The Federal Maritime Commission (FMC) regulates international oceanic transportation. FMC requires Ocean Transportation Intermediaries (OTI’s) to show proof of financial strength through a FMC-48 surety bond, or OTI bond. The Federal Maritime Commission Bond ensures the protection of the public and the government from any possible harm caused by an OTI. OTI Freight Forwarders (OFF’s), as well as non-vessel-operating carriers (NVOCC’s), also need bonds in order to prove financial strength.
OTI bonds consist of three parties: the FMC, the Ocean Transportation Intermediaries, and the surety company. The Federal Maritime Commission requires the bond. If the intermediary harms a person or group, acting against the provisions of the bond, the harmed party may file a claim against the bond. If the claim is valid, the surety company will pay the claim up to the full bond amount. As the principal, the OTI must then repay the surety company for the paid claim.
The FMC sets the bond amount. If someone files a claim on the bond, the bond amount serves as the highest amount claimable. The FMC set the required bond amount at $50,000.
The bond premium, or cost, generally runs 1-3% bond amount with good credit. The premium covers the cost of issuing the bond and keeping the bond active. The FMC may issue additional costs to file the bond.
If paid annually, the bond remains in force until cancelled or until the end of the principle’s license term. If the principle cancels the bond, they must notify the state 30 days before the cancellation date.
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