Freight Broker Bond (FMCSA)
What Is a Freight Broker Bond?This is a surety bond required by the FMCSA (federal motor carrier safety administration). Every freight broker must have the bond, and it exists to ensure that brokers will be able to pay carriers and/or shippers. It’s a financial incentive to avoid fraud and regulatory failures.
What Does a Freight Broker Bond Cover?By regulation, the surety bond is required to cover a minimum of $75,000. This can be used to pay settlements when a claim is awarded against the bond. Keep in mind that greater sums can be awarded, and the freight broker will be liable for any amounts beyond the bond coverage.
How Much Does a Freight Broker Bond Cover?A freight broker bond will typically cover $75,000 in damages.
How Much Does a Freight Broker Bond Cost?The typical range of costs is between $3,750 and $12,000. What percentage of the coverage you pay is dependent on a slew of factors regarding the bond amount, the freight broker business and its financial strength. A bond quote will show you exactly how much you pay.
Surety Bond Cost CalculatorThe cost of surety bonds will depend on your business history, credit score and other specific factors. The best way to know the cost is to get a free quote when you fill out the bond application.
Can I Get a Freight Broker Bond With Bad Credit?Yes! We issue bonds even when credit scores drop below 650 or have other blemishes. Keep in mind that regulations prohibit the issuing of freight broker bonds to anyone who is currently in bankruptcy.
Freight Broker Bond RequirementsThe chief freight broker bond requirement is to cover a minimum of $75,000. Additionally, they are issued from one year and must be renewed annually.
Types of Freight Broker Security RequirementsIn order to run a freight brokerage, a security fund must exist in one of two forms: a BMC-84 Bond or BMC-85 trust. They have separate advantages and weaknesses.
The BMC-84 BondThese are covered by annual fees. More importantly, BMC-84 bond claims are processed by a surety company, not the government.
The BMC-85 TrustThe BMC-85 trust is covered via collateral, usually in the form of a trust fund (that still must value at least $75,000). Claims against the trust are handled by a government agency.
Can Someone File Against My Freight Brokerage?Yes. Shipping and transportation companies can file against your brokerage if they feel they have been wronged, especially if wrongdoing was in violation of regulations.
Freight Broker Bond Claims ProcessWhen a bond claim is made, the bond agency will investigate the claim to see if it is valid. If they validate the claim, the bond will be paid, and you’ll have to secure a new bond to replace it. It’s worth noting that you will not be on the hook for damages awarded up to the value of the bond.
History of the $75,000 BMC-84 BondFreight broker bond requirements were originally set in 1930. They were reviewed and increased in 1970 and again in 2012. It was the 2012 review that set the $75,000 requirement and modernized the freight broker bond.
Household Goods Carrier BondA household goods carrier bond is required in some states in addition to the freight broker bond. The household goods bond provides additional coverage against regulatory failures.
Freight Broker Bond Renewal and CancellationThe bond will auto renew each year. If you wish to cancel the automatic renewal, a minimum of 30-days notice is required and has to be processed by the FMCSA.
How to Become a Freight BrokerThis can be accomplished in a few steps. First, you must file for Motor Property Carrier and Broker Authority. Then, provide proof of insurance and your freight broker surety bond. Then, you can submit a Designation of Process Agent and pay the filing fee.
Over 125 years of combined experience
As a surety bond broker, we work for YOU not the surety company. We are licensed nationwide and appointed by 25 surety companies so that we are able to offer the best solution for all surety bond needs. We are a small organization that strives to make you feel like part of our family.
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Three party agreement
Surety Bond Definition: The definition of a surety bond is as follows: A surety bond is a binding agreement between three parties. This agreement sets forth a financial guarantee by one party ( “surety” ) to another party ( “obligee” ) that a third party ( “principal” ) will fulfill required obligations to the obligee, and that state, federal, and local laws and applicable regulations will be adhered to. Let’s examine each of the three parties.Learn more about surety bonds
Bad Credit – Fast Approvals – Lowest Rates Available.
- Credit below 650 and/or have blemishes on credit report.
- Average cost is 5-15% of the bond amount.
- Available for all commercial bonds.
Why does credit matter? Applying for a surety bond is similar to applying for a loan. You are asking a surety company to back you financially. Reviewing credit is the best method for the surety to understand their risk. All sureties review credit as a view only and should have no effect on your credit score. While it is true that bad credit makes it harder to obtain a competitive quote, we are committed to making sure all of our customers have access to the best possible rates. While we can’t guarantee that we can provide a bond for the most extreme bad credit situations, we strive to make sure no stone is unturned! In other words, if you are insurable, we will get it written. Contact us today and let us put together an online quote for you that will exceed your expectations.