Blog Posts Categorized: Freight Broker

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?

The prerequisite for working as a freight broker anywhere in the United States is an operating authority issued by the Federal Motor Carrier Safety Administration (FMCSA). Learn more about the role freight brokers play in moving cargo from one point to another and what it takes to become a freight broker.

What Are the Steps in the Licensing Process?

If your intent is to launch your own freight brokerage, you�ll need to establish a legal business entity and register it with the Oregon Secretary of State, which can be done easily online.

Whether you will be operating your own brokerage or working as a freight broker for a firm owned by someone else, the same steps are required.

1. You can apply for an operating authority as a �Broker of Household Goods� or as a �Broker of Property (except Household Goods),� or you can apply for both. You�ll have to decide this up front.
2. You�ll also have to decide whether you will select a process agent in every state where you will operate (i.e., maintain an office and write contracts). Your other option is to choose a blanket process service company that has agents in all states that can accept legal service on your behalf if you are sued. If you choose a blanket process service company, they can complete a Form BOC-3�(Designation of Process Agents) for you and file it with FMCSA. Otherwise, you will need to complete the form yourself, listing all of your chosen process agents, and submit it to FMCSA yourself.
3. FMCSA requires you to purchase a $75,000 freight broker bond (Form BMC-84) from an FMCSA-approved company. As the party requiring the bond, FMCSA is the bond’s “obligee.” As the freight broker, you are the bond’s “principal.” (Alternatively, you could set up a Trust Fund Agreement using Form BMC-85, but you probably won’t want to tie up $75,000 when you can purchase a freight broker bond for much less.)

All applications for a freight broker operating authority are submitted through the Unified Registration System (URS). To do so, you’ll need to create a URS account, complete the online application, upload all required supporting documents, and pay the $300. Once you pay the fee, URS will automatically assign you a motor carrier number (MCN), which is your unique identifier as a registered freight broker. About 10 business days later, you should receive your operating authority documents in the mail.

Why Is a Freight Broker Surety Bond Required?

FMCSA requires freight brokers to purchase a surety bond as a guarantee to operate in full compliance with FMCSA regulations. The terms of the surety bond agreement, which is a legally binding contract, also obligate the principal to compensate FMCA or other party (e.g., shippers or carriers) for monetary damages resulting from the principal�s unlawful or unethical conduct as a fright broker.

How Are Freight Broker Bond Claims Paid?

The third party to the BMC-84 agreement is the bond�s guarantor (the �surety�). The bond legally obligates the principal to pay all claims the surety finds to be valid, but the surety has guaranteed their payment. Therefore the surety will pay a claim up front and then be reimbursed by the principal. Not repaying that debt can result in the surety taking legal action against the principal.

What Does It Cost?

The annual premium for a freight broker bond depends on the premium rate set by the surety through analysis of the risk that the principal might not repay the surety for claims paid on the principal�s behalf. �That analysis is based on the principal�s personal credit score. With a good credit score, the premium rate should be somewhere between 2% and 4%. With lesser credit, the premium rate will be higher because the risk to the surety is greater.

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?

If you want to operate anywhere in the United States as a freight broker, you must first obtain an operating authority (essentially a license) from the Federal Motor Carrier Safety Administration (FMCSA). Learn more about a freight broker’s role in the movement of cargo and about what it takes to become a freight broker.

What Are the Steps in the Licensing Process?

There are a few decisions you�ll need to make in preparation for applying for a freight broker operating authority, beginning with deciding whether you will be opening your own firm or working for a freight brokerage owned by someone else. If you do plan to open your own brokerage, you�ll need to choose an appropriate legal structure (such as a sole proprietorship or LLC), establish a business entity, and register it with the Tennessee Secretary of State and Department of Revenue.

Another decision you�ll need to make is whether to apply for an operating authority as a �Broker of Household Goods� or a �Broker of Property (except Household Goods),� or perhaps as both.

