Single Source Blog - Surety News - Page 9

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

Freight brokers go through a federal registration process that results in the issuance of a freight broker operating authority by the Federal Motor Carrier Safety Administration (FMCSA). Learn more about what freight brokers do and what it takes to become one.

What Are the Steps in the Licensing Process?

This is what you�ll need to do in preparation for applying for your operating authority:

1. If you plan to open your own freight brokerage firm, you must set up a legal business entity and register it with the Arkansas Secretary of State and the Arkansas Department of Finance and Administration.
2. Decide which type of operating authority you will apply for��Broker of Household Goods,� �Broker of Property (except Household Goods),� or both.
3. Choose a process agent in every state where you will maintain an office or write contracts, or select a blanket process service company that can accept legal service on your behalf in any state. In either case, you (or your designated blanket agency) must complete a Form BOC-3�(Designation of Process Agents) and file it with FMCSA.
4. Buy a $75,000 freight broker bond (Form BMC-84) with FMCSA as the �obligee.� Alternatively, you can establish a Trust Fund Agreement (Form BMC-85), though few freight brokers are willing to tie up $75,000 in cash.

Now you�re ready to create an account on the Unified Registration System (URS) and complete the online application, upload required documents, and pay the $300 registration fee. When your payment has been accepted, URS will generate your MC number (MCN). You can use your MCN as proof of your successful registration until your operating authority documents arrive in the mail.

Why Is a Freight Broker Surety Bond Required?

In purchasing a BMC-84 freight broker you re guaranteeing that you will operate in full compliance with FMCSA regulations and that you will pay all valid claims resulting from any noncompliant action on your part that causes FMCSA or a shipper or carrier to incur monetary a financial loss.

How Are Freight Broker Bond Claims Paid?

In addition to FMCSA as the obligee, there are two other parties to a freight broker bond. The freight broker is known as the �principal,� and the bond�s guarantor is the �surety.� The terms of the surety bond agreement legally obligate the principal to pay all claims the surety finds to be valid. But as the guarantor, the surety typically will pay a claim up front and then be reimbursed by the principal. The surety can sue the principal if not reimbursed for the claim amount.

What Does It Cost?

If your personal credit score is good, you should pay an annual freight broker bond premium that is somewhere between two and four percent of the $75,000 bond amount. That�s because the risk that you will not repay the surety for claims paid on your behalf is considered to be low. A principal with lesser credit presents a greater risk to the surety and will pay a higher premium rate.

Our surety bond professionals will get you the freight broker (BMC-84) bond you need at a competitive rate.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

Obtaining an �operating authority� (which serves the same purpose as a license) is a prerequisite for operating as a freight broker in the United States. This operating authority is issued by the Federal Motor Carrier Safety Administration (FMCSA).

What Are the Steps in the Licensing Process?

All applications for a freight broker operating authority are submitted and processed through the Unified Registration System (URS). If you plan to open your own brokerage, you�ll need to establish a legal business entity and register it with the Arizona Secretary of State and the Arizona Department of Revenue. Whether you are going to launch your own firm or work as a freight broker for someone else�s brokerage, you�ll need to decide which type of operating authority to apply for��Broker of Household Goods,� �Broker of Property (except Household Goods),� or apply for both.

Every freight broker must also designate a process agent in every state where you will have an office or write contracts. Or you may choose a blanket process agent company that has agents in every state. All process agents must be listed on a single Form BOC-3�(Designation of Process Agents)that will be filed with FMCSA. If you opt for a blanket process agent company, they can prepare and file the form for you.

Additionally, every applicant for an operating authority must purchase a $75,000 freight broker bond (Form BMC-84) or provide FMCSA with a Trust Fund Agreement (Form BMC-85). The bond is the more popular option because it does not require tying up $75,000 in cash or credit.

Applications for a freight broker authority are entered into and submitted through the Unified Registration System (URS). As soon as you have completed your application and have paid the $300 registration fee, the system will automatically generate your MC number (MCN), but it takes about ten business days for your operating authority documents to arrive in the mail.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 bond guarantees a freight broker�s compliance with all FMCSA regulations and obligates the freight broker (the bond�s �principal�) to pay all valid claim against the bond resulting from their noncompliant behaviors.

The bond also indemnifies FMCSA (the bond�s �obligee,�) against liability for any financial harm experienced by the shippers and carriers that do business with a registered freight broker.

