Auto Shipping Glossary: Bonded
The term “bonded” is bandied about a lot in the auto transport industry, but do you know what it actually is? Few customers would be able to say exactly what it is, which is understandable as truthfully it’s not as important to a customer as it is to a carrier – though that doesn’t mean it can’t have an impact on your vehicle shipment. A bond is required for any auto transport broker to transport vehicles. Known as a performance bond or surety bond, it’s designed to make sure that auto transport brokers properly pay their carriers for any loads that they assign to a carrier on behalf of their customers. Prior to October 1, 2013 the minimum bond amount was $10,000; now, however, it is $75,000. The increase has been both lauded and criticized by brokers and carriers, with brokers claiming it will squeeze many smaller auto transport brokers out of the market while auto transport carriers are claiming it will help prevent fraud and protect carriers from unscrupulous brokers.
Though every auto transport broker needs to be bonded, not all of them actually need it in the sense that not all brokers take pre-paid freight. Bonds are great insurance for auto transport carriers as they allow them to more easily recoup their losses in case the broker doesn’t pay on a billed order. This is in stark contrast to a cash-on-delivery order, in which the customer pays the broker a deposit and the carrier their fee upon receipt of the vehicle at the delivery point. We’ve spoken about this issue before on this blog, but it’s worthy to note again that pre-paid freight typically moves slower than freight paying COD because less auto transporters are willing to take pre-paid freight precisely because of the uncertainty of getting paid that requires a broker bond in the first place. Some brokers do only pre-paid freight and have been in business for many years; if they can make it work that’s all well and good, but most small brokers have a hard time doing pre-paid orders because of how much cash goes out of their coffers every week; doing COD-only is beneficial as it limits how much money is going out, though it does mean less money coming in as only the deposit is taken. Never book with a company that is not bonded regardless of how the carrier gets paid; not only is it dangerous to book with a broker without a bond, but you can rest assured that it is quite illegal for them to operate without a bond and no legitimate carrier would take their freight anyway.
If you are interested in getting quotes to transport your vehicle, you can fill out our free online auto transport quote request form to get up to ten free quotes from reputable and reliable auto transporters who can help you with any type of transportation service you need. You can also call our toll-free telephone number to speak to one of our helpful representatives, who can answer any questions you have as well as take your information over the phone to get you in contact with multiple auto transport companies who can help you get from wherever it is you are shipping from to wherever it is you need to get to.