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This bond type is actually a general term that stands for several types of broker bonds. It’s a surety bond and works as a form of insurance that protects customers from illegal or unethical actions a broker may perform. All broker bonds are unique and come with different rates and requirements.
Each broker bond has three parties involved, just like any other type of surety bond. The principal or the broker is a person or an organization required to obtain the bond. The obligee is the entity that requires the bond from the principal. There’s also a surety, an organization that issues the bond and guarantees financially to an obligee that the principal will follow the terms in the contract.
One of the main types of broker bonds is a freight broker bond. It is legally required from freight brokers for honorable work performance. Customers and the government require financial support in case freight brokers fail to honor contracts, pay truck drivers, or deliver loads for clients.
The cost of the broker bond might vary depending on the type and agreement. Each type has specific rates and requirements, which can influence the final price. Usually, the principal needs to pay the bond amount and the premium, which is calculated from the bond amount and typically costs from 1% to 12% of the total price.
The premium could also vary depending on the credit score of the principal. Freight broker bond, for example, is set to $75,000 and the premium goes anywhere between $900 and $2000.
Broker bonds are required by the federal government, states, and other municipalities. They guarantee legal work performance and that a broker will honor the terms set in the surety bond. Broker bonds are, therefore, meant to cover potential financial losses to clients in case brokers fail to comply with the agreement.
Bonding Solutions is a national surety agency specializing in broker bonds. With decades of surety knowledge and experience, we are the team to call in order to get you the bond you need at an affordable rate. We often have the ability to underwrite bonds within 24 hours of your request. In order to apply for a broker bond, click the button below to fill out our short, online application or call our office directly at (877) 841-6745Get Started