How Are Freight Broker Bond Claims Paid?

While the principal bears the full legal obligation to pay all valid claims, the bond�s guarantor (the �surety�) has guaranteed the payment of claims. So the surety typically pays a claim initially and then is reimbursed by the principal. If repayment is not forthcoming, the surety will take legal action against the principal to recover the claim amount plus legal fees.

What Does It Cost?

To purchase a BMC-84 freight broker bond you�ll pay an annual premium that is a small percentage of the $75,000 bond amount. That premium rate is set by the surety through an underwriting process that focuses on the risk involved in paying claims on behalf of the principal and waiting to be reimbursed. The average premium rate for applicants with good credit, and therefore considered low risk, is in the range of 2% to 4%. Someone with lesser credit presents a greater risk to the surety and will be assigned a higher premium rate.

Our surety bond professionals will get you the freight broker (BMC-84) bond you need at a competitive rate.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

Anyone who will be working as a freight broker in Alabama will need to apply for and receive an �operating authority� from the Federal Motor Carrier Safety Administration (FMCSA). Click here to learn what freight brokers do and the procedure or becoming a freight broker anywhere in the country.

What Are the Steps in the Licensing Process?

Before you apply for your freight broker operating authority, you will need to decide whether you will be opening your own brokerage or working as a freight broker in a firm owned by someone else.

If you will be establishing your own freight brokerage, you�ll need to create a legal business entity and register it with the IRS, the Alabama Department of Revenue and the Alabama Secretary of State.

All prospective freight brokers must decide which of the two types of freight broker operating authority they will apply for: �Broker of Household Goods� or �Broker of Property (except Household Goods),� or both. They must also select a process agent in every state where they will have an office or write contracts. Alternatively, they may choose a blanket process agent company that can represent them in any state. If you choose a blanket agent, they can complete the required Form BOC-3�(Designation of Process Agents) for you and file it with FMCSA on your behalf. Otherwise, you’ll need to list all of your process agents on a single form and submit it with your application.

All freight brokers also are required to purchase a $75,000 freight broker bond (Form BMC-84). You have the option of providing FMCSA with a Trust Fund Agreement (Form BMC-85) instead of a bond, but most applicants don�t want to tie up that much cash.

When you have everything you need, sign in to the Unified Registration System (URS), follow the instructions for submitting your application, and pay the registration fee (currently $300). The system will generate your MC number (MCN) immediately as evidence of your operating authority. The operating authority documents will arrive in the mail within a few days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 surety bond is your guarantee to do business in compliance with FMCSA regulations and to pay all valid claims filed by shippers, carriers, and others financially harmed as a result of your violation of any of those regulations.

How Are Freight Broker Bond Claims Paid?

There are three parties to a BMC-84 freight broker bond, which is a legally binding contract among them. �FMCSA is the �obligee� requiring the bond. The freight broker is the �principal,� who is legally obligated to pay all valid claims. The bond�s guarantor is the �surety� and has guaranteed the payment of claims. Therefore, the surety will pay a claim initially and be reimbursed later by the principal. Failing to reimburse the surety can result in legal action against the principal.

What Does It Cost?

The annual premium for a BMC-84 freight broker bond is a small percentage of the $75,000 bond amount. That percentage is the premium rate, which the surety sets through an underwriting evaluation of the risk of not being repaid by the principal for claims paid on the principal�s behalf.

The primary consideration is the principal�s personal credit score. For the average bond applicant with good credit, the premium rate should be between 2% and 4%. A principal with a low credit score could be a greater risk to the surety and will pay a higher premium rate.

Our surety bond professionals will get you the freight broker (BMC-84) bond you need at a competitive rate.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

Freight brokers are licensed at the federal level, but the process is referred to as registration rather than licensing and the end result is an operating authority from the Federal Motor Carrier Safety Administration (FMCSA). Learn more about what freight brokers do and what it takes to become one.

What Are the Steps in the Licensing Process?

