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Understanding What A Surety Bond Is

What's in this article?
  1. New Surety Bond Requirements & Map-21
  2. What Do These Changes Mean For The Auto Shipping Industry?
  3. Motor Carriers
  4. Brokers
  5. Further Resources
Understanding A Surety Bond

Essentially, a surety bond guarantees completion of a contracted service in the event that the contractor does not hold up their end of the bargain. What this does is assure the auto transporter of compensation if they are not fully paid for the service they provide, or the terms or the contract are not upheld by the broker.

A surety bond, which may also be called a performance bond, is a form of consumer protection in that it serves as “insurance” against the job not being finished or a broker that doesn’t play by the rules. It also protects drivers from shady business practices by questionable auto transport brokers. A new law called the Moving Ahead for Progress in the 21st Century (or MAP-21) has significantly increased the minimum surety bond requirements, as well as the penalty against brokers that aren’t operating in line with the new regulations.

New Surety Bond Requirements & MAP-21

As of Oct. 1, 2013, auto transport brokers must carry a surety bond of $75,000, rather than the $10,000 amount that had previously been required. These changes are part of the MAP-21 legislation passed in 2012 that aims to improve safety and accountability within the transportation industry. Here are the main points of the new law as the state by the Federal Motor Carrier Safety Administration:

  • A higher barrier to entry into the business
  • Maintain the highest safety standards for carriers and drivers
  • Monitor and remove drivers, carriers, and vehicles that are unsafe

For those who have not made the change to be compliant with the new law, there is a grace period of 60 days (ending Dec. 1) in which you may still qualify. If qualification is not met during this 60 day phase-in period, brokers run the risk of having their licenses revoked by the FMCSA.

If the $75,000 surety bond is not meet by the Dec. 1 deadline, brokers and freight forwarders must then use a trust to meet the requirement, in which case the actual cash amount is needed, rather than just collateral as in the case of the surety bond.

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What Do These Changes Mean For the Auto Shipping Industry?

The idea behind the new requirements are that the higher barrier to entry will eliminate some of the more questionable auto transport brokers from joining the business. Additionally, the new law creates more oversight in the transportation industry as it inches toward firmer standards of regulations.

At least, in theory, the changes created by the new surety bond requirements would help protect auto carriers from unscrupulous brokers that take advantage of the lack of regulation within the auto transport industry. This should help combat the practice of brokers not paying carriers the full amount they are owed, or even worse, disappearing completely and leaving the carrier with no course of action to receive payment.

The new law doesn’t just apply to brokers, however. Carriers will also have to make some adjustments to stay compliant with the new regulations. Here’s a breakdown of the main points of MAP-21:

Auto-Transport Motor Carriers Companies

Motor Carriers

  • Carriers that subcontract work to other companies will need to acquire a broker’s license
  • A database will be kept that maintains records of drug and alcohol abuse by drivers
  • An electronic logging device will be required for all interstate carriers
  • New restrictions on time worked and breaks taken
  • Only companies with operating authority can provide brokerage services
  • Brokers and freight forwarders must obtain the $75,000 surety bond or face having their license revoked

Both brokers and carriers face stiff financial penalties if they are found to be noncompliant with the new regulations.

Further Resources

Rules and Regulations - Transport industry rules, regulations and resources from the FMCSA.

National Transportation Safety Board - The NTSB conducts transportation investigations and studies.

Surety Bonds - Information and resources about surety bonds from the U.S. Small Business Association.

Motor Carriers Companies
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Joe Webster began his journey in the auto transport field by attending the University of Southern California (USC), where he graduated with a Bachelor of Business Marketing. 

After college, he started his career in the auto transport industry from the bottom up and has done virtually every job there is to do at A-1 Auto Transport, including but not limited to: Truck Driver, Dispatch, Sales, PR, Bookkeeping, Transport Planner, Transport Manager, International Transport Manager, Brokering, Customer Service, and Marketing. Working with his mentor Tony Taylor, Joe Webster has learned the ins and outs of this industry which is largely misunderstood. 

With over 30 years experience in the industry, we've been helping people ship their vehicles, motorcycles, RV's, heavy equipment, household goods and more across the country or overseas without a hitch. Ask us anything.

