If you are a new freight broker or freight carrier, you might have been told you need to file a trust fund agreement (BMC-85). But did you know you could file an ICC Freight Broker Bond (BMC-84) instead and save money?
Trust funds (BMC-85) tie up your money and require 100% collateral. The surety bond (BMC-84) only requires an annual premium. Some of our customers have been bonded for as low as $938!
To get a free quote, complete our online ICC Freight Broker Bond application.
What is a Freight Broker Bond?
A Freight Broker Bond (BMC-84) is a type of license and permit surety bond that freight brokers and freight forwarders need to purchase before they can get licensed. This is a federal bond required by the Federal Motor Carrier Safety Administration (FMCSA).
You need this bond before you can get licensed as a freight broker or freight forwarder.
Freight Broker Bonds are also known as:
- Interstate Commerce Commission (ICC) Bonds
- Property Broker Bonds
- Transportation Broker Bonds
How does a Freight Broker Bond Work?
This bond provides a form of protection for motor carriers. The bond exists to establish trust and credibility for your business.
When you get a Freight Broker Bond, you are guaranteeing that you will abide by all federal and state rules and regulations. You also are guaranteeing that you will pay motor carriers and shippers.
How the bond works is this: If you follow all the rules and regulations, nothing further will happen with your bond. But if you fail to follow through on your obligations, for example by not paying motor carriers, someone can make a claim against your bond.
If a claim is made on your bond, the surety company will investigate the claim. If the claim is determined to be valid, they will require you to satisfy the claim, for example by paying the motor carrier. If you fail to satisfy the claim, the surety company will satisfy the claim for you. Then, they will come to you for repayment.
Freight broker claims are not good for your business. You can learn more about the bond claim process and what your obligations are under the bond.
How Much Does a Freight Broker Bond Cost?
Previously, freight brokers could file a $10,000 bond, but with the new transportation law, Moving Ahead for Progress in the 21st Century (MAP-21), the bond amount is now $75,000. The bond amount has been set at $75,000 since October 1st, 2013.
You do not need to pay the full $75,000 to get bonded. You just need to pay a portion of this amount. This will be a one-time payment.
The price you’ll pay for your bond is based on three main factors:
- your personal credit
- business experience
- and financial strength of your company – sometimes financial statements are required
Some of our customers have been bonded for as low as $938.
The best way to see what you’d pay is to complete our interactive application so we can get you a quote:
Can I Get a Freight Broker Bond If I Have Bad Credit?
Rates for those with bad credit are usually higher than those with good credit. Bad credit rates usually start at 3-4% and can go as high as 15%.
To get a bad credit quote, complete our online ICC Freight Broker Bond application.
Do I Need To File My Freight Broker Bond?
No. We will electronically file your Freight Broker Bond with the FMCSA, so you won’t have to deal with any added paperwork.
Once the FMCSA approves your bond, you will be able to view your bond coverage online within 24 hours.
After you get your bond, you can finish the process to become a freight broker which includes purchasing public liability insurance, BOC-3 filing, and obtaining your Unified Carrier Registration (UCR).
Does My Freight Broker Bond Expire?
Yes. Freight Broker Bonds are valid for one year from the date of issuance.
If you wish to terminate your bond, you must give the surety company a 30-day cancellation notice. These bonds will need to be renewed every year for you to remain in compliance with the law. This means you will need to pay to renew the bond. You might be eligible for a lower rate in your second year.