Freight Broker & Forwarder Surety Bonds (BMC-84)

The cost of a freight broker surety bond varies greatly and is determined by all owners and spouses credit ratings, years in business, industry experience, and financial strength. In 2013, a new transportation law - Moving Ahead for Progress in the 21st Century (MAP-21) - increased the required freight broker bond from $10,000 to $75,000. The amount increase means sureties underwrite these bonds more carefully and price them accordingly. Providing the necessary financial documentation and information to the surety serves both to expedite the application process and get you the lowest available rate.

At The ProSure Group, freight broker / forwarder (BMC-84) bonds can be written for annual premiums as low as 1.25 percent, or $938 for a $75,000 surety bond. To qualify for the lowest premium, applicants should have excellent credit (750 FICO score or higher) and personal and business financials with cash verification and be in business a minimum of 3 years. Applicants must also provide resumes which detail experience in the freight industry for a minimum of 5 yearswith no claims made against their bonds. Most applicants who apply for bonds, especially new companies, usually qualify for rates between 3.5 percent and 5 percent. Bad credit doesn't always disqualify an applicant from obtaining a bond. However,individuals or businesses who've filed bankruptcy within the last 5 years are more difficult to bond.

In many cases, there are a number of ways to lower the cost of a surety bond. Possible steps toward lower rates include providing supplementary evidence of financial or business statements, obtaining additional liquid assets, and improving your credit score. Working with a surety that takes the time to find the lowest marketplace rate is also important.

As a freight broker or forwarder, obtaining a BMC-84 surety bond is necessary to receive professional licensure from the FMCSA. From the perspective of carriers and shippers, freight broker surety bonds provide financial protection in the event that a broker or forwarder violates a contract, agreement, or arrangement. In such a case, the surety bond holds the broker or forwarder responsible and covers the damages.

The Federal Motor Carrier Safety Administration manages the registration of freight brokers and forwarders for the U.S. Department of Transportation (DOT). Applicants must register per U.S. Code 49 Section 13904 and be licensed by DOT. The FMCSA has established the rules, regulations, and procedures for licensure, including posting a $75,000 surety bond, which must be filed per U.S. Code Title 49 Section 13906. The principal on the bond should be the broker or forwarder, the obligee the United States of America, and the surety company.

The term of a freight forwarder / broker bond is either one year or until the bond is canceled. The bond can be renewed annually and for as many years as required. New applicants should set their bonds’ effective dates to coincide with their application submissions. To cancel a bond, a 30-day notice must be sent the surety or principal and the FMCSA.

Apply for a surety bond from The ProSure Group online, by phone, or at our offices. Our surety experts are familiar with all types of bonds and can guide you through our easy application process. We have partnerships with more than 30 sureties, so you are ensured to get the best available rate and terms. To get started, fill out the application and our surety specialists will be in touch!

The following comprises steps to obtain a freight broker or freight forwarder license.

• Complete all forms required by FMCSA.
• File Form OP-1 (Application for Motor Property Carrier and Broker Authority); supplemental documentation to be attached.
• Submit a $75,000 surety bond (Form BMC-84).
• Pay the $300 fee for each type of operating authority being requested.
• Register with the Unified Registration System (URS) (first-time applicants only).
• Meet the broker’s requirement: proof of 3 years of relevant experience or evidence of industry knowledge.
• Submit a Designation of Agents for Service of Process (Form BOC-3) for each state in which you intend to operate.

Forwarders may be required to carry minimum insurance coverage, including the following types of insurance and the subsequent coverage amounts.

Liability insurance: BMC-91 or BMC-91x

• Freight: $750,000 to $5 million minimum, depending on cargo.
• Vehicles weighing less than 10,001 pounds that transport non-hazardous freight: $300,000.
• Passenger Vehicles: $5 million.
• Passenger Vehicles with a capacity of 15 or fewer people: $1.5 million.

Cargo Insurance (for freight forwarders of household goods): BMC 34 or BMC-83

• $5,000 per vehicle (minimum).
• $10,000 per occurrence (minimum).