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.
- 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
- 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.
- 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.
- 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.