Obtaining a Freight Broker License in Michigan

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 Are the Costs of Obtaining a Freight Broker License in Michigan?

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.