How to Get a Trucking Broker�s License in Texas

Who Needs a Trucking Broker�s License?

Trucking brokers, also known as freight brokers, play an important logistical role in the movement of freight throughout the country. They match shippers with motor carriers who can move their freight.

Shippers pay for this service because freight brokers save them money by negotiating shipping fees, selecting only reputable carriers, tracking the movement of freight, and keeping shippers updated on the status of their loads.

Anyone who wants to work as a trucking broker must be licensed by the Federal Motor Carrier Safety Administration (FMCSA). This is the part of the U.S. Department of Transportation that is responsible for regulating interstate commerce and enforcing safety rules.

What Does the Licensing Process Involve?

The steps in the licensing process are as follows:

1. Establish a business entity in Texas. This can be a sole proprietorship, partnership, LLC, or corporation. Register it with the Office of the Texas Secretary of State.
2. Obtain a US Department of Transportation (USDOT) number.
3. Apply to the FMCSA for an operating authority (the official term for a broker’s license) through the Unified Registration System. You’ll need to enter your USDOT number and fulfill all of the FMCSA licensing requirements. These include obtaining a $75,000 freight broker bond, having the necessary insurance (cargo, bodily injury, and property damage coverages), and paying the license fee.
4. Designate a process agent to whom court papers may be served in the event that you are sued in your capacity as a trucking broker.You must have a process agent in every state where you do business. Submit a completed form BOC-3 to the FMCSA.
5. It takes 4-6 weeks for DOT to approve and issue a new operating authority.

Why is a Surety Bond Required?

Every trucking broker must establish a $75,000 trust fund or purchase a $75,000 surety bond as part of the process of obtaining the necessary operating authority. The advantage of choosing the surety bond option is that it doesn�t tie up your cash or assets. The specific bond for obtaining a trucking broker�s license is called a BMC-84 bond.

The purpose of the bond is to ensure that funds will be available to compensate the shipper or carrier if you fail to meet the terms of a contract or otherwise cause them to suffer a financial loss. Thus, the bond serves as the broker�s guarantee to operate in a completely lawful and ethical manner.

Understanding the Process: How Surety Bonds Work for Trucking Brokers

The surety bond agreement is a legally binding contract that entitles an injured party to file a claim against the trucking broker�s surety bond and be compensated for their loss. There are three parties in the agreement. These are the obligee that requires the bond (USDOT), the principal required to purchase the bond (the broker), and the surety that underwrites and issues the bond.

The obligee establishes the required bond amount ($75,000) and the conduct that would constitute a violation of the surety bond agreement. The surety determines what a given broker will pay for a bond, and the principal is legally obligated to pay all valid claims against the bond.

The surety will often pay a claim on behalf of the principal to give the principal time to gather the funds to cover the claim. The principal is legally obligated to reimburse the surety for any such advance claims payment. The terms of the surety bond agreement indemnify the surety against any legal responsibility for paying claims.

What Does It Cost?

The annual premium for any type of surety bond is a small percentage of the required bond amount, also known as the bond�s penal amount. This is the maximum amount that will be paid on a claim.

The surety bases the premium rate primarily on the principal�s personal credit score, though other factors may also be considered. The higher the principal�s credit score, the lower the premium rate and vice versa.

Get Bonded Today

Request an online quote today for the surety bond you need to obtain your operating authority as a trucking broker. Or, give us a call to discuss your bonding needs with one of our experienced surety bond professionals. We look forward to serving you.