All freight brokers and freight forwarders, as part of the professional licensing requirements of the Federal Motor Carrier Safety Administration (FMCSA), are required to obtain $75,000 surety bonds. These freight professionals bonds are referred to as freight broker bonds, freight forwarder bonds, and BMC-84 bonds. Unlike Trust Fund Agreements (BMC-85), which require the principals to present (sometimes full) collateral, BMC-84 surety bonds have no collateral requirements and can be obtained for just a small percentage of the total bond amount. The ProSure Group surety bond agency offers freight broker and freight forwarder bonds for rates as low as 1.25 percent of the total bond amount. Apply for a Florida freight broker bond today!
Freight brokers serve as intermediaries between shippers and carriers and play many roles, including overseeing the processing of insurance claims on loads. According to U.S. Code 49 Section 13102, a freight broker “sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” Brokers don’t handle or take possession of freight, but they are required by the FMCSA to have freight broker surety bonds to maintain their brokerage authority.
In contrast with brokers, freight forwarders take possession of trucking loads and arrange them into smaller shipments, store them in warehouses, and sometimes ship them domestically or internationally using their own bills of lading (BOL). According to U.S. Code 49 Section 13102, a forwarder with freight “assumes responsibility for the transportation from the place of receipt to the place of destination,” among other duties. But before assuming this responsibility, the forwarder must first obtain a freight forwarder surety bond and register with the FMCSA.
Our surety agents write all kinds of transportation and shipping bonds, including freight broker and forwarder bonds, ocean transportation intermediary (FMC-48) bonds, as well as customs bonds. Contact us today for a free bond quote!
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The cost of a freight broker surety bond is determined by an individual or company’s credit rating, business experience, and financial strength. In 2013, a new transportation law — Moving Ahead for Progress in the 21st Century (MAP-21) — increased the required freight broker bond from $10,000 to $75,000. The amount increase means sureties underwrite these bonds more carefully and price them accordingly. Providing the necessary financial documentation and information to the surety serves both to expedite the application process and get you the lowest available rate.
At The ProSure Group, freight broker / forwarder (BMC-84) bonds can be written for premiums as low as 1.25 percent, or $937.50 for a $75,000 surety bond. To qualify for the lowest premium, applicants should have excellent credit (700 FICO score or higher) and personal or business financials. Applicants must also provide documentation which details involvement in the freight industry for a minimum of 5 years with no claims made against their bonds. Most applicants who apply for bonds, especially new applicants, qualify for rates between 2 percent and 5 percent. Bad credit doesn’t disqualify an applicant from obtaining a bond, but individuals or businesses who’ve filed bankruptcy within the last 5 years are more difficult to bond.
In many cases, there are a number of ways to lower the cost of a surety bond. Possible steps toward lower rates include providing supplementary evidence of financial or business statements, obtaining additional liquid assets, and improving your credit score. Working with a surety that takes the time to find the lowest marketplace rate is also important.
As a freight broker or forwarder, obtaining a BMC-84 surety bond is necessary to receive professional licensure from the FMCSA. From the perspective of carriers and shippers, freight broker surety bonds provide financial protection in the event that a broker or forwarder violates a contract, agreement, or arrangement. In such a case, the surety bond holds the broker or forwarder responsible and covers the damages.
The Federal Motor Carrier Safety Administration manages the registration of freight brokers and forwarders for the U.S. Department of Transportation (DOT). Applicants must register per U.S. Code 49 Section 13904 and be licensed by DOT. The FMCSA has established the rules, regulations, and procedures for licensure, including posting a $75,000 surety bond, which must be filed per U.S. Code Title 49 Section 13906. The principal on the bond should be the broker or forwarder, the obligee the United States of America, and the surety company.
The term of a freight forwarder / broker bond is either one year or until the bond is canceled. The bond can be renewed annually and for as many years as required. New applicants should set their bonds’ effective dates to coincide with their application submissions. To cancel a bond, a 30-day notice must be sent the surety or principal and the FMCSA.
Apply for a surety bond from The ProSure Group online, by phone, or at our offices. Our surety experts are familiar with all types of bonds and can guide you through our easy application process. We have partnerships with more than 30 sureties, so you are ensured to get the best available rate and terms. To get started, fill out the application and our surety specialists will be in touch!
The following comprises steps to obtain a freight broker or freight forwarder license.
Forwarders may be required to carry minimum insurance coverage, including the following types of insurance and the subsequent coverage amounts.
Liability insurance: BMC-91 or BMC-91x
Cargo Insurance (for freight forwarders of household goods): BMC 34 or BMC-83
|License||Freight Broker Surety Bond/Freight Forwarder Surety Bond (BMC-84 Bond)||U.S. Department of Transportation, Federal Motor Carrier Safety Administration
||$75,000||Click Here To Get Bonded|