What Is a Railway Company Surety Bond?
In some cases, railroad transporters are required to obtain a railway company surety bond. This is a type of commercial bond, which is required by, most notably, the Kansas City Southern Railway Company and the Texas Burlington Northern Santa Fe (BNSF) Railway Company.
The goal of the surety bond is to ensure that railroad transporters who operate on the infrastructure of such railway companies comply with all applicable regulations. In case you transgress from your legal obligations, you may end up with a claim against your surety bond. This is how harmed parties can seek a fair reimbursement.
Your railway company surety bond works as a three-party contract. Your business is the principal of the bond. The railway company is the obligee that requires the bond. The surety is the third party that provides you with a bond.
Questions about Railway Company Surety Bond
In which states do you need to post this surety bond?
The Burlington Northern Santa Fe Railway Company, based in Texas, requires businesses to post a $10,000 surety bond if they engage in transporting rail-owned or controlled equipment at BNSF’s facilities.
Kansas City, Missouri
The Missouri-based Kansas City Southern Railway Company requires railroad transporters that use its network to post a $10,000 surety bond. It is a prerequisite to signing its Intermodal Interchange and Facilities Access Agreement.
What are the railway company surety bond costs?
In order to get bonded, you have to cover only a small fraction of the $10,000 surety bond that you have to post. Your surety bond cost is thus different from the required bond amount. The bond premium is usually 1% and 5% of the required amount, in case your finances are stable.
When you apply with a surety, it has to examine your personal and business financials to assess the bonding risk involved. The most important factors that affect your bond cost are your personal credit score, business financials, and assets and liquidity. The more solid your overall profile is, the smaller your bond premium is likely to be.
|Surety bond name||Surety bond amount||Above 700||Between 650-699||Between 600-649||Below 599|
|Kansas City Southern Railway Company and Texas BNSF Railway Company bond||$10,000||$100-$150||$100-$250||$250-$500||$500-$1,000|
What happens if I have bad credit?
Even if your finances are problematic, you can still get bonded with Lance Surety Bonds. We operate our Bad Credit Surety Bonds program for applicants struggling with issues such as low credit scores, tax liens, bankruptcies, and civil judgements.
The usual bad credit bond rates are in the range of 5% and 10%. The higher price is due to the increased bonding risk. With us, however, you can still get a top bonding option. We work with numerous A-rated, T-listed surety companies, so we can shop around for you.
How do I get this bonded?
In case you’d like to learn more about the bonding process, you can review our in-depth How to Get Bonded page. It contains the most essential details that you’d need.
Do you need assistance with your bond application? Just contact us at (877) 514-5146. Lance Surety Bonds’ specialists are here to help.