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 better question is, �Who needs a freight broker operating authority?� That�s the official name for the result of the registration process through which the Federal Motor Carrier Safety Administration (FMCSA) must approve anyone who wants to work as a freight broker in the United States. Learn more about what freight brokers do and how to become one.
What Are the Steps in the Licensing Process?
Before you can complete your online application for a freight broker operating authority, you�ll need to accomplish the following:
- If you will be setting up your own freight brokerage firm, you must first establish a legal business entity and register it with the state through Virginia Business One Stop.
- Decide whether to apply for an operating authority as a Broker of Household Goods or as a Broker of Property (except Household Goods), or as both.
- Choose the process agent(s) who can accept legal service on your behalf if you are sued. That can be an individual process agent in every state where you will maintain an office or write contracts, or a blanket process service company that has agents in all states. In either case, you (or a blanket agency) must fill out a Form BOC-3�(Designation of Process Agents) and file it with FMCSA.
- Purchase a $75,000 freight broker bond (Form BMC-84)with FMCSA as the “obligee.” While you have the option of setting up a $75,000 Trust Fund Agreement (Form BMC-85), most freight brokers don’t want to tie up that much cash.
When you�ve accomplished all necessary preparatory tasks, go ahead and create an account on the Unified Registration System (URS), complete the online application, upload required supporting documents, and pay the $300 registration fee. The system will generate your MC number (MCN) at that point. Your MCN is the official proof of your operating authority; your operating authority documents should arrive in the mail inten business days or less.
Why Is a Freight Broker Surety Bond Required?
A BMC-84 freight broker bond is your guarantee to do business in full compliance with FMCSA regulations. It legally obligates you to pay all valid claims filed by FMCSA or by a shipper or carrier for monetary damages caused by any noncompliant action on your part.
How Are Freight Broker Bond Claims Paid?
There are three parties to every freight broker bond�FMCSA as the �obligee,� the freight broker as the �principal,� and the bond�s guarantor as the �surety.� Although the principal bears the legal obligation to pay all legitimate claims, the surety guarantees their payment and therefore will pay them initially. But that does not eliminate the principal�s obligation, so the principal must then reimburse the surety. If not repaid within an acceptable timeframe, the surety can take legal action against the principal.
Understanding the Costs of a Freight Broker License and Surety Bonds
With a high personal credit score, the risk of the surety not being reimbursed by the principal is deemed low, so the bond premium rate should be in the range of two to four percent. Someone with a lower credit score poses 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.