NVOCC Bond Overview
The NVOCC bond, also known as the OTI bond, is a surety bond that all ocean freight forwarders (OFFs) and non-vessel-operating common carriers (NVOCCs) must obtain upon applying for an OTI license in the United States. NVOCCs who aren’t based in the U.S. do not have to obtain a license, but will still need to post a bond.
The bond is required by the FMC, and its purpose is to guarantee that bonded OTIs will comply with all regulations applicable to their activities.
NVOCC bonds are required of the following parties:
- U.S.-based and licensed OFFs and NVOCCs
- non-U.S. based and licensed NVOCCs
- unlicensed non-U.S. based NVOCCs
Like every surety bond, the NVOCC bond offers protection to shippers and carriers partnering with OTIs. It protects them from those OTIs who do not comply with FMC rules, or are dishonest in their operations.
There are three sides to the NVOCC surety bond agreement: the bond principal (the NVOCC or OFF), the bond obligee (the FMC) requesting the bond, and the surety bond company that extends its financial backing and guarantee.
A claim can be made against the bond by anyone working with a bonded OTI who has been treated dishonestly and has suffered financial harm. The surety must then respond to the bond claim by investigating it, and–if the claim is proven– compensating the claimant up to the full bond amount. The bonded OTI must repay the surety for all claims expenses. Therefore, bond principals should always seek to avoid claims.
Here is a summary of the bond requirements:
Surety Bond Name: NVOCC Bond / OTI Bond
Surety Bond Amount: Starts at $50,000 but varies depending on type of business being bonded, see below
Bureau of Certification and Licensing
Federal Maritime Commission
Washington, DC. 20573
Surety Bond Principal: NVOCCs and OFFs applying for OTI license with the FMC
Expiration Date: Continuous Bond
See the sections below for more information about types of NVOCC bonds, bond cost, and how to apply for a bond.
Types of NVOCC Bonds
There are different types of NVOCC bonds, depending on the type of license that you are applying for. These are:
- $50,000 bond for OFFs (+$10,000 for every additional unincorporated U.S. branch office)
- $75,000 bond for licensed U.S. based and non-U.S. based NVOCCs (+$10,000 for every additional unincorporated U.S. branch office)
- $150,000 bond or other financial guarantee for non-licensed, non-U.S. based NVOCCs
- $96,000 bond for NVOCCs serving in the U.S.-China trade (includes regular $75,000 bond + additional $21,000 for Optional Rider to cover Chinese government financial responsibility requirements)
NVOCC Bond Cost
The total amount of a bond is the amount that the surety may pay as compensation, if a claim is made against the bond. The bond cost, in comparison, is only a small percentage of the total amount. This is called your bond premium.
Your premium is determined by sureties on the basis of your financial stability and health. First among the factors determining bond cost is your personal credit score. The higher your score, the lower your premium. To get a fuller picture, sureties also look at your personal and business financial statements, your asset profile, and even your work experience.
With a perfect or near-perfect credit score you can expect to get a standard market rate on your bond, which means a rate between 1% and 5% ofstyle="align:center"
|Surety Bond Cost by Credit Score|
|Surety Bond Amount||Above 700||Between 650-699||Between 600-649||Below 599|
Another factor influencing the cost of your bond is your choice of surety bond agency. Bryant Surety Bonds can offer its clients some of the lowest rates on these bonds, thanks to the surety bond companies we work with. All of these companies are A-rated and T-listed, which means that your bond is guaranteed to be accepted by the FMC.
To apply for your bond simply fill in the online application form. You can also call us at 866.450.3412 if you would like to speak to one of our bond experts, ask them questions or request assistance.
Read our Surety Bond Cost page for more useful tips about bond cost, and what you can do to reduce your premium over time.
Bad Credit Bonds
A bad credit score can sometimes be an obstruction to getting a surety bond. Luckily, with our Bad Credit Program, applicants who have a low credit score can still get bonded with no hassle. While rates under this program are higher, they typically don’t exceed 10%-15% of the total bond amount.
As with all our bonds, the ones under this program are provided by the same surety companies, guaranteeing that you will get the lowest rate possible, and the same strong backing.
How to Get Your NVOCC Bond
To get your bond, simply apply online and we’ll take care of the rest. While approval times vary, processing is usually fast, so you can expect to hear from us and get your bond quote in no time.
Don’t forget you can always call us at 866.450.3412 if you want to speak to an expert or receive assistance with your application. We look forward to hearing from you.