You�ll also need to decide whether to select a process agent in each state where you will keep an office and write contracts or a blanket process service company that has agents in all states.� Whichever way you go, you must then complete a Form BOC-3�(Designation of Process Agents) listing all of the process agents you have chosen on a single form, and file it with FMCSA. (If you designate a blanket process service firm, the company can do that for you.)

Finally, you must decide whether to purchase a $75,000 freight broker bond (Form BMC-84) or set up a Trust Fund Agreement (Form BMC-85) for the protection of FMCSA. Most freight brokers choose the bonding option, as it requires only an annual premium whereas going the trust fund route requires tying up $75,000 in cash and/or credit.

Applications for a freight broker operating authority are submitted through the Unified Registration System (URS). Simply follow the instructions for creating an URS account, completing the online application, uploading the required supporting documents, and paying the registration fee. Upon payment of the $300 fee, URS will generate your MC number (MCN), which is the proof of your operating authority. The operating authority documents will be sent to you by mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 bond is a freight broker�s pledge to operate in full compliance with all FMCSA regulations governing the freight brokerage industry. �Any violation by the freight broker (the bond�s �principal�) that causes financial harm to FMCSA or a shipper or carrier gives the injured party the right to file a claim against the bond and be compensated for the loss.

How Are Freight Broker Bond Claims Paid?

The principal is legally obligated to pay all valid claims. However, the third party to the legally binding freight broker bond�the �surety��is the bond�s guarantor. Having guaranteed the principal�s payment of valid claims, the surety will pay a claim on the principal�s behalf and then be reimbursed by the principal. The surety can take legal action against the principal for failing to repay that debt.

What Does It Cost?

The annual premium for a freight broker bond is a small percentage of the $75,000 bond amount. The surety determines that percentage, the premium rate, through an underwriting analysis of the risk of not being reimbursed for claims paid on behalf of the principal. The risk level is measured on the basis of the principal�s personal credit score.

A freight broker with good credit should be assigned a premium rate in the 2% to 4% range. A lower credit score signals a higher risk level, which warrants 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?

You cannot work as a freight broker anywhere in the United States unless you obtain a freight broker operating authority from the Federal Motor Carrier Safety Administration (FMCSA). Learn more about what freight brokers do to keep cargo moving throughout the country and how to become one.

What Are the Steps in the Licensing Process?

Before you sit down to complete your application for a freight broker operating authority through the Unified Registration system (URS), there are a few decisions you’ll need to make:

• Decide whether you will be opening your own freight brokerage firm or work as a freight broker for a company owned by someone else. If you want to be an entrepreneur, you�ll need to choose an appropriate legal structure for your business, establish a legal business entity, and register it with the Washington Secretary of State to obtain your Unified Business Identifier (UBI). You must also register the business with the Department of Revenue.
• Consider your options and decide whether your intent is to operate as a �Broker of Household Goods� or �Broker of Property (except Household Goods),� or as both.
• Decide whether you will select a process agent in every state in which you will have an office or write contracts or a blanket process service company that has agents in all states. You must list all of your process agents on a single Form BOC-3�(Designation of Process Agents) and file it with FMCSA. (If you choose a blanket process service company, you can ask them to prepare and submit the form for you.)
• Purchase a $75,000 freight broker bond (Form BMC-84) that lists FMCSA as the bond’s “obligee” and you as the principal. (You could establish a Trust Fund Agreement (Form BMC-85) instead, but most freight brokers prefer not to tie up $75,000 in cash or credit if they don’t have to.)

When you�re ready, set up an URS account, and follow the instructions to complete the online application, upload the necessary supporting documents, and pay the $300 registration fee. As soon as your payment has been accepted, URS will generate your MC number (MCN), which is universally accepted as proof of a valid operating authority. You should receive the actual operating authority documents in the mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

In purchasing a BMC-84 freight broker bond, agree to comply with all applicable FMCSA regulations. Any noncompliant act that causes FMCSA, a shipper, or a carrier to experience a financial loss can result in the injured party filing a claim against your BMC-84 bond. Thus, the bond provides financial protection for FMCSA and the shippers and carriers who do business with you.

