BMC-84 Freight Broker Bond: A Comprehensive Guide

Overview:

• Average Cost: $925 per year or $93 per month based on the broker’s credit.
• Bond Amount: $75,000.
• Who Needs It: All individuals and business entities seeking to obtain a freight broker or freight forwarder registration.
• Purpose: To ensure motor carriers and shippers do not suffer financial harm due to unethical actions committed by a freight broker.
• Regulation: The Federal Motor Carrier Safety Administration (FMCSA).

Background:

• Freight brokers must register with the FMCSA as per 49 U.S. Code Statute 13904.
• To ensure ethical business practices and timely payments, brokers must maintain a $75,000 BMC-84 Freight Broker surety bond.

Obtaining a Freight Broker Surety Bond:

• BondExchange facilitates the process, offering an easy-to-use platform for insurance agents.
• The platform, backed by 40 years of experience and advanced technology, ensures efficient service in obtaining quotes or issuing bonds.

Underwriting Requirements:

• Freight Broker bonds are considered higher-risk, with underwriters examining factors such as the broker’s credit score, financial statements, and business experience.
• Rates are influenced by credit history and business experience, with better rates for brokers with excellent credit.

Cost of BMC-84 Freight Broker Bond:

• The cost ranges from $925 to $9,750 per year or $93 to $975 per month.
• Determined by factors like credit score, financial statements, and business experience.
• New brokers with challenged credit may face higher rates or need collateral.

Who is Considered a Freight Broker?

• Defined by 49 CFR Statute 371.2 as any individual or business entity arranging the transportation of property by an authorized motor carrier.

Freight Forwarders and Bonds:

• Freight forwarders are also required to purchase a $75,000 Freight Broker Bond.
• Freight forwarders organize shipping and store customer property, including handling international shipments.

Registration Process with the FMCSA:

• Brokers must purchase a surety bond or obtain a trust fund agreement.
• Purchase insurance with specific minimum limits.
• Designate a process agent.
• Complete the online application and pay a $300 application processing fee.

Renewal Process:

• Renewal involves submitting a completed renewal application and a $300 operating fee.
• The registration is valid for a maximum of 5 years.

Differences Between BMC-84 and BMC-85:

• BMC-84 does not require collateral, while BMC-85 mandates the offering of the full $75,000 in collateral.
• BMC-85 collateral is held in a trust, incurring an annual fee.

