Freight Broker Bonds (BMC-84)

Freight Broker Bonds (BMC-84)

What is a freight broker bond?

Freight brokers, the Federal Motor Carrier Safety Administration (FMCSA), and a surety firm enter into legally enforceable contracts known as freight broker bonds, sometimes referred to as BMC 84 bonds or ICC bonds.

The Principal (the freight broker) is subject to the duties set forth by the Obligee, the FMCSA. The bond ensuring the broker's performance is issued by the surety, also referred to as the bonding firm. In addition to the bond needed by the FMCSA, certain states now demand their own bonds for freight brokers.

What is the purpose of a freight broker bond?

To be eligible for a freight broker license and to work as a freight broker or freight forwarder in the United States, you must post freight broker bonds. A broker has the option to file Form BMC-85 and place the entire bond amount into a trust fund if they decide not to post a surety bond. Since this alternative demands upfront payment of the bond's entire value rather than just a premium, it is less appealing to newer freight brokers.

The FMCSA receives a guarantee from the surety firm when they issue the bond that the shippers and motor carriers of a licensed broker will be compensated for monetary losses resulting from a breach of the laws and regulations required by the freight broker license.

The surety will make restitution up to the bond amount if the freight broker violates the FMCSA's requirements. The broker is responsible for the losses and is obligated by law to pay back any damages paid by the surety firm under the bond.

What is the cost of a freight broker bond?

A freight broker surety bond has a $75,000 total bond amount. Your premium rate, which is expressed as a percentage of the entire bond amount, is set by the surety firm.

The surety firm assesses your credit rating, financial stability, work history, and licensing status during the application procedure. Even while applicants with good credit typically get the best deals, having bad credit won't stop you from getting a freight broker bond.

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