Got a Surety Bond Claim? Here’s What You Can Expect
If you work in the freight industry, you need to stay on top of a lot of things—communicating with shippers and carriers, processing orders, researching the market for even more cost-efficient ways to do business, and the list goes on.
However, all of these are pleasant tasks compared to dealing with a freight claim when one comes in. Almost every broker has had a claim filed against them at least once in their career, but if you are still new to the industry and have little experience dealing with claimants, this post may do you good. Read on to find out what you can expect when someone files a claim against your company.
What Is a Freight Claim?
A claim, in essence, is based upon a breach of contract by the freight broker or forwarder. It is a demand in writing for a certain amount of money, which contains sufficient information to identify the shipment received by the carrier within time limits specified in the Bill of Lading contract.
The Bill of Lading is a legal document between the shipper and the carrier of a particular good, detailing the type, quantity and destination of the good. The Bill of Lading also serves as a receipt of shipment when the good is delivered to the predetermined destination.
As a freight broker, a claim against you may be filed by either the shipper, the owner of the good, the consignee, or the carrier company you are using.
- A shipper or the end customer can file a freight claim against you due to shortage, loss, damage (apparent or concealed), and delay of cargo.
- The trucking company you have employed can also file a claim against you if you have breached your agreement with them. For example, if you have been negligent and have not paid them on time or in full, they will have grounds to file a claim against you.
What Documents Should Be Included in a Claim?
First off, in order for a claimant to have grounds for filing a claim he/she needs to establish three things:
- The carrier received the freight in good condition at the origin.
- The freight was short or damaged when received at the destination.
- The estimated monetary amount of the loss or damage.
After having established these three things, the claimant needs to include the following documents with the claim:
- Original bill of lading or a certified copy—it serves as proof of shipment.
- Original invoice displaying value of goods—it verifies that the claimed amount does not exceed the terms of sale. Discounts need to be noted, as well.
- Copy of the proof of delivery notating delivery exceptions.
- Salvage value or damage allowance.
- Repair invoice from repairing organization.
- Photos of the damaged goods.
If some of this information is missing, the claim may be declined.
When Can a Freight Claim Be Filed?
A claimant is obligated to file within 9 months of delivery in order for the claim to be valid. This goes for both damaged goods and lost shipments. If the cargo was shipped internationally, then the limitations differ, depending on which country the freight has been shipped from.
Carriers are expected to acknowledge that a claim has been filed within 30 days.
The majority of claims are concluded within sixty 60 days.
What Happens Once a Freight Claim Is Filed?
Once a claim has been filed against you, your freight broker surety bond kicks in. The bond is that important document, which you had to obtain in order to get a freight broker or forwarder license.
As a freight broker, you are regulated and licensed by the Federal Motor Carrier Safety Administration (FMCSA). This is where a claimant would go to find the surety bond provider which processed your bond. Their details can be found next to your freight broker company’s name on the FMCSA website.
Once they have found this information, they usually get in touch directly with your surety bond provider. The claimant will be asked to send all of the documentation, which we mentioned above, in order to give the surety company proof of your misconduct. If you have indeed broken your contract, then your surety bond provider will get in touch with you and notify you.
Depending on the amount you need to repay, the money can be taken directly from the premium you have paid to get bonded or, if it exceeds it, your surety provider will repay the claimant. Later, you will be asked to pay back the bond provider.
The Bottom Line
In conclusion, freight claims get filed all the time. As a freight broker, you may not even be at fault. Due to poor weather conditions or careless truckers, shipments often can get damaged or lost. This is why obtaining a freight surety bond is crucial to your business.
You can get one from a surety bond agency, like Lance Surety Bonds. With us, you can get bonded in all 50 states. We offer our clients an exclusive $75,000 BMC-84 Program which does not require collateral. And you can get bonded with us even if your credit score is less than perfect.
Don’t waste time insuring your business, since you never know when a claim may arrive at your door. Apply online to get bonded today!
Latest posts by Vic Lance (see all)
- How to Get an Alabama Contractors License - August 22, 2017
- Time to Renew Your Florida Mobile Home and Recreational Vehicle Dealer Bond for 2017 - August 14, 2017
- The Ultimate Freight Broker Bond Renewal Guide - August 14, 2017