Construction Broker Bond
Frequently Asked Questions
Question 1. What does the newly enacted Vehicle Code section 34510.5 (part of AB 145) require?
Answer. The Governor signed AB 145 on September 29, 2010, which requires that a broker of construction trucking services shall not furnish construction transportation services to any construction project unless it has secured a surety bond of not less than $15,000 executed by an admitted surety insurer.
Question 2. Who is a Broker in Construction Trucking Services?
Answer. A Broker in Construction Trucking Services or Construction Broker is defined in CA Civil Code section 3322 as:
“any person, excluding a licensed contractor, that, as a principal or agent, arranges for transportation services to be provided by an independent contractor motor carrier of property in dump truck equipment and who is responsible for paying the transportation charges of the motor carrier.
A “motor carrier of property in dump truck equipment” means a motor carrier of property permitted by the Department of Motor Vehicles (DMV) that hauls any type of construction commodity or material in dump truck equipment. The law does not apply to certain construction materials production facilities or companies who do not accept a fee for arranging transporting their products. Basically, if you are a broker of construction material and handle other truckers’ money regardless of whether or not you own or lease your own trucks and or trailers, you will be required to obtain this bond.
Question 3. If I’m a Broker, when will I need a Bond and for what value?
Answer. As of January 1st, 2011, a new law in California (AB 145) will require a Truck Broker of Construction Services to obtain a $15,000 “AB 145 Truck Broker Bond”. If you do not obtain this bond, you may be subject to a $5,000 fine.
Question 4. What state agency is going to enforce the $5,000 fine aspect of the Construction Broker Bond’s requirements?
Answer. Since it establishes a misdemeanor offense, it would be up to a law enforcement agency to cite the violator for the misdemeanor and impose the fine. Most likely this would be done by a local District Attorney’s Office, but it could also be done by the Attorney General’s Office, or a city attorney (in those cities where they have enough resources to prosecute misdemeanors instead of just kicking them over to the DA’s office.)
Question 5. Who or what state agency is the Construction Broker Bond going to be sent to?
Answer. Although we are working with the DMV, at this time no state or federal agency is responsible for oversight and or reporting to the general public or industry. A broker should present the bond upon the demand of a law enforcement agency. It is also suggested that brokers provide their contractor and shipper customers a copy of this Bond as good business practice.
Question 6. How do I get this type of bond and from who?
Answer. Western States Trucking Association’s (WSTA) endorsed insurance agent PFA Transportation Insurance & Surety Services has arranged an exclusive preferred program through an admitted A+ rated surety carrier for this mandatory bond. Our exclusive program will allow you access to these special rates.
Call PFA at 800-595-2615, ask for Pam or Dani.
