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BMC-84 Freight Broker Bond Guide

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What is a Freight Broker Bond?

The BMC-84 (also known as a freight broker surety bond) is a specific type of surety bond that protects shippers/motor carriers, which is required by the Federal Motor Carrier Association (FMCSA) in order to obtain a brokerage authority.

How Does a Freight Broker Bond Work?

If you don’t follow FMCSA rules, claims can be filed against your bond which you’re responsible to pay.

Having a BMC-84 bond helps ensure that you as the broker abide by the Federal Motor Carrier Safety Administration (FMCSA) rules and regulations. Should you fail to do so, a claim can be made against your bond. You are then responsible to repay the claim amount.

As an example, freight brokers who do not pay motor carriers in a timely fashion may have a claim brought against their bond. This can be a costly issue for licensed freight brokers, and it can put your brokerage at risk. For these reasons, it is essential to understand what a BMC-84 is and how it works in practice.

What Does a Freight Broker Bond Cost?

The cost of a freight broker bond ranges from $750 to $9,000. The pricing is calculated as a small percentage of the full $75,000 bond amount, typically between one to 12%. The percentage you pay as your bond rate is based on your financial strength, including your personal credit.

If you are ready for a bond quote, you can apply online to get a free quote. You can also read more about freight broker bond costs here. To understand more about pricing and the bonding process, you might want to check out our most frequently asked surety bond questions.

How to Get a Freight Broker Bond (BMC-84)

Now that you know what a freight broker bond is and how important it is to your brokerage business, you need to understand the process for getting your bond. If you’re starting a new freight brokerage, you'll need to register with the FMCSA in order to obtain your freight broker authority. You will also want to ensure you have a business plan in place.

Once registered, you’ll need to get a freight broker bond (BMC-84) from a bond company and ensure your bond gets filed with the FMCSA. You can get your free quote directly on our website.

You can also read our complete guide to getting your freight broker license for more detailed information. If you're unsure of where to get the proper training to become a freight broker, take a look at our top freight broker training schools.

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Freight Broker E-Book Guides

We have put together several free freight broker guides that cover the most essential information you'll need to know as a freight broker. Take a look at the topics covered in our e-book guides below:

Freight Broker Guides
  • How much it costs to become a broker
  • How to get your authority
  • The importance of training
  • How to get the proper training
  • How to leverage/find the right load boards

These e-book guides were created specifically with freight brokers in mind, and they provide all of the crucial information you need to help ensure your brokerage thrives in this competitive profession.

BMC-84 or BMC-85: What’s Right for You?

To meet the requirements of becoming a licensed freight broker, you have two options: obtaining a freight broker bond (BMC-84) or a trust fund (BMC-85). They both offer advantages and disadvantages depending on the needs of you and your brokerage. Read our detailed article to determine whether you should get a BMC-84 or BMC-85.

What Makes a Good Freight Broker Bond Company?

Several companies provide freight broker bonds, but not all are created equal. Find out what makes a good freight broker bond provider so you can save hundreds and avoid paying false bond claims.

Trust in Numbers: The Nation's Leading BMC-84 Provider

Our company is the nation’s largest provider of freight broker bonds in the U.S. In fact, we write twice as many bonds as our closest competitor. Why does this matter to you?

Our high volume of freight broker bonds written allows us to provide you the lowest rates in the industry and offer industry leading protection with a team of freight claim experts.

However, don't just take our word at face value. Take a look at the top freight broker bond providers chart below (statistics provided courtesy of FMCSA).

Your Bond is Worthless Without Strong Financial Backing

When you get a freight broker surety bond, a surety company is providing you a form of credit by guaranteeing that any potential claims caused by your freight brokerage will be paid. If you do cause bond claims, the surety will step in to pay them.

However, you are ultimately responsible for paying the surety back. With a freight broker bond, the surety company is guaranteeing your performance by backing you financially.

If the surety company who writes your bond is financially weak, this is a red flag that they may not have the cash to pay claims on their customers' bonds. The FMCSA will reject your bond, forcing you to buy another, and you will likely receive no refund for your rejected bond.

Don't run the risk of purchasing a worthless bond. Our agency's freight broker bonds are backed by one of the strongest (A+ rated by A.M. Best) and largest surety companies in the nation.

Dedicated Team to Help You Fight False Claims

The freight broker industry is filled with bond claims, but many of them are false. The high amount of false bond claims are largely due to slow payments to motor carriers who believe they are getting ripped off, while in reality the amount owed is often just delayed.

If you don't have support to refute false claims, money will be coming out of your pocket to pay them. Our agency has a team of claim specialists here to help you dispute and provide proof for bogus claims so you can avoid spending your hard-earned money needlessly. Keep in mind it is crucial that you work with an expert in the industry. Learn more about how to ensure you choose the proper bond company.

How Bond Claims Put Your Brokerage at Risk

You are responsible for paying bond claims in full, including legal expenses associated with a claim. This can be a substantial cost to you and your business. Additionally, a freight broker bond requires an indemnity agreement which effectively pledges your corporate and personal assets in the event of bond claims. The combination of covering legal costs and the need to utilize personal and business assets to pay for a claim puts your brokerage at steep financial risk.

Watch our video for an easy-to-understand explanation of how bond claims work. Unfortunately, most bond agencies won’t take the time to explain how bond claims can put you at risk and how you can avoid them. Your bond agency and bond agent should provide this valuable information. If they do not, consider working with an agency that has your best interest at heart.

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How to Save Money on Bond Claims

As mentioned, bond claims put your freight brokerage at risk. Your bond agency should be your first line of defense against bond claims. In order to avoid claims, simply follow FMCSA regulations and make sure to pay motor carriers when necessary.