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Mylene Rutllant
It’s my number one pick in auto shipping to this day.

Due to the nature of my work, I must relocate every couple of years to where my company needs me. Because of this, I’ve tested several moving and auto transport companies over the years.

And my choice in terms of auto transport has to be A1 Auto Transport. It’s in the name, but also in the quality with which they do their jobs. I’ve never had a problem with this company.

The only time my shipment was delayed was during winter when a snowstorm closed down all the major roads. And they still found an alternative and got my car delivered before roads got unstuck.

When I moved to West Virginia, they picked up my car the very day I called them. I like to think they take special care of me considering all the business I’ve sent them. I’ll continue to support A1 Auto Transport. It’s my number one pick in auto shipping to this day.

Luis Rodriguez
You have my full support and recommendation!

I considered selling my car when I moved to Washington. It was old and rusty, but I grew attached to it. So, I called a couple companies to transport it to my new home, but they both fell through.

The first one couldn’t decide on a schedule. He would constantly change the pickup date till I got frustrated and canceled. The second was insufferable, very rude on the phone, even worse in person.

They started picking a part my car asking me why I still have it. If that’s their opinion of my vehicle, how can I trust they’ll take care of it? If something happened midway, why wouldn’t they just blame it on the car instead of paying up?

So, I cancelled this company as well and turned to A1 Auto Transport. From the get go, they were very different from my past options. Their website was very professional and up to date, full of useful information. I requested a quote using their online form, and I got an email response within an hour. Surprisingly fast!

If I didn’t know any better, I would’ve thought they were lacking customers, but the email spoke for itself. In just one email, everything I needed to know was there, including a contact number I could use to get more information or confirm the transport.

I called and got things rolling. I was very pleased with the driver. He followed standard procedure and represented his company well. Can’t remember his name, but props to him!

The car arrived in Washington 6 days later in excellent condition. From what I understand, the transport was delayed a bit by a storm, but since the time window was 4-6 days from the beginning, I don’t really care. You have my full support and recommendation!

Testimonial by Cristine Benoit
Cristine Benoit
I can safely say this is a legit company that will get the job done.

There are a lot of options for auto transport these days, which surprisingly makes it harder to find a good company. I received more than 10 offers to ship my car, but I couldn’t decide on any of them.

After doing some research, I got even more worried reading about all the scams and accidents that can happen. But, I have work to do and couldn’t afford to drive my newly purchased Mini Cooper all the way to Virginia.

Fortunately, I made the right choice with A1 Auto Transport. They are very good at their jobs. I spent more than an hour drilling Joe with various questions, and he never once lost his patience. He saw I was interested, so he bore with me until I was satisfied. The driver was also very courteous and my car was intact on arrival. I couldn’t have asked for more.

By the way, the price we first agreed on stayed the same. There were no delays or unexpected “surprises.” I can safely say this is a legit company that will get the job done.

David Osallo
We give A1 Auto Transport a big 10 out of 10!

We give A1 Auto Transport a big 10 out of 10! We chose them to move our car from California to Vermont, since we needed professionals.

We were abroad during the transport, so the transport was a bit tricky. The driver had to pick it up from storage on short notice and get it to its destination within at most 10 days. I was happy to note it arrived sooner. We got it 3 days early, right when we got home to pick it up. It made getting around way easier. Awesome service!

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A-1 Auto Transport is a disclosed agent for the following shipping companies:

Trans Global Auto Logistics, Inc.
3401 E Randol Mill Rd
Arlington, TX 76011
NO. 018191NF
CFR Rinkens
15501 Texaco Avenue
Paramount, CA 90723
NO. 013055NF
ABC Worldwide LLC
2840 NW 2nd Ave #105
Boca Raton, FL 33431
NO. 025472F
CSI Logistics
435 Division Street
Elizabeth, NJ 07201
FMC 22206
Intl Cargo
45 Campus drive
Edison, NJ 08837
NO. 17858N
ShipYourCarNow LLC
1160 South Rogers Circle Suite 1
Boca Raton, FL 33487
NO. 025646
Merco Air & Ocean Cargo, Inc.
6 Fir Way
Cooper City, FL 33026
NO. 021869F
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