Bmc 84 Freight Broker Bond

Why do you need a BMC-84 Freight Broker Bond?

A BMC-84 bond contributes to the assurance that you, the broker, follow the guidelines set forth by the Federal Motor Carrier Safety Administration (FMCSA). If you don’t, someone may claim your bond. After that, you must reimburse the claim amount.
For instance, freight brokers risk having a claim made on their bond if they fail to pay motor carriers on schedule. For authorized freight brokers, this can be an expensive problem that could jeopardize your agency. These factors make it crucial to comprehend the nature of a BMC-84 and how it functions in real life.

What Does a Freight Broker Bond Serve?

As part of the registration procedure to become a freight broker, brokers are required by the FMCSA to obtain a Freight Broker Bond. If the broker commits any fraud or neglects to pay its carriers or shippers on schedule, the bond guarantees that motor carriers and shippers will be compensated for any monetary losses. To put it briefly, the bond is a kind of insurance that guards shippers and motor carriers in the event that the broker behaves unethically.

What Conditions Apply To The BMC-84 Freight Broker Bond?

⦁ A surety bond company with state authorization should be the one issuing the bond.
⦁ The ICC Termination Act of 1995 will be followed in terms of transportation and shipments, and the bond will ensure financial responsibility.
⦁ The FMCSA’s rules and regulations must be followed by the Principal.
⦁ During the bond’s term, the Principal shall be held accountable for any damages and violations.
⦁ When a freight broker is sued for not paying freight charges that are specified in the contract, the bond will be utilized to cover the costs of the lawsuit.
⦁ The bond is good until it is canceled. If you need to cancel, you must give 30 days’ notice. This bond may be canceled at any time by the Principal or the Surety by sending a written notification to the FMCSA.
The purpose of freight broker bonds is to ensure that brokering is an ethical and fair industry in which all parties involved receive proper compensation for their efforts. In addition, surety bonds show freight brokers that they are a reliable source of funding and a secure partner for commercial dealings.

How to Get a BMC-84 Freight Broker Bond

What are the conditions for a freight broker bond, then? Before being eligible for a freight broker surety bond, brokers need to obtain the following three requirements:

  1. The FMCSA’s operating authority
  2. Insurance against public responsibility
  3. A BOC-3 document obtained from FMCSA
    Obtaining your public liability insurance and receiving your FMCSA operating permission are almost the same processes. Once you have registered as a process agent with federal approval, you are free to apply for a freight broker bond by getting in touch with a surety bond business.
    The surety business will obtain your credit score and provide you with a quote when you apply for a bond. The higher your credit score, the less the bond firm will charge you annually for their services. Don’t worry, though; a lot of bond firms will still work with you if your credit isn’t great. It will simply cost more.

What Is the Price of a Bond for a Freight Broker?

The annual bond premiums for the $75,000 BMC-84 Bond now range from $938 to $9,000, depending on your particular situation. A variety of factors, including but not limited to the following, influence costs:
⦁ Business financials
⦁ Years of expertise in the business
⦁ Current or past bond claims
⦁ Fixed and liquid asset

Frequently Asked Questions

Q1. What is the difference between BMC-84 and BMC-85?
When applying for registration, brokers who opt to acquire a BMC-85 Trust Fund Agreement are required to provide the entire $75,000 as collateral or transfer this sum into a trust. Generally speaking, banks and trust organizations will charge a yearly maintenance fee of 1% to 2%. Instead of offering the whole bond amount as security, brokers who get the BMC-84 surety bond are only required to pay an annual premium on the bond. Surety bonds do not reduce the broker’s working capital by locking up assets in a trust or collateral, in contrast to trust fund arrangements.

Q2. How do freight brokers find rates?
The primary elements that affect freight rates are the actual products being shipped, weight, size, distance, locations of pickup and delivery, and the mode of transportation (truck, ship, train, or aircraft).

Conclusion

If you’re starting a new freight brokerage, you’ll need to register with the FMCSA to obtain your freight broker authority. You will also want to ensure you have a business plan in place. Here at can do 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.