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:
- 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
- You�ll also need to register your brokerage with the�IRSand the Florida Department of Revenue.
- 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.
- 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.
- 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 Are the Costs Involved in Obtaining a Freight Broker License?
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.