Here�s what you will need to do in preparation for applying for a freight broker operating authority:

1. Unless you plan to open your own freight brokerage, skip to #3 below. If you will be starting your own brokerage, you�ll first need to form a legal business entity and, unless it will be a sole proprietorship, register it with the California Secretary of State.
2. For taxation purposes, register your brokerage with the�IRSand the California Franchise Tax Board.
3. Decide which type of freight broker operating authority you will apply for: �Broker of Household Goods� or �Broker of Property (except Household Goods).� Many freight brokers apply for both.
4. You must designate a process agent in every state where you will have an office or write contracts. You have the option of choosing a blanket process agent company that can represent you in every state. List all of your designated process agents on a single Form BOC-3�(Designation of Process Agents) that you will submit to FMCSA. A blanket process agent company can complete and file the form for you.
5. Purchase a $75,000 freight broker bond (Form BMC-84) or set up a Trust Fund Agreement (Form BMC-85). The bond is by far the more popular option with freight brokers because it doesn�t require tying up $75,000 that could otherwise be used as operating capital.

When you are ready, go ahead and complete the online application through the Unified Registration System (URS). At the end of the process, after you have paid the $300 registration fee, the system will generate your MC number (MCN), which is the evidence of your operating authority. Within 10 business days, you will receive the operating authority documents in the mail.

Why Is a Freight Broker Surety Bond Required?

The BMC-84 surety bond you purchase serves as your guarantee to do business in full compliance with FMCSA regulations and to pay all valid claims resulting from any noncompliance on your part. It provides financial protection for FMCSA (the �obligee� requiring the bond) as well as for shippers and carriers using your services.

How Are Freight Broker Bond Claims Paid?

The BMC-84 bond required by FMCSA (the bond�s �obligee�) is a legally binding three-party contract with a freight broker (the bond�s �principal�) and the bond�s guarantor (the �surety�). That contract legally obligates the principal to pay all valid claims. The surety has guaranteed the payment of claims and typically will pay a claim initially and be reimbursed within a certain time period by the principal. A principal who fails to repay that debt is likely to be sued by the surety and end up paying court costs and legal fees on top of the claim amount.

What Does It Cost?

Freight brokers usually choose to provide FMCSA with a BMC-84 bond rather than a BMC-85 trust fund because a surety bond can be purchased for an annual premium that is only a small percentage of the $75,000 bond amount. The surety determines what that percentage (the premium rate) will be based on an assessment of the risk that paying claims on behalf of the principal entails. That risk is measured largely by the principal�s personal credit score.

For those with good credit, which suggests a low risk to the surety, the premium rate will most likely be in the 2% to 4% neighborhood. Those with poor credit will pay a substantially higher premium rate.

Request a�convenient online quote today, or call and speak with one of our surety bond experts who can answer your questions about freight broker BMC-84 surety bonds.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

If you�re planning to work as a freight broker anywhere in the United States, you�ll need to obtain an �operating authority� from the Federal Motor Carrier Safety Administration (FMCSA).Click here to learn more about what freight brokers do and what it takes to become one.

What Are the Steps in the Licensing Process?

There are a few things you�ll need to do before you apply for your freight broker operating authority:

1. If you plan to work for a freight brokerage operated by someone else, skip to #3 below. If you will be launching your own freight brokerage, you�ll need to establish a legal business entity and register it with the Florida Department of State
2. You�ll also need to register your brokerage with the�IRSand the Florida Department of Revenue.
3. Decide which of the two types of freight broker operating authority you will apply for: �Broker of Household Goods� or �Broker of Property (except Household Goods).� If you like, you can apply for both.
4. Freight brokers must designate a process agent in every state where they maintain an office or write contracts. Or, they may choose a blanket process agent company that has agents in every state. List all of your chosen process agents on a single Form BOC-3�(Designation of Process Agents) to be filed with FMCSA. If you decide to use a blanket company, they can complete and file the form for you.
5. The last task to complete before starting your application is to purchase a $75,000 freight broker bond (Form BMC-84). Alternatively, you can provide FMCSA with a Trust Fund Agreement (Form BMC-85) if you don�t have a problem tying up $75,000 in cash.

When you have accomplished all of the steps above, access the Unified Registration System (URS) and follow the instructions. After submitting your completed application, and paying the registration fee (currently $300), you’ll get your MC number (MCN) immediately. This number is the proof of your operating authority. You should receive the actual documents in the mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

When you purchase a BMC-84 surety bond you are pledging to operate in compliance with FMCSA regulations and agreeing to pay all valid claims filed against the bond by shippers, carriers, and any others experiencing a financial loss as a result of your noncompliance.

How Are Freight Broker Bond Claims Paid?

