Five Types of Frequent Transportation Bond Requirements

If you're involved in the transportation industry, securing a transportation surety bond could be a necessary step to ensure financial responsibility and legal operation. Merchants Bonding Company provides surety bond coverage for multiple types of transportation bonds, helping you secure the right bond for your specific needs.

Federal Freight Broker Bonds: Safeguarding Freight Transactions

The Federal Motor Carrier Safety Administration (FMCSA) mandates the use of freight broker bonds for the brokering of freight. These bonds, also referred to as property broker bonds, play a pivotal role in protecting both the freight owner and the shipping company. Known by various names such as ICC, FMCSA, or BMC-84 bonds, they are a prerequisite for all interstate motor carriers.

The intricacies of freight broker bonds extend beyond being a regulatory requirement. The bond acts as a guarantee for the proper handling and delivery of freight, ensuring a secure and trustworthy transaction process.

To comply with the FMCSA, $75,000 in surety bond coverage is required.

The Department of Defense (DOD)

The Surface Deployment and Distribution Command (SDDC), overseen by the Department of Defense (DOD), necessitates two crucial bonds: personal property carrier bonds and freight carrier bonds.

Personal Property Carrier Bonds

The personal property carrier bond guarantees the secure transportation of military personal property between military bases. The domestic bond is fixed at $50,000 and the international bond is fixed at $150,000.

Freight Carrier Bonds

The freight carrier bond secures the performance and fulfillment of carrier obligations to deliver DOD freight. The bond amount can vary in the amounts of $25,000, $50,000 or $100,000.

Fuel Tax Bonds

Fuel tax bonds serve as financial guarantees, assuring the timely payment of taxes and fees to state governments by fuel sellers, manufacturers, and other related entities. These bonds are a vital component in maintaining regulatory compliance for various stakeholders in the fuel industry.

NCP - Service Transportation Bonds

Transportation service businesses, including school bus operators, may require non-construction performance (NCP) bonds. These bonds, aligned with the performance contract, guarantee the principle will perform a specific service, at a set price, for an agreed upon time period.

Oversize Permit Bonds

Oversize permit bonds protect the highways and infrastructure that a large commercial operator may use. They guarantee that the commercial operator will be held financially responsible for any damage of roadways, bridges, or other infrastructure while using permitted routes. They may be needed at the state or local municipality level and may also be known as superheavy bonds or overweight permit bonds.

How do I get a Surety Bond?

Surety bonds are issued by Merchants Bonding Company (Mutual) through insurance agents. Contact your local insurance agent or use our Find an Agent tool. They will guide you through the process, informing you of what documents and information are needed by the surety (Merchants Bonding Company (Mutual)) to underwrite your bond.

What is a Surety Bond?

A surety bond is a three-party agreement that ensures the fulfillment of a commitment or contract. For instance, the surety (Merchants Bonding Company (Mutual)) may provide a surety bond to a construction company (the principal) which is required by the state (the obligee), ensuring the construction company will perform the duties as outlined in the contract. In bonding the construction company, Merchants assumes the risk should the company default or not fulfill their contract. A surety bond is different from traditional insurance in that the principal is obligated to pay back the surety company on any claims paid out.

All information provided is subject to change.