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?
You cannot work as a freight broker anywhere in the United States unless you obtain a freight broker operating authority from the Federal Motor Carrier Safety Administration (FMCSA). Learn more about what freight brokers do to keep cargo moving throughout the country and how to become one.
What Are the Steps in the Licensing Process?
Before you sit down to complete your application for a freight broker operating authority through the Unified Registration system (URS), there are a few decisions you’ll need to make:
- Decide whether you will be opening your own freight brokerage firm or work as a freight broker for a company owned by someone else. If you want to be an entrepreneur, you�ll need to choose an appropriate legal structure for your business, establish a legal business entity, and register it with the Washington Secretary of State to obtain your Unified Business Identifier (UBI). You must also register the business with the Department of Revenue.
- Consider your options and decide whether your intent is to operate as a �Broker of Household Goods� or �Broker of Property (except Household Goods),� or as both.
- Decide whether you will select a process agent in every state in which you will have an office or write contracts or a blanket process service company that has agents in all states. You must list all of your process agents on a single Form BOC-3�(Designation of Process Agents) and file it with FMCSA. (If you choose a blanket process service company, you can ask them to prepare and submit the form for you.)
- Purchase a $75,000 freight broker bond (Form BMC-84) that lists FMCSA as the bond’s “obligee” and you as the principal. (You could establish a Trust Fund Agreement (Form BMC-85) instead, but most freight brokers prefer not to tie up $75,000 in cash or credit if they don’t have to.)
When you�re ready, set up an URS account, and follow the instructions to complete the online application, upload the necessary supporting documents, and pay the $300 registration fee. As soon as your payment has been accepted, URS will generate your MC number (MCN), which is universally accepted as proof of a valid operating authority. You should receive the actual operating authority documents in the mail within 10 business days.
Why Is a Freight Broker Surety Bond Required?
In purchasing a BMC-84 freight broker bond, agree to comply with all applicable FMCSA regulations. Any noncompliant act that causes FMCSA, a shipper, or a carrier to experience a financial loss can result in the injured party filing a claim against your BMC-84 bond. Thus, the bond provides financial protection for FMCSA and the shippers and carriers who do business with you.
How Are Freight Broker Bond Claims Paid?
A freight broker bond is legally binding on three parties: the obligee, the principal, and the party (the �surety�) that has guaranteed the bond. Although the bond legally obligates you, as the principal, to pay al valid claims, the surety has guaranteed that you will do so. Consequently, the surety will pay a legitimate claim on your behalf, but you must then repay that amount to the surety. If you don�t, the surety can use you to recover what you owe.
What Are the Costs Associated with Getting a Freight Broker License?
To purchase a freight broker bond you�ll pay an annual premium that is the product of multiplying the $75,000 bond amount by the premium rate set for you by the surety. The surety�s primary concern is being repaid for claims paid on your behalf. The best measure of the risk that you won�t is your personal credit score.
The better your credit score, the smaller the risk to the surety, and the lower your premium rate. With good credit, you should be assigned a premium rate that is somewhere between two and four percent. If your credit score is lower, your premium rate will be higher because of the greater risk to the surety. A lower credit score will result in a higher premium rate.
Our surety bond professionals will get you the freight broker (BMC-84) bond you need at a competitive rate.