The BMC-84 freight broker bond required by FMCSA (the bond�s �obligee�) is a legally binding contract that obligates the freight broker (the �principal�) to pay all valid claims. However, the bond�s guarantor (the �surety�) has guaranteed the payment of claims and will pay a claim initially and be repaid later by the principal. The surety can take legal action against a principal who fails to reimburse the surety for paying a claim on the principal�s behalf.

What Does It Cost?

To purchase and/or renew a BMC-84 freight broker bond you will pay an annual premium that is a small percentage of the $75,000 bond amount. The surety determines what that percentage, the premium rate, through an underwriting assessment of the risk of not being reimbursed for a claim paid on the principal�s behalf.

That assessment is based largely on the principal�s personal credit score. The average bond applicant with good credit can expect a premium rate in the range of 2% to 4%. A lower credit score suggests that the applicant presents a greater risk to the surety and warrants a higher premium rate.

Request a�convenient online quote today, or call and speak with one of our surety bond experts who can answer your questions about freight broker BMC-84 surety bonds.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

Who Needs a Freight Broker License?

Anyone planning to operate as a freight broker in the United States must first obtain an “operating authority” (which serves the same purpose as a license) from the Federal Motor Carrier Safety Administration (FMCSA).

What Are the Steps in the Licensing Process?

All freight broker operating authority applications are submitted and processed through the Unified Registration System (URS). There are a few things you�ll need to do in preparation for starting an application:

• If you plan to launch your own freight brokerage, you�ll first need to choose a legal structure, establish a legal business entity, and register it with the Texas�Secretary of State�s Office.
• You�ll also need to register your brokerage with the�IRSand the Texas�Comptroller of Public Accounts.
• There are two types of freight broker operating authority: �Broker of Household Goods� and �Broker of Property (except Household Goods).� Every freight broker needs to decide which one to apply for, or apply for both.
• You�ll also need to choose a process agent in every state where you will have an office or write contracts or a blanket process agent company that can represent you in any state. List all process agents on a single Form BOC-3�(Designation of Process Agents) to be filed with FMCSA. If you choose a blanket company, they can do this for you.
• Finally, purchase a $75,000 freight broker bond (Form BMC-84) or provide FMCSA with a Trust Fund Agreement (Form BMC-85), but that requires tying up $75,000 in cash or credit.

Now you�re ready to apply for a freight broker authority through the Unified Registration System (URS). Once you’ve competed the application, and have paid the registration fee (currently $300), URS will generate your MC number (MCN) immediately. Your operating authority documents should arrive by U.S. mail in about 10 business days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 freight broker bond provides financial protection for FMCSA, the bond�s �obligee,� and for the shippers and carriers that do business with you. The bond is a legally binding contract that guarantees your compliance with all FMCSA regulations. It also obligates you to pay all valid claims against the bond for damages caused by your noncompliance.

How Are Freight Broker Bond Claims Paid?

Although the freight broker (the �principal�) purchasing a BMC-84 bond is legally obligated to pay all valid claims, the bond�s guarantor (the �surety�) has guaranteed the payment of claims. So the usual practice is for the surety to pay a claim initially and then be reimbursed by the principal. Not repaying that debt can result in the surety suing the principal for the claim amount plus legal fees.

What Does It Cost?

The annual premium for a BMC-84 freight broker bond is a small percentage of the $75,000 bond amount. That percentage, the premium rate, is determined by the surety through an underwriting process. The surety�s main underwriting concern is the risk of not being repaid for claims paid on behalf of the principal. The best measure of that risk is the principal�s personal credit score.

The average premium rate for applicants with good credit is in the range of 2% to 4%. Someone with lesser credit presents a greater risk to the surety and will be assigned a higher premium rate.

Request a�convenient online quote today, or call and speak with one of our surety bond experts who can answer your questions about freight broker BMC-84 surety bonds.

Learn how to become licensed as a freight broker, and speak with an Single Source Insurance agent today about purchasing the BMC-84 bond you�ll need to operate as a freight broker.

What Do Freight Brokers Do?

Pretty much everything you own most likely came from somewhere else�another state, the other side of the country, or perhaps overseas, and a freight broker probably had a hand in getting it to you. That goes for the car in your driveway, the clothes in your closet, the television in your family room, and the food in your refrigerator and kitchen cabinets.

