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You may have encountered the terms ‘licensed and bonded’ when looking for vehicle shipping, renovations, or mechanics. When dealing with any type of hauler or contractor that has to do with your automobile and shipping, you need to ensure they are licensed and bonded. Having a licensed and bonded carrier company ensures that you’re covered for the unexpected.
What is a Surety Bond and what does it do?
Essentially surety bonds guarantee the completion of a contracted service in the event that the contractor fails to maintain their part of the agreement. This provides the car transporter with reimbursement if they are not totally compensated for the service they provided or if the broker fails to meet the end of the contract.
A surety bond, also known as a performance bond, is a type of consumer protection. It acts as “insurance” against the project not being completed or a broker that was asked to ship car to Miami that does not follow the guidelines. It also protects drivers from dubious business activities by vehicle transport brokers.
Contract bonds and commercial bonds are the two most common forms of surety bonds. Contract bonds ensure the completion of a certain contract.
What do License and Permit Bonds do?
Permission and authorization Bonds are a sort of surety bond needed by a city, county, or state for a person or business to get a license or authorization. These bonds assure compliance with the underlying state statute, law, local ordinance, or regulation.
Auto transport brokers must now post a $75,000 surety bond instead of the $10,000 required previously. These modifications are part of the MAP-21 Act of 2012, which aims to improve transportation safety and accountability.
The new rules are intended to discourage some of the more problematic vehicle transport brokers from entering the sector by raising the entry hurdle. Furthermore, the new law increases control in the transportation industry as it moves toward stricter regulatory requirements.
How New Regulations Keep You Covered
In theory, the additional surety bond requirements would help safeguard auto carriers from unscrupulous brokers who take advantage of the industry’s lack of oversight. This could help to combat the practice of brokers failing to pay carriers the whole amount owed, or worse, disappearing completely, leaving the carrier with little options for payment.
The new regulation, however, does not simply apply to brokers. Certain improvements will also be required of carriers in order to comply with the new regulations. Carriers who subcontract work to other organizations must obtain a broker’s license, a database of driver drug and alcohol use (https://www.nhtsa.gov/research-data/national-driver-register-ndr) will be maintained, all interstate transporters will be required to use an electronic logging device, and new time limits for working and taking breaks will be implemented.
Why Are There So Many Different Kinds of Surety Bonds?
There are several sorts of bonds available to safeguard the public against firms that may engage in unethical or unlawful behavior. Regulators indicate a heightened likelihood of wrongdoing in industries where a bond is necessary to get a corporate license. This is not because these companies are involved in criminal activity; rather, they involve large commercial transactions, such as the purchase of a car or enrollment in a private school.
The sorts of claims that can be made against a bond differ based on the industry. As a result, bond requirements vary widely between industries and regions. Surety bonds available in a number of formats that protect clients while making it easier for new businesses to get started.
Contract Bonds Hold Companies Accountable for Completing the Job
Contract bonds hold one party liable if the requirements set by another party are not met. A surety bond of this sort is typically required for building projects, but it can also be included in other contractual agreements.
Contract bonds are one of the most prevalent types of surety bonds since they promote the seamless execution of a contract and hold the wrongdoer liable if something goes wrong during your transportation.
Performance Bonds Make Sure the Job is Completed
A performance bond is one sort of contract bond. A performance bond is a surety bond provided by an insurance provider to guarantee that a contractor successfully completes a project. For example, a contractor may be required to deposit a Performance Bond in the name of a customer for whom they are constructing a structure.
If the contractor fails to complete the assignment in accordance with the contract conditions, the customer is guaranteed monetary compensation up to the amount of the Bond. In most circumstances, Surety will hire a substitute contractor to finish the job. This is very important in auto transport because the job must be completed in order for you to get your vehicle.
What are Commercial Bonds?
Many types of businesses and professions must post a commercial bond before the state recognizes them as a lawful business entity. A commercial bond is usually required before the state can issue a license.
Commercial bond requirements are used by states to ensure that professionals follow legal and ethical rules and suffer repercussions if they do not.
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