you have taken to improve your credit, as well as to showcase your financial statements.
Another important factor for reducing your bond cost is choosing carefully your surety. Make sure you settle for an established, solid provider that has access to multiple surety companies. Then it can shop around for you to get you the best rates, even if you have to get a renewal with bad credit.
Is it possible that my freight broker bond cost increases from year to year?
As explained in the previous question, the price you pay for your bond can and sometimes does change from year to year.
If you focus on running your business diligently and make sure to work on your finances and overall stability, your bond price is not likely to grow. Surety companies are making efforts to keep rates at their current levels, unless it is really unavoidable, such as when legislation changes require the bond amount hikes.
If you feel like your premium is too high, you can also talk to your surety bond expert and ask them for help on strengthening your application.
With these most common questions about the freight broker bond renewal answered, you’ll hopefully have an easier and cheaper renewal procedure. In any case, getting well acquainted with potential pitfalls and best practices means you’re well prepared to handle your licensing and bonding.
What else is new for freight brokers in 2019?
There are a few important developments for freight brokers in 2019.
A couple of states increased their minimum wage requirements, including Alaska, Arizona, Arkansas, California, Colorado, Delaware, District of Columbia, Florida, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, New Jersey, Ohio, Oregon, Rhode Island, South Dakota, Vermont and Washington. Brokers who operate in more than one state should take note of the minimum criteria in each territory in order to avoid potential legal problems.
Another significant development is the upcoming deadline for compliance with the Drug and Alcohol Clearinghouse. By January 2020, all truck drivers have to comply with it, which is likely to reduce the number of eligible people. Employers will have to consult the clearinghouse database for drug and alcohol violations prior to hiring a driver, as well as during the annual verifications of current drivers.
If you still have questions about your freight broker bond, feel free to leave a comment below or simply contact one of our freight broker bond experts at (877)-514-5146.
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