How Are Freight Broker Bond Claims Paid?

A freight broker bond is legally binding on three parties: the obligee, the principal, and the party (the �surety�) that has guaranteed the bond. Although the bond legally obligates you, as the principal, to pay al valid claims, the surety has guaranteed that you will do so. Consequently, the surety will pay a legitimate claim on your behalf, but you must then repay that amount to the surety. If you don�t, the surety can use you to recover what you owe.

What Does It Cost?

To purchase a freight broker bond you�ll pay an annual premium that is the product of multiplying the $75,000 bond amount by the premium rate set for you by the surety. The surety�s primary concern is being repaid for claims paid on your behalf. The best measure of the risk that you won�t is your personal credit score.

The better your credit score, the smaller the risk to the surety, and the lower your premium rate. With good credit, you should be assigned a premium rate that is somewhere between two and four percent. If your credit score is lower, your premium rate will be higher because of the greater risk to the surety. A lower credit score will result in 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?

The Federal Motor Carrier Safety Administration (FMCSA) issues freight broker operating authorities (the freight broker equivalent of a license) through a registration process.  All freight brokers are registered at the federal level. Learn more about the role freight brokers play in moving cargo in the United States and what it takes to become one.

What Are the Steps in the Licensing Process?

While freight broker operating authorities are issued at the federal level, you will need to establish and register your business at the state level if you plan to operate your own brokerage firm. In North Carolina, that means registering your new business with the Secretary of State and obtaining a sales and use tax number form the North Carolina Department of Revenue.

Whether you plan to operate your own brokerage or work as a freight broker in someone else�s firm, there are a few steps you�ll need to take in preparation for applying for a freight broker operating authority:

• Decide which type of operating authority you will be registering for��Broker of Household Goods� or �Broker of Property (except Household Goods),� or perhaps both.
• Identify a process agent (someone who can accept legal service on your behalf if you�re sued) in every state where you will have an office or write contracts. Or, you can identify a blanket process service company that can represent you in any state.
• List all of your process agents on a single Form BOC-3�(Designation of Process Agents) to file with FMCSA. (If you opt for a blanket process agent, the company can do that for you.)
• Obtain a $75,000 freight broker bond (Form BMC-84) from an FMCSA-approved surety bond company, with FMCSA as the bond’s “obligee.” Alternatively, you could set up a Trust Fund Agreement (Form BMC-85) instead of purchasing a surety bond, but that would mean tying up much more money than it will cost you to furnish FMCSA with a surety bond.

You�ll apply for your operating authority through the Unified Registration System (URS). Create an URS account, complete the online application in its entirety, upload the required documents, and pay the registration fee (currently $300). As soon as your payment is processed, URS will give you your MC number (MCN), which is proof of your operating authority, although the operating authority documents won’t arrive in the mail for about 10 business days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 bond is a freight broker�s guarantee to operate in full compliance with FMCSA regulations. Any violation, such as failing to pay a shipper or carrier, that causes FMCSA or a shipper or carrier to experience a financial loss, can result in the injured party filing a claim against the bond. As the bond�s �principal,� you are legally obligated to pay all valid claims.

How Are Freight Broker Bond Claims Paid?

There is a third party to a freight broker bond in addition to the principal and the obligee, and that�s the �surety��the bond�s guarantor. The terms of the legally binding surety bond agreement obligate the principal to pay all valid claims, but that payment is guaranteed by the surety. Therefore, the surety will pay a valid claim initially, on the principal�s behalf, and be reimbursed by the principal. Not repaying the claim amount can result in the surety taking legal action against the principal.

What Does It Cost?

The annual premium for a freight broker bond is calculated by multiplying the $75,000 bond amount by the premium rate established by the surety through underwriting. The primary underwriting consideration is the risk that the principal won�t repay the surety as required. That risk is measured by the principal�s personal credit score�the higher the score, the lower the risk to the surety.

The premium rate for someone with good credit should be in the range of two to four percent. An applicant with a lower credit score 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?

