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:
- 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.
- Decide which type of operating authority you will apply for��Broker of Household Goods,� �Broker of Property (except Household Goods),� or both.
- 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.
- 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.