Claims

[grasshopper]

If a claim arises for even the smallest infraction, why are the bonding companies so quick to drop your bond and side with the person who submitted the claim? It seems freight brokers are being strangled here.

[don jipping]

Typically when 1 claim comes in, a bunch are soon to follow. This is what is known as a run on the bond or trust.

Insurance companies generally do not have a cash deposit from the broker so they are setting themselves up for a 10k payout and will cancel the bond with the FMCSA immediatly to prevent further bleeding. Once the claim has been investigated and settled, they may refile the coverage for the broker.
In short, they tend to shoot 1st and ask questions later.

The BMC-85 Broker Trust Fund has the brokers $ to guarantee the trust and therefore will investigate 1st and POSSIBLY shoot later.

75% of todays freight brokers use the trust as opposed to the bond for the above reason. Not to discount the broker bond, as it does have some benefits. It is a matter of your choice as to what makes you feel comfortable.

don

[Admin]

Originally Posted by don jipping

The BMC-85 Broker Trust Fund has the brokers $ to guarantee the trust and therefore will investigate 1st and POSSIBLY shoot later.

Of course they are less trigger happy. They are holding the freight brokers money!

Originally Posted by don jipping

75% of todays freight brokers use the trust as opposed to the bond for the above reason. Not to discount the broker bond, as it does have some benefits. It is a matter of your choice as to what makes you feel comfortable.

Your statistic may be accurate (where did you find it?), but the reasoning is not.

The only reason to use the BMC-85 Trust Fund over the BMC-84 Surety Bond is if you cannot get the bond in a standard program. Most agencies simply do not have the proper markets to place freight broker bonds since most bonding companies do not write them.

One can apply for the BMC-84 surety bond within minutes using our agency's online quote system.

[grasshopper]

Is there a standard amount that a company will put into this trust fund? What is the minimum?

[don jipping]

Originally Posted by Admin

Of course they are less trigger happy. They are holding the freight brokers money!



Your statistic may be accurate (where did you find it?), but the reasoning is not.

The only reason to use the BMC-85 Trust Fund over the BMC-84 Surety Bond is if you cannot get the bond in a standard program. Most agencies simply do not have the proper markets to place freight broker bonds since most bonding companies do not write them.

One can apply for the BMC-84 surety bond within minutes using our agency's online quote system.

Maybe I should have said "1 of the reasons". A broker is more likely to have his compliance put in jeopardy if the bonding company is going to submit a cancel notice to the FMCSA when the 1st claim comes in. Once a brokers bond is cancelled, it is even harder to place his bond with another company.

Like you stated, because the Trust provider is holding the $, they are less likely to cancel the coverage, thus, less chance of putting authority in jeopardy.

In reference to my stats, they have been compiled from daily FMCSA reports since 2005 of brokers who have been granted authority.

Hope this clarifys my earlier post.

Don

[Admin]

Great stats Don! Thanks for sharing.

Just out of curiousity, how long does it take to setup a BMC-85 from start to finish?

[don jipping]

It really varies, if the broker is local, we can file same day, otherwise we have to rely on next day delivery of doc's and next day return of signed doc's(3 days)

As an authorized USDOT filer of BMC-85's, we must have properly signed paperwork to file.

For a new broker authority to be actually activated, it is generally 5-7 calender days from filing of trust for authority to be activated by the FMCSA.

Don