Every freight broker operating in the United States must obtain a freight broker operating authority by registering with the Federal Motor Carrier Safety Administration (FMCSA). Learn more about the role freight brokers play in moving cargo from one point to another, and what it takes to become a freight broker.

What Are the Steps in the Licensing Process?

When you�re ready to apply for your operating authority, you�ll do it through the Unified Registration System (URS). But there are several things you’ll need to do first in preparation for applying.

1. First, if you plan to establish your own freight brokerage, you will need to decide on an appropriate legal structure, create a business entity, and register it online through Maryland�s Business Express
2. Decide whether you will be applying for an operating authority as a �Broker of Household Goods� or �Broker of Property (except Household Goods),� or both.
3. Decide whether you will select a process agent in every state where you will have an office or write contracts, or instead opt for a blanket process service company that has agents in all states. Complete a single Form BOC-3�(Designation of Process Agents) listing all of your process agents and file it with FMCSA or, if you decide to use a blanket process service, you can ask the company to do that for you.
4. Purchase a $75,000 freight broker bond (Form BMC-84) from an FMCSA-approved company, with FMCSA as the bond’s “obligee.” You have the option of establishing a Trust Fund Agreement (Form BMC-85) instead of purchasing a surety bond, but most freight brokers don’t want to tie up $75,000 when the annual premium for a freight broker bond is much less.

Once you�re ready to apply for your operating authority, you�ll need to create an URS account, complete the online application, upload the required documents, and pay the registration fee, which currently is $300. URS will then automatically generate your motor carrier number (MCN), which identifies you as a registered freight broker. You should receive your operating authority documents in the mail in no more than 10 business days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 freight broker bond is your guarantee to FMCSA that you will do business in compliance with FMCSA regulations governing freight brokerage activities. A violation that causes a monetary loss to FMCSA or a shipper or carrier can result in the injured party filing a claim against your bond. The bond�s guarantor, known as the �surety,� will determine whether the claim is valid, and if it is, the legal obligation to pay it rests entirely with you, the bond�s �principal.�

How Are Freight Broker Bond Claims Paid?

Although it may seem a little odd, the surety will pay the claimant directly, and then collect reimbursement from you. As the bond�s guarantor, the surety has a responsibility to resolve the claim swiftly. But the obligation to compensate the injured party is yours and yours alone, so by law you must repay the surety for any claim paid on your behalf or risk being sued by the surety.

What Does It Cost?

The annual premium for a freight broker bond is a small percentage of the $75,000 required bond amount. That percentage, the premium rate, is set by the surety through an underwriting assessment of the risk that paying claims on your behalf entails. That risk is measured by your personal credit score.

If your credit score is good, the risk that you won�t reimburse the surety is assumed to be low, and your premium rate should be in the range of two to four percent. But if your credit score is on the low side, the risk to the surety is higher and your premium rate will be higher as well.

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?

To operate legally in the United States, all freight brokers must be registered by the Federal Motor Carrier Safety Administration (FMCSA). The result of that process is the issuance of a freight broker operating authority, which functions as a license. Learn more about what freight brokers do to facilitate the movement of cargo and what is involved in becoming a freight broker.

What Are the Steps in the Licensing Process?

Much of the work that goes into becoming a freight broker occurs well before submitting an application for an operating authority. Tasks you�ll need to accomplish in preparing to apply include:

1. Establishing a legal business entity if you plan to operate your own freight brokerage firm. This involves choosing an appropriate legal structure and registering your business with the Mississippi Secretary of State.
2. Choosing which type of operating authority to apply or��Broker of Household Goods� or �Broker of Property (except Household Goods),� or both.
3. Selecting a process agent in every state where you will have an office or write contracts or a blanket process service company that has agents in all states. You must list all of your process agents on a single Form BOC-3�(Designation of Process Agents)and file it with FMCSA.(If you designate a blanket process service firm, the company can do that for you.)
4. Purchasing a $75,000 freight broker bond (Form BMC-84) that designates CSA as the bond’s “obligee” requiring the bond. There is an option to set up a Trust Fund Agreement (Form BMC-85) instead of buying a surety bond, but most applicants prefer not to tie up $75,000 when they can purchase a surety bond for far less.

