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What is a Freight Broker Bond BMC-84 and How to obtain at Affordable Rate?
Posted by All State Bonds on
Freight Broker Bond, BMC-84
Freight Broker Bond BMC-84, is required by FMCSA ( Federal Motor Carrier safety Administration) for all companies providing brokerage or freight forwarding services. As of October 1, 2013 FMCSA increased the minimum financial responsibility to $75,000 freight broker bond, also know as a MBC-84. Formerly known as the Interstate Commerce Commission bond, or ICC Bond, the Freight Broker bond is legally required to operate as an authorized broker or freight forwarder. This bond guarantees payment to shippers and motor carriers in the event your company fails to carry out its contracts as is required by FMCSA.
All State Bonds will Issue most BMC-84 on the Same Day. All State Bonds have one of the lowest rate nationwide that start from $750.
This bond is also commonly known as BMC-84, property broker surety bonds. The FMCSA also allows brokers to submit a BMC-85 trust fund in place of a bond. All State Surety, Inc. only recommends submitting the BMC-85 trust fund if they do not qualify for a BMC-84 freight broker bond.
Advantages of the BMC-84 freight broker bond when compared to the BMC-85 trust. First the band typically allows you to keep more capital in your business as all that is required is a yearly premium as opposed to a $75,000 trust. Secondly, should a claim arise the surety will investigate to ensure the claim’s validity, with the BMC-85 often times the money is just withdrawn from the trust when the claim is filed.
FMCSA acknowledges that there are motor carriers that occasionally broker loads that have not previously been required to obtain operating authority registration from FMCSA as brokers. FMCSA will accept complaints regarding unauthorized brokers through their National Consumer Complaint Database ( http://nccdb.fmcsa.dot.gov/). One $75,000 bond for both broker and freight forwarder authority is sufficient as long as the legal entity holding the authorities is the same. If your broker and freight forwarder operations are conducted under separate but affiliated companies, then each entity must have a separate bond.
For those with questionable credit, and do not qualify for the standard market, a high-risk surety bond market exists for freight brokers. This program charges higher rates than the standard market.
How to Become a Freight Broker?
I. Become a freight broker by receiving Broker’s Authority from FMCSA. A Broker’s Authority, available through the FMCSA for a $300 fee. You fill out Form OP-1 and a file for your authority to operate as a broker.
II. A Surety Bond or Trust Fund, which you can obtain from a bank or bonding company. The cost varies depending on your personal credit. You’re required to carry a $10,000 bond or trust, but if your credit is good, some companies will put up your bond for you for a fee (normally $500 to $700 per year). The form filed with this is BMC-84 or BMC-85.
Once done, select process agents have on file. You can now receive freight loads to broker to contractors. For more information see here.
How to Verify a Freight Broker Bond?
If you’re new to working with freight brokers, you may be confused about the role of their surety bond. From the Carrier’s standpoint, the surety bond is in place as protection in case the broker refuses to pay for services rendered. Always verify a freight broker’s bond before accepting a load. Read on to learn more. Visit the Federal Motor Carrier Safety Administration (FMCSA) website. Go to the Licensing and Insurance section and choose Carrier Search.
Federal requirement for a freight Broker License:
Bond: Freight Broker Bond
Oblige: Federal Motor Carrier Safety Administration
1200 New Jersey Avenue
SE, Suite W60-300
Washington, DC 20590
Form: BMC-84 (electronically filed with the FMCSA)