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?
The prerequisite for working as a freight broker anywhere in the United States is an operating authority issued by 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?
If your intent is to launch your own freight brokerage, you�ll need to establish a legal business entity and register it with the Oregon Secretary of State, which can be done easily online.
Whether you will be operating your own brokerage or working as a freight broker for a firm owned by someone else, the same steps are required.
- You can apply for an operating authority as a �Broker of Household Goods� or as a �Broker of Property (except Household Goods),� or you can apply for both. You�ll have to decide this up front.
- You�ll also have to decide whether you will select a process agent in every state where you will operate (i.e., maintain an office and write contracts). Your other option is to choose a blanket process service company that has agents in all states that can accept legal service on your behalf if you are sued. If you choose a blanket process service company, they can complete a Form BOC-3�(Designation of Process Agents) for you and file it with FMCSA. Otherwise, you will need to complete the form yourself, listing all of your chosen process agents, and submit it to FMCSA yourself.
- FMCSA requires you to purchase a $75,000 freight broker bond (Form BMC-84) from an FMCSA-approved company. As the party requiring the bond, FMCSA is the bond’s “obligee.” As the freight broker, you are the bond’s “principal.” (Alternatively, you could set up a Trust Fund Agreement using Form BMC-85, but you probably won’t want to tie up $75,000 when you can purchase a freight broker bond for much less.)
All applications for a freight broker operating authority are submitted through the Unified Registration System (URS). To do so, you’ll need to create a URS account, complete the online application, upload all required supporting documents, and pay the $300. Once you pay the fee, URS will automatically assign you a motor carrier number (MCN), which is your unique identifier as a registered freight broker. About 10 business days later, you should receive your operating authority documents in the mail.
Why Is a Freight Broker Surety Bond Required?
FMCSA requires freight brokers to purchase a surety bond as a guarantee to operate in full compliance with FMCSA regulations. The terms of the surety bond agreement, which is a legally binding contract, also obligate the principal to compensate FMCA or other party (e.g., shippers or carriers) for monetary damages resulting from the principal�s unlawful or unethical conduct as a fright broker.
How Are Freight Broker Bond Claims Paid?
The third party to the BMC-84 agreement is the bond�s guarantor (the �surety�). The bond legally obligates the principal to pay all claims the surety finds to be valid, but the surety has guaranteed their payment. Therefore the surety will pay a claim up front and then be reimbursed by the principal. Not repaying that debt can result in the surety taking legal action against the principal.
What Are the Costs Associated with a Freight Broker License in Oregon?
The annual premium for a freight broker bond depends on the premium rate set by the surety through analysis of the risk that the principal might not repay the surety for claims paid on the principal�s behalf. �That analysis is based on the principal�s personal credit score. With a good credit score, the premium rate should be somewhere between 2% and 4%. With lesser credit, the premium rate will be higher because the risk to the surety is greater.
Our surety bond professionals will get you the freight broker (BMC-84) bond you need at a competitive rate.