Freight brokers play an important role in the movement of cargo within the United States and between the United States and other countries. They don�t do the moving, but they make the transportation arrangements. They never take physical possession of cargo, and don�t normally ship under their own bills of lading. Freight brokers function entirely as intermediaries between shippers who have goods that need to be moved and the carriers who get those goods where they need to go.

Typically, a shipper will contact a freight broker about moving goods from one place to another. It could be a moving company that needs to transport a family�s household goods across country to their new home, a manufacturer shipping parts or raw materials to a factory, an importer shipping goods to a retail distribution center, or just about anything else. The freight broker will match up the shipper�s request to the network of carriers the broker works with or has vetted for reliability, negotiate the transportation rate, schedule the shipment, track the shipment while it is in transit, and make sure it reaches its destination.

How Do Freight Brokers and Freight Forwarders Differ?

Many people get confused about the differences between freight brokers and freight forwarders, and the two roles do have a lot in common. Both freight brokers and freight carriers make shipping arrangements and oversee the movement of freight. Both can manage the logistics of transporting cargo across international borders for importers and exporters, although freight brokers tend to operate primarily domestically, within the United States.

Freight forwarders play a more active role in preparing and shipping cargo. They may take physical possession of and responsibility for goods, warehouse them, and perhaps consolidate them with goods from other shippers to get better shipping rates, which freight brokers do not do. In fact, freight brokers rely on freight forwarders to do those things, although some freight brokers also operate as freight forwarders. It�s not uncommon for freight forwarders to own their own fleet of shipping containers that can be loaded with a shipper�s cargo or loaded onto trucks, cargo ships, or trains.

What Training Do Freight Brokers Need?

There are no specific educational or training requirements for becoming a freight broker, but the transportation industry and the movement of cargo across state lines and international borders are highly regulated. Consequently, most people seeking licensure as a freight broker will voluntarily seek formal training or take a job with a freight brokerage firm to learn through hands-on experience. There are freight broker training schools in every state, and many of them operate entirely online.

Who Issues Freight Broker Licenses?

Technically, freight brokers are registered, not licensed. They must register with the Federal Motor Carrier Safety Administration (FMCSA) to receive a “freight broker authority.” The proof of that authority is the MC (motor carrier) number issued by FMCSA.  Those who have never applied before must do so through the Unified Registration System.

In addition to meeting the federal registration requirements that apply to all freight brokers operating in the U.S., there may be some state-specific requirements to meet as well. You�ll need to consult the appropriate state office or agency that regulates interstate transportation and freight brokers in the state where your business is domiciled and learn what, if any, registration or licensing requirements may apply. You can access state-level contact information here.

What Are the Steps in the Registration Process?

Applying online actually is the final step in the registration process. There are a few things you�ll need to accomplish first.

Key Decisions

You�ll need to make a couple of key decisions before you begin the process of applying for a freight broker authority. The first decision is what legal structure you will establish for your business: individual or sole proprietor, partnership, or corporation. If you�re not familiar with the advantages and disadvantages of these options, it would be wise to talk to a legal or tax expert before choosing one.

The second decision is whether you want to operate as a �Broker of Household Goods,� a �Broker of Property (except Household Goods),� or both.� The registration process is the same regardless of the type of operating authority you�re seeking, but you�ll pay a filing fee for each if you opt for both.

Process Agent(s)

Every applicant for a freight broker operating authority must choose a process agent in every state where they have an office or write contracts. FMCSA defines a process agent as �a representative upon whom court papers may be served in any proceeding brought against a motor carrier, broker, or freight forwarder.� You have the option of designating any blanket company on the FMCSA process agent list. Each blanket company has a process agent that works with the company in every state. This makes this the usual choice, as freight brokers commonly operate nationwide. Most would prefer not to deal with dozens of process agents themselves.

Once you�ve chosen a blanket company as your process agent, you can have them file Form BOC-3�(Designation of Process Agents) with the FMCSA, or you can complete and file the form yourself. Only one completed form can be on file, so if you are using multiple process agents, they must all be listed on the same Form BOC-3. It must include all states for which agency designations are required. You are required to keep one copy on file in your primary office location.

Surety Bond or Trust Fund

Whether you will be applying for registration as a Broker of Household Goods or a Broker of Property, you will need to furnish either a freight broker bond (Form BMC-84) or a Trust Fund Agreement (Form BMC-85) in the amount of $75,000. Most freight brokers choose to purchase a BMC-84 surety bond because, unlike a BMC-85 Trust Fund Agreement, a bond does not tie up their cash or credit. A surety bond can be purchased for an annual premium that is only a small percentage of the required $75,000 bond amount.

