Broker license bond cost
The Federal Motor Carrier Safety Administration (FMCSA) requires freight brokers and freight forwarders to file a surety bond before receiving a license. Prior to July 2012, the freight broker license bond amount was $10,000. However, with the enactment of MAP-21 (Moving Ahead for Progress in the 21st Century Act) the bond amount was increased to $75,000, due in part to the previous amount being inadequate to cover claims. Although this increased bond amount was met with significant criticism and opposition in the freight industry, it remains the standard by which freight brokers and forwarders must comply.
Premiums for this bond vary by state and applicant. For applicants with excellent credit, We can issue these bonds for as little as $938 in many states. Brokers wanting to renew their bond may qualify for the best available premium after a year or two of conducting business without having any claims filed against the bond. Since freight broker bonds are inherently risky, underwriters must review all applicants’ credit and financials in order to determine an appropriate premium required to write the bond.
Freight broker license bond
In order to issue a freight broker license, the FMCSA requires all freight brokers and freight forwarders to file either a surety bond (BMC-84) or a trust fund agreement (BMC-85). This requirement exists to ensure that licensed freight brokers and forwarders are held to certain standards, as well as to prevent fraud or failure to pay motor carriers or shippers in a timely manner. Should freight brokers or forwarders fail to comply with any terms of the surety bond, parties that suffer damages as a result may file a claim against the bond. If the claim is determined to be valid, the surety company will pay to settle the claim up to the full amount of the bond— $75,000. Once the claim has been resolved, it is the responsibility of the license holder to reimburse the surety the equivalent amount of money.
Should an applicant opt not to obtain a surety bond, another security option is to place the $75,000 into a trust fund by filing Form BMC-85. However, this option requires full collateral up front, so it is typically large brokers with established financial stability that choose this option. Newer freight brokers are encouraged to file a surety bond since it only requires an annual premium (typically 2-4% of the bond amount), rather than collateral.
Freight broker bond details
Freight broker license bonds are valid for one year from the date it is issued. If either the broker or surety wishes to terminate the bond during that year, a 30-day notice of cancellation must be sent to the FMCSA. During the 30 days prior to cancellation, the surety remains liable for any claims filed against the bond.
Become a freight broker
The Federal Motor Carrier Safety Administration (FMCSA) is the regulatory authority for freight brokers and forwarders. According to Title 49, U.S.C. 13904, freight brokers and forwarders must register with FMCSA before beginning business operations and arranging for the transportation of any goods. Brokers must have either three years of relevant experience or satisfactory evidence of their knowledge in the freight industry in order to be approved for their license. In order to become a licensed freight broker, applicants must take several additional steps required by the FMCSA:
- file OP-1 Application for Motor Property Carrier and Broker Authority
- provide proof of insurance coverage: $75,000 surety bond (BMC-84) or trust fund agreement (BMC-85)
- submit BOC-3 (Designation of Process Agent)
- include non-refundable filing fee of $300
For freight forwarders, the FMCSA requires additional insurance, to be submitted on the following forms:
- liability insurance: BMC-91 or BMC-91x (if insurance is provided by multiple companies)
- freight: $750,000-$5,000,000 minimum insurance (depends on cargo)
- vehicles weighing less than 10,001 lbs. transporting non-hazardous freight: $300,000
- passenger vehicles: $5,000,000
- passenger vehicles with capacity of 15 people or fewer: $1,500,000
- proof of cargo insurance (if you are a household goods freight forwarder): BMC-34 or BMC-83
- minimum $5,000 per vehicle
- minimum $10,000 per occurrence
Applicants may submit the OP-1 form to the FMCSA online or through mail. However, if an applicant does choose to mail the form, it may take up to four weeks to receive their operating authority. In order to expedite the process, applicants are encouraged to ensure that all information provided is correct. Applications with incomplete or missing information are likely to be rejected.
Apply for my freight broker bond
We strives to provide every client with a fast, easy and accurate surety bond application process.
- Step 1: Apply online, and let our surety experts do all the work for you.
- Step 2: Pay for your bond. We offer quick, easy and convenient payment options.
- Step 3: Receive your bond. We will instantly send you a digital copy of your bond via email. This bond is filed electronically by us and submitted directly to the FMSCA on your behalf. No physical copy of the bond is ever issued.
Because financial credentials are required with freight broker bonds, it may take up to 48 hours to get a bond price quote. Your account manager will issue your bond as soon as payment is processed.
Understand surety bonds
Surety bonds hold business professionals responsible for acting ethically and lawfully while on the job. When it comes to freight broker bonds, the obligee requiring the bond is the U.S. government, the principal required to purchase the bond is the freight broker and the surety responsible for producing the bond is the underwriting company.
Apply for your surety bond
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