BMC-84 Freight Broker Surety Bond
What is a Freight Broker Bond?
Freight brokers and freight forwarders in the U.S. are required by the Federal Motor Carrier Safety Administration (FMCSA) to provide a $75,000 freight broker surety bond. Obtaining the bond is part of the steps to getting a freight broker license. The freight broker bond is also known as BMC-84 bond, ICC broker bond, or FMCSA broker bond.
The FMCSA requires this bond to protect shippers and motor carriers from brokers and freight forwarders who fall short of their contractual obligations, such as conducting fraud or failing to pay trucking companies on time.
Essentially, a freight broker bond is a binding agreement between the following three parties:
- Principal (the freight broker)
- Obligee (the FMCSA)
- Surety (the surety bond company)
The bond must be issued by a surety bond company that has been authorized by the the Secretary of the Treasury, and since the general public does not have direct access to these companies, this is where we steps in to help.
By working exclusively with top rated companies, we are able to provide freight brokers with the best rates available.
What does a Freight Broker Bond cover?
The BMC-84 bond covers any claims that have been made against the freight broker, for up to the $75,000 bond amount.
How a claim is handled, solely depends on how the freight broker has met the FMCSA securities requirement prior to that.
How much does a Freight Broker Bond cost?
The cost of the freight broker bond is only a percentage of the $75,000 bond amount, called the premium, and it is determined by the surety bond company issuing the bond.
That percentage is often largely based on the freight broker’s credit score. However, providing additional information that shows financial strength and experience can help lower the cost. Sureties will then assess all the risks involved in bonding, will formulate a quote based on all the provided information.
Below are some of the main factors that have an impact on your freight broker bond cost:
- Personal credit score
- Years of industry experience
- Current or previous bond claims
- Business financials
- Fixed and liquid asset
Freight broker bond rates can be as low as 1.25% ($938) for experienced brokers with excellent credit score and financial records. Applicants with an average credit score and financials can expect their rates to be anywhere between 3% and 5%.
Can I get a Freight Broker Bond with Bad Credit?
Yes, freight brokers with poor credit score can still get bonded. However, you should expect the bond premium to be a bit higher.
Freight brokers with credit score of 650 or lower, or with no credit history, are considered high-risk applicants. This is why bad credit bond rates typically start at 5% of the bond amount and can go up to 12%.
Contact our office at 206-248-5615 for free Bond Quote!