Questions about Freight Broker Bonds
What is the BMC-84 Freight Broker Bond?
As of Oct 1, 2013, the MAP-21 law requires that freight brokers and freight forwarders must post a $75,000 bond (increased from $10,000) that demonstrates financial responsibility and guarantees payment to motor carriers and shippers if it fails to comply with contracts and agreements.
Failure to comply with the broker requirement may mean that broker authority is revoked by the Federal Motor Carrier Safety Administration (FMCSA). Additionally, failure to renew the bond each year will mean freight broker companies will be unable to renew operating licenses.
Also known as Interstate Commerce Commission (ICC) Bond, Property Broker Bond, and Transportation Broker Bond, the BMC-84 Freight Broker Bond is a necessary requirement for operating as a licensed freight broker or freight forwarder in the United States. In essence, any company moving property such as household goods or freight and motor cargo must have a BMC-84 or BMC-85 in order to legally provide these services.
- Removes the need for capital upfront
- Only pay a percentage of the $75,000 rather than post the full amount
- Costs significantly less if no claims are made
- Provides flexibility and increased protection
- Surety bond companies share liability and are, subsequently, invested in claims
How Does a Freight Broker Bond Work?
The BMC-84 is a surety bond that must be issued by a company authorised by the Secretary of Treasury. It acts as a form of credit whereby principals are required to provide payment for claims. When a principal fails to meet its contractual obligations, the bond company will intervene to ensure the customer suffers no losses, however, the principal is still required to pay the full amount of the claim.
This binding agreement between three parties (principal, surety, oblige) essentially allows the freight company (principal) to provide indemnity through the surety company (surety) to the oblige (FMCSA). It is the FMCSA who regulates the industry and ensures customers do not suffer financial harm because of negligent practice or dereliction of contract.
A BMC-84 surety bond requires a monthly payment (premium), removing the need for principals to provide collateral, as with Trust Fund, and freeing up capital for other purposes. When a freight company purchases a bond and pays the premium, the bond company extends surety credit that assures the obligee that this project/shipment is guaranteed. Assuming the principal follows the terms to completion, there will be no claims and no further payments for the principal.
If a claim is made, the principal must contact the bond agent who should be able to provide more information on the claim. Next, the principal should contact the claimant to see if the issue can be resolved. If the claim remains valid, as stated in the bond indemnity agreement which you are required to sign when obtaining your freight broker bond, compensatory payments must be agreed and paid.
How Do I Get a Freight Broker Bond?
Getting a freight broker bond is simple with Lance Surety Bonds. As a surety bond agency appointed with top surety bond companies (carriers) authorized by the US Department of Treasury, we offer complete peace of mind alongside the lowest rates in the industry.
Fill out our online form for a free quote. If your bond is approved, you will then be contacted with your bond premium. Once you pay your annual bond premium, coverage will begin as soon as your bond has been registered.
Freight Broker Bonds are electronically filed with the FMCSA, so you don’t have to worry about additional paperwork. Once the FMCSA approves your bond, you will be provided with the electronic filing confirmation, and within 24 hours will be able to view your active bond coverage on the FMCSA website.
How Much Does a Freight Broker Bond Cost?
Depending on your specific circumstances, annual bond premiums for the $75,000 BMC-84 Bond currently range between $938 and $9,000. Costs are determined by a range of factors, including but not necessarily limited to:
- Personal credit score
- Years of industry experience
- Current or previous bond claims
- Business financials
- Fixed and liquid asset
Here at Lance Surety Bonds, we are committed to getting you the best deal for your company, and offer excellent rates for brokers with bad credit scores. Additionally, you can speak to us for advice on how to lower your bond premiums or read our tips & tricks to strengthen your application.
Freight Broker Bond Requirements
In order to successfully apply and receive a BMC-84 bond, your company will need to fulfil a range of requirements. The good news is that, if you apply through Lance Surety Bonds, we require significantly less information to approve your bond. Contact us for a free quote and enjoy these benefits:
- Lowest rates in the industry
- No collateral required
- No business or personal financials required
- Approvals for good or bad credit
- No spousal indemnity required
- US Citizenship is not a requirement
Other brokers may also require:
- MC Number
- Contact Information
- Company Name
- Residency Status
- Years in Business
- Active Claims
Freight Broker Bond Renewal
All freight broker bonds are valid for only 1 year from the issue date and timely renewal is required to prevent your license being revoked. However, to help you ensure continued coverage, Lance Surety will keep you updated in plenty of time for renewal. Additionally, you can learn more about renewal in our renewal guide here.
If you are retiring or closing down your brokerage, you must notify the FMCSA at least 30 days in advance using the BMC-36 form.
Other Freight Broker Bond FAQs
Yes. While many sureties only offer bonding to customers with perfect credit, Lance Surety Bonds has designed a special Bad Credit Program for applicants with problematic finances. Your annual premium will depend on your individual credit profile, but you can expect slightly higher rates due to the increased bonding risk.
Approvals for BMC-84 bonds do not require collateral. We can get you bonded with just an annual premium requirement.
Collateral is only needed if you are trying to meet the freight broker securities requirement by using a BMC-85 trust fund. You can read more about the difference between a BMC-84 bond a BMC-85 trust fund here.
Even though there is no speedy way to verify your freight broker bond, there is a way you can check the status of your freight broker bond and license online by using the following these easy steps:
- Go to the US DOT and FMCSA License and Carrier Search website.
- Enter your MC or USDOT number in the appropriate field.
- After you land on the next page, go to the last column "View Details" and select either HTML or PDF Report
- From there, you can check the “Insurance Type” field for "Bond", and see if there is any "Insurance on File"
- If there is an active bond on file, the column will read "YES"
This is currently the only way that you can check online if you or any other freight broker or forwarder has active bond coverage.
Still Have Questions? Check Our FAQ Pages
What Our Clients Have To Say?
Kimberlee AblesQuick response times and turn around for issuing bonds. Great customer service and very knowledgeable. We have used Lance Surety multiple times and have never been disappointed. Highly recommend them and Collette!
Andrew PoincotLong story short, these guys cut through the B.S. and get the job done. Responsiveness, excellent! Communication, excellent! Respect for their industry partners, excellent! John, Collette, Ryan, you're all-stars! Thank you!
Margie MartinezWe decided for Lance Surety Bond's quote for 2 reasons; Price and Customer Service. Our Representative Ryan was just SUPERB!! [...] I highly recommend Lance Surety Bond for all your Bonding needs! I'll definitely come back for all of mine. :-) Thanks Ryan!