When you apply for your operating authority, you�ll do so using the Unified Registration System (URS). The system will guide you through creating an URS account, completing the online application, uploading the necessary documents, and paying the $300 registration fee. As soon as you pay the fee, URS will give you your MC number (MCN), as proof of your registration. You can expect your operating authority documents to arrive in the mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

In purchasing a BMC-84 freight broker you agree to comply with FMCSA regulations governing freight brokers. Any violation that causes FMCSA or a shipper or carrier financial harm can result in the inured party filing a claim against the bond.� If this occurs, as the bond�s �principal,� you are legally obligated to pay the claim if the bond�s guarantor, the �surety,� finds it to be legitimate.

How Are Freight Broker Bond Claims Paid?

As the bond�s principal, you are solely responsible for paying any valid claim. However, because the surety has guaranteed your payment, the surety will pay a claim initially and then be reimbursed by you. If you don�t repay the surety on schedule, you can 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 broker bonds are subject to underwriting to determine the premium rate you will pay. The primary underwriting concern is the risk of the surety not being reimbursed readily for claims paid on your behalf. �That risk is measured largely on the basis of your personal credit score. With a good credit score, your premium rate should be in the range of 2% to 4%. If you have a lower credit score, your premium rate will be higher because the risk to the surety will be considered greater.

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?

The Federal Motor Carrier Safety Administration (FMCSA) registers all U.S. freight brokers, issuing them a freight broker operating authority, which is the equivalent of a license. Learn more about what freight brokers do to keep cargo moving throughout the country and what it takes to become one.

What Are the Steps in the Licensing Process?

Most of the effort required to get a freight broker operating authority goes into preparing to apply for one. You�ll need to accomplish all of the following before you sit down to complete your application.

1. If you will be working as a freight broker in a firm owned by someone else, you can skip to Step 2. If you will be launching your own freight brokerage, you must first set up a legal business entity, register it with The Michigan Secretary of State and obtain a Nevada state business license.
2. Make a decision as to whether you want to operate as a �Broker of Household Goods� or �Broker of Property (except Household Goods),� or perhaps as both.
3. You will need to name a process agent in every state where you will have an office or write contracts. (A process agent is someone who will accept legal service on your behalf if you are sued.) Or you may choose to be represented by a blanket process service company that has agents in all states. Either you or your blanket process company, if you go that route, must complete a single Form BOC-3�(Designation of Process Agents)and file it with FMCSA.
4. Obtain a $75,000 freight broker bond (Form BMC-84) with FMCSA listed as the bond’s “obligee.” Alternatively, you could establish a Trust Fund Agreement (Form BMC-85), but that would require you to tie up $75,000 in cash, which is unnecessary.

When you�ve done all of the above, you will have what you need to apply for registration through the Unified Registration System (URS). You’ll set up an URS account, complete the online application, upload all required documents, and pay the registration fee (currently $300). At that point, URS will generate your MC number (MCN), which is your proof of registration. You should receive your operating authority documents by mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

When you purchase a BMC-84 freight broker bond, you guarantee that you will comply with all applicable FMCSA regulations. Any act of noncompliance that causes financial harm to FMCSA, a shipper, or a carrier can result in a claim being filed against your bond�a claim that you, as the bond�s �principal,� are legally obligated to pay.

How Are Freight Broker Bond Claims Paid?

In addition to FMCSA as the obligee and you as the principal, there is a third party to the legally binding freight broker bond contract: �the bond�s guarantor, referred to as the �surety.� While you are legally obligated to pay all valid claims, the surety has guaranteed their payment. Because of that guarantee, the surety will pay a claim up front, but you must then reimburse the surety for the claim amount. If you don�t, the surety can take legal action against you to secure repayment.

What Does It Cost?

The annual premium for a BMC-84 bond is calculated by multiplying the $75,000 bond amount by the premium rate assigned by the surety through underwriting. That premium rate will be based largely on your personal credit score, which is a good measure of the risk that you might not repay the surety for claims paid on your behalf.