The Unified Registration System provides all the necessary forms in a single online application form. After completing it and paying the registration fee (currently $300 a piece for a Broker of Household Goods or a Broker of Property or $600 for both together) you�ll receive an MC number immediately. Your operating authority documents will arrive in the mail within about 10 business days. You will need to re-register every year to keep your authority current.

Bear in mind that there may be additional licensing or registration requirements at the state level in the states in which you will be operating.

Why is a Freight Broker (BMC-84) Bond Required?

The transportation of freight within the United States is highly regulated, and a freight broker bond plays an important role in ensuring regulatory compliance by freight brokers. Categorized as a “license and permit” surety bond because purchasing one is a prerequisite for receiving an operating authority, a BMC-84 bond serves as a freight broker’s guarantee to do business in accordance with all applicable regulatory requirements.  Any violation of that guarantee that causes financial harm to FMCSA, a shipper, or carrier gives the injured party the right to file a claim against the bond. The most common cause for claims is nonpayment of fees owed to carriers.

Thus, a BMC-84 bond serves a dual purpose: 1) to maintain the integrity of the freight brokerage industry and the confidence of shippers and carriers, and 2) to provide financial protection for FMCSA, shippers, and carriers against loss resulting from a freight broker�s unlawful and unethical business practices. The terms of the BMC-84 bond agreement indemnify FMCSA against any legal liability for damages stemming from a freight broker�s noncompliance.

How Does a Freight Broker Bond Work?

Like all mandatory surety bonds, a freight broker bond is a legally binding contract among three parties: the �obligee� requiring the bond, the �principal� purchasing the bond, and the �surety� guaranteeing the payment of claims. In the case of a freight broker bond, the obligee is FMCSA, the principal is the freight broker, and the surety is the bond�s guarantor. Of these three parties, only the principal is legally obligated to pay valid claims against the bond.

When a claim is submitted, the surety will investigate to determine whether it is legitimate and needs to be paid. �The surety may even attempt to negotiate a settlement. But if that�s not possible, the claim must be paid. It may seem a little odd given the principal�s legal obligation to pay valid claims, but typically, it�s the surety that writes the check to a claimant. That�s because the surety has guaranteed that the principal will pay all valid claims. The best way to make that happens is to pay the claim initially and then collect repayment from the principal.

So, what happens if the principal fails to repay the surety? Many have learned that the hard way when they found themselves in court and ended up paying court costs and legal fees, as well as reimbursing the surety for claims paid out on their behalf. The surety may give the principal a certain amount of time in which to gather the funds needed to repay the debt created by the surety�s initial payment of a claim. But if repayment is not forthcoming, the surety has the right to take legal action to obtain it.

How Much Does a Freight Broker Bond Cost?

As noted earlier, the annual premium for a freight broker bond is a small percentage of the $75,000 bond amount. That percentage is the premium rate, which the surety establishes for each bond applicant on a case-by-case basis. The reason for there being no one-size-fits-all premium rate is that the main underwriting concern is the risk of the surety not being repaid readily for claims paid on behalf of the principal. And that risk level can vary widely from one bond applicant to the next. There is also, of course, the risk of claims being incurred in the first place.

When underwriting a freight broker BMC-84 bond, the best predictor of the likelihood of claims is the principal�s freight brokerage training and experience. The more knowledge a principal has, the less likely he or she is to commit a regulatory violation that could result in a claim against the bond. The risk of non-repayment is measured by the principal�s personal credit history and financial standing. Someone who has been responsible about paying debts in the past and has the financial resources to pay a claim is likely to do so.

In general, a high personal credit score is indicative of low risk to the surety, which is rewarded with a low premium rate. On the other hand, a low personal credit score is associated with a higher risk to the surety, which generally warrants a higher premium rate.

The average bond applicant with very good to excellent credit usually will pay a premium rate in the range of two to four percent, which makes the annual premium between $938.00 and $6,000. Those with lesser credit will pay a higher premium rate, usually between six and ten percent. The range of premium rates also varies by state, despite the fact that the bond is required by a federal agency, FMCSA.

Request a convenient online quote today, or call and speak with one of our surety bond experts who can answer your questions about freight broker BMC-84 surety bonds.