[Surety Guy]

Originally Posted by guest

I feel as though you are incorrect in the difference between bonds and trust funds. You state that a question about whether or not people would feel more comfortable with a large bonding company rather then putting up their own working capital. I feel as though people would feel comfortable knowing that the company they go with is going to do the right thing when it comes to claims. Having put up your own working capital would make that company more enclined to pay for the freight hauled then not.

True, if I were a client of the freight hauler I would prefer for their own capital to be at stake in the event of a claim. However, I was stating what is best if you are the freight hauler, not their clients.

Originally Posted by guest

If you go with a large bonding company sure you are guaranteed the $10,000.00 surety bond but what happens when you have to pay out the whole $10,000.00 for claims filed, they then have to come up with the whole amount to pay it back to you.

I think you are confused as to how a bond works...Similar to auto insurance, you pay a premium for the sureties guarantee, you do not pay the amount of the bond. Do you pay $1,000,000 annually for your million dollar coverage on your car insurance? No, nor do you pay the surety $10,000 for the bond.

Originally Posted by guest

With a Trust Fund at least with making monthly payments they have money in the Trust fund and if we need to pay out the whole amount they only need to come up with what is outstanding.

self insuring a business is a risky plan no matter how you look at it. The broker is in effect saying I will perform per the terms of our contract and it is guaranteed by $10,000 of their working capital. In the event of a claim, the $10,000 can be wiped out with no legal council backing them up in the event of an invalid claim.

Originally Posted by guest

We are also choosey about who we give Trust Funds to in any business you have to know who your customers are. We don't make them jump through hoops and give up every thing personal and business about themselves. You are asking for financials from the business and personal.

I have yet to hear of a surety sharing anyone's financials with any third parties. I don't think asking for business financials and a personal statement is that much when they are making a $10,000 guarantee on the performance of a business they don't know. Obviously, there would be little required of the applicant for a trust fund, there is no risk for the bank. This is why I recommend the trust fund to my clients that can't obtain the bond.

Originally Posted by guest

When trying to get bonded you ask for every thing short of their first born.

I don't think a one page application and personal and business financials is everything, but their first born.

Originally Posted by guest

The fact that with a Trust Fund when the companies are making monthly payments at least we know that they are still around and doing business.

how is this an advantage for a broker choosing between the two options? I thought that's what we were discussing.

Originally Posted by guest

With a Trust Fund you are not just a file number you are a business and we know who you are we treat our customers on a personal level.

Your not just a file number, you are a file number that is an interest earning account for their company

Originally Posted by guest

The ability to insure yourself in any way makes you a better business owner all together because you learn the you don't want to have to spend that money because it is yours. Therefore the claim level is lower.

I agree that it will make them a better freight broker since the risk is on their hands, but that doesn't necessarily make it smarter business decision, as they could be out $10,000!

Originally Posted by guest

The question that I would like to ask is why would you tell someone with good or bad credit to go and get a BMC-85 for the first year or so and then get a surety bond?

Because there are no sureties willing to write this high claim bond for a new business. Would you make a $10,000 guarantee on the performance of a stranger that is starting a new company if all you knew about them is that they pay their bills late? This is not our decision since we are the agency, not the surety. However, I agree with their underwriting and would practice using the sme guidelines.

Originally Posted by guest

If I was someone that you told that to I would never come back to talk to you again because in one year I would be fully funded at $10,000.00 and would be doing business and have nothing to worry about.

Well you might want to worry about a claim in which case you can say goodbye to your $10,000. Without a surety, you have no one on your side to fight invalid claims.

Originally Posted by guest

New or Old companies are making the right decision to control their own company buy putting themselves in charge of their money and the way that it is handled.

(you meant "by" not "buy")

I don't understand how having $10,000 frozen in account for the duration of your business being active puts you in control...Fortunatly, with the bond you don't need to come up with $10,000.


I am not saying the trust fund is a bad option, but it is certainly not the better of the two if you can obtain the bond. The only reason I ever recommend the trust fund is if you can't obtain the bond, which many can not. However, for the businesses that can get the bond, it is rediculous to self insure your company using the trust fund.

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