If your credit is good, the risk to the surety is low, and your premium rate should be in the range of two to four percent. A lower credit score will result in 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�registered, actually�by the Federal Motor Carrier Safety Administration (FMCSA). The result of that registration process is a freight broker operating authority. Learn more about the role freight brokers play in the movement of cargo and what it takes to become one.

What Are the Steps in the Licensing Process?

Before applying for a freight broker operating authority, there are some decisions to be made and some tasks to be accomplished.

1. If you will be opening your own firm rather than working in someone else�s freight brokerage, you will need to establish a legal business entity and register it with your county clerk and the Michigan Department of Treasury.
2. Decide whether you will be registering as a �Broker of Household Goods� or �Broker of Property (except Household Goods),� or perhaps both.
3. Choose a process agent that can accept legal service on your behalf. You will need to choose one in every state where you will have an office or write contracts. You may also opt for a blanket process service company that has agents in all states. Complete a single Form BOC-3�(Designation of Process Agents) listing all of your process agents and file it with FMCSA. If you choose a blanket process agent, the company can do that for you.
4. Purchase a $75,000 freight broker bond (Form BMC-84) from a company approved by FMCSA, with FMCSA as the bond’s “obligee.” You have the option of establishing a Trust Fund Agreement (Form BMC-85) instead of purchasing a surety bond, but you probably won’t want to tie up $75,000 in cash when you don’t have to.

When you�re ready to apply for your operating authority, you�ll do it through the Unified Registration System (URS). Create an account on URS, complete the online application, upload the supporting documents, and pay the $300 registration fee.  As soon as your payment goes through, URS will generate your MC number (MCN), which is the evidence of your successful registration. Your operating authority documents will arrive in the mail within 10 business days.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 freight broker is your pledge to abide by FMCSA regulations. If you fail to do so, and that failure causes FMCSA or a shipper or carrier to incur a financial loss, as the bond�s �principal,� you are legally obligated to compensate them.

How Are Freight Broker Bond Claims Paid?

The FMCSA acts as the �obligee,� you act as the bond�s �principal,� and the third party to your freight broker bond is the bond�s guarantor, known as the �surety.� �Although the principal is legally obligated to pay all valid claims, the surety has guaranteed that they will be paid. Therefore, the surety will pay a claim initially and then be repaid by the principal. The surety can take legal action against the principal if not repaid on schedule.

What Does It Cost?

The surety�s main underwriting concern is being repaid for claims paid on the principal�s behalf. If your personal credit score is good, the surety will consider you a low risk and assign you a premium rate that is in the range of two to four percent of the $75,000 bond amount. A principal with lesser credit is a greater risk to the surety and will pay a higher premium rate.

Work with our surety bond professionals to get the freight broker (BMC-84) bond you need at a competitive rate.

Learn how to become licensed as a freight broker in Ohio, 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 in the United States are registered, not licensed. The result of that process is a freight broker that results in the issuance of a freight broker operating authority by the Federal Motor Carrier Safety Administration (FMCSA). Learn more about what being a freight broker entails and what is involved in becoming one.

What Are the Steps in the Licensing Process?

There are a few important tasks you must take care of before you begin your application for a freight broker operating authority.

1. If you will be launching your own firm, you must set up a legal business entity and register it with the Ohio Secretary of State and the Ohio Department of Taxation.
2. Decide which of the two types of operating authority you will apply for��Broker of Household Goods� or �Broker of Property (except Household Goods).� You may apply for both, if you prefer.
3. Select a process agent in every state where you will maintain an office or write contracts. A process agent is someone authorized to accept legal service on your behalf if you are sued by a shipper or carrier. You have the option of using a blanket process service company that can represent you in any state. Either you or your selected blanket company must complete a single Form BOC-3�(Designation of Process Agents) lifting all of your process agents and file it with FMCSA.
4. Purchase a freight broker bond (Form BMC-84) in the amount of $75,000, with FMCSA as the “obligee.” This is much more popular with freight brokers than the other option, which is to establish a Trust Fund Agreement (Form BMC-85), which requires tying up $75,000 in cash.

