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.