Remember, you are responsible to pay for any bond claims that you cause. There is a significant number of false claims in the freight broker industry; learn how we can save you money on claims if they occur. If you need help understanding exactly what your bond guarantees you will and will not do, please contact a bond professional.

What Are the Freight Broker Insurance Requirements?

In addition to getting your freight broker bond, there are a few requirements you must meet if you'd like to become a freight broker. Take a look at the insurance-related requirements mandated by the FMCSA below:

Public Liability Insurance

Aside from the surety bond for freight brokers, motor carriers are required to get public liability insurance to insure against bodily injury, property and environmental damage.

BOC-3 Filing

Brokers and carriers will also need to file the BOC-3 form with the FMCSA. This form is required and designates process agents – a necessary component of operating a legal brokerage business.

Download Form BOC-3

If you'd like to avoid the extra paperwork, our company can handle your BOC-3 filing for you.

Unified Carrier Registration

You will also need to obtain your Unified Carrier Registration (UCR). The UCR system registers and collects fees from operators of vehicles engaged in interstate travel. For freight brokers, this requirement is relatively simple and inexpensive at only $76. If you are also a motor carrier, then your registration cost varies depending on the size of your fleet. In either case, you’ll need to re-register and pay the fee annually. Registering through this system can be done online at the UCR application website.

What Freight Broker Bond Amount Do You Need?

As of October 1st, 2013, freight brokers and forwarders are required to secure a $75,000 freight broker bond. However, highly-qualified freight brokers may also opt for an additional $25,000 in bond coverage to provide extra protection for their shippers and motor carriers. Learn more about how you can stand out from the freight broker crowd with an excess bond.

Why You Should Be Cautious With BMC-85 Trusts

As mentioned above, you can either get a freight broker bond or a trust fund to obtain a license for your brokerage. However, it’s crucial that you understand that not all trust funds meet FMCSA standards. In some cases, choosing the wrong trust fund can lead to losing thousands of dollars and ultimately harming your brokerage.

If your trust is not properly funded, you may not find out until it is too late. The FMCSA has shut down BMC-85 trustees in the past for only partially funding trusts, resulting in Federal indictments and leaving freight brokers scrambling to pay for a new bond or trust to remain in compliance. If you choose to go with the trust fund option, you should verify that you’re BMC-85 trust fund is acceptable and fully funded.

How to Verify Your BMC-85 Trust

If you select a trust to meet your licensing requirements, you need to make sure you are getting what you're paying for. The FMCSA declared that group trust funds are not an acceptable option. Therefore, if you are purchasing a BMC-85 trust fund and not providing $75,000 in cash collateral, you must provide an Irrevocable Letter of Credit (ILOC) to the trustee, or they must post the ILOC on your behalf. Here are the steps you need to take:

1

Obtain a copy of the ILOC (see: example ILOC)

2

Check the ILOC to ensure it specifically lists your company

3

Contact the bank backing the ILOC to confirm it is legitimate

4

Contact the state in which the bank is licensed to confirm its status

If the trustee refuses to provide you a copy of the ILOC, it should be a warning sign that you are not getting what you are paying for and the trustee may be at risk of getting shut down.

With a freight broker bond, you don't have to take the extra steps to ensure a surety bond is properly funded. This is already done for you by the Department of Insurance and third parties like A.M. Best. Bonding companies are given both a financial size category and financial stability grade by the rating agency. These ratings are used by the government to verify that everything is in place for you.

Get a FREE Freight Broker Bond Quote Today

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Frequent Questions

What does a freight broker bond cost?

Freight broker bonds are priced as a percentage of the $75,000 bond amount that’s required by the FMCSA. The percentage you pay, or your bond rate, is based on your personal credit and your financial strength. You can apply online to get an exact quote. Also, you can learn more about surety bond costs and how they are determined by reading our comprehensive pricing guide.

Will I qualify for the $75K bond?

In many cases, yes. We can approve nearly any freight broker or forwarder, even if credit is an issue. Also, no collateral is required as it is with a freight broker trust. Apply to get an instant approval. This is made possible by our high-risk market, which is exclusive to our agency. If you go to another agency, they will likely broker the bond through us, possibly costing you extra money and time.

What is the difference between the BMC-84 bond and the BMC-85 trust fund?

The BMC-84 is the form used for the surety bond option, which only costs a percentage of the required bond amount. Since you do not need to post collateral with the surety bond, this frees up working capital, improves your liquidity, and helps you operate a more financially sound business. A BMC-85 trust fund, on the other hand, is a form of security provided by you as the freight broker. You must pay a yearly fee, and place $75,000 in a trust account to cover future bond claims.

Is the BMC-84 surety bond the best option?

For most freight brokers, the answer is yes. The trust fund (BMC-85) ties up your money by requiring 100% collateral, while the bond only requires an annual payment which is a percentage of the bond amount. The bond also comes with a team of claim specialists that will assist you in fighting false claims, which is priceless since the freight broker business has a high frequency of false claims. Learn how your brokerage can stand out from the crowd with $100,000 excess bond coverage.

What is the required freight broker bond amount?

A $75,000 bond is required for licensed freight brokers. We strongly advise that all freight brokers are compliant before they continue operations so that they keep their authority and avoid unnecessary fines.

Where can I get a BMC-84 bond form?

Technically, there is no physical bond form, as it is an electronic bond filing which we will handle for you. However, you can take a look at the official FMCSA BMC-84 form that was previously used. Once your bond is filed by our team, you can view it on the FMCSA website.

What if a false claim is filed?

You must contact us immediately, as we have a team of claim specialists here to find a resolution for you. It is essential that you work with an expert in the surety industry to help avoid the costs of false claims. Learn more about how to ensure you choose the proper bond company.

Are you looking for a different type of bond?

You can take a look at our full list of license and permit bonds.


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