When you�ve completed all of the above off, you�re ready to create an account on the Unified Registration System (URS). You’ll use this account to complete an online application, upload supporting documents, and pay the registration fee (currently $300). Once your payment has been processed, the system will generate your MC number (MCN). It will take about 10 business days for your operating authority documents arrive in the mail.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 freight broker bond is your pledge to do business in accordance with all applicable FMCSA regulations and pay any resulting claims if you don�t. Any noncompliant action on your part that is verified to have caused FMCSA or a shipper or carrier to experience a monetary loss is grounds for a claim against your bond�a claim that you, as the bond�s �principal,� are legally obligated to pay.

How Are Freight Broker Bond Claims Paid?

In addition to FMCSA as the obligee, and the freight broker as the principal, there is a third party to every freight broker bond�the bond�s guarantor, known as the �surety.� Although the principal is legally obligated to pay all legitimate claims, the surety guarantees their payment. Consequently, the usual practice is for the surety to pay a claim initially and then be reimbursed for that amount by the principal. Not being reimbursed can result in the surety taking legal action against the principal to recover the amount of the claim.

What Does It Cost?

The annual premium rate for a freight broker bond is determined by the surety through an underwriting assessment of the risk that the principal may not repay the surety for claims paid on the principal�s behalf. If the principal�s personal credit score is high, the risk to the surety is low, and the premium rate should be no more than 2% to 4%. A principal with a low credit score presents a higher level of risk 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?

The better question is, �Who needs a freight broker operating authority?� That�s the official name for the result of the registration process through which the Federal Motor Carrier Safety Administration (FMCSA) must approve anyone who wants to work as a freight broker in the United States.  Learn more about what freight brokers do and how to become one.

What Are the Steps in the Licensing Process?

Before you can complete your online application for a freight broker operating authority, you�ll need to accomplish the following:

1. If you will be setting up your own freight brokerage firm, you must first establish a legal business entity and register it with the state through Virginia Business One Stop.
2. Decide whether to apply for an operating authority as a Broker of Household Goods or as a Broker of Property (except Household Goods), or as both.
3. Choose the process agent(s) who can accept legal service on your behalf if you are sued. That can be an individual process agent in every state where you will maintain an office or write contracts, or a blanket process service company that has agents in all states. In either case, you (or a blanket agency) must fill out a Form BOC-3�(Designation of Process Agents) and file it with FMCSA.
4. Purchase a $75,000 freight broker bond (Form BMC-84)with FMCSA as the “obligee.” While you have the option of setting up a $75,000 Trust Fund Agreement (Form BMC-85), most freight brokers don’t want to tie up that much cash.

When you�ve accomplished all necessary preparatory tasks, go ahead and create an account on the Unified Registration System (URS), complete the online application, upload required supporting documents, and pay the $300 registration fee. The system will generate your MC number (MCN) at that point. Your MCN is the official proof of your operating authority; your operating authority documents should arrive in the mail inten business days or less.

Why Is a Freight Broker Surety Bond Required?

A BMC-84 freight broker bond is your guarantee to do business in full compliance with FMCSA regulations. It legally obligates you to pay all valid claims filed by FMCSA or by a shipper or carrier for monetary damages caused by any noncompliant action on your part.

How Are Freight Broker Bond Claims Paid?

There are three parties to every freight broker bond�FMCSA as the �obligee,� the freight broker as the �principal,� and the bond�s guarantor as the �surety.� Although the principal bears the legal obligation to pay all legitimate claims, the surety guarantees their payment and therefore will pay them initially. But that does not eliminate the principal�s obligation, so the principal must then reimburse the surety. If not repaid within an acceptable timeframe, the surety can take legal action against the principal.

What Does It Cost?

With a high personal credit score, the risk of the surety not being reimbursed by the principal is deemed low, so the bond premium rate should be in the range of two to four percent. Someone with a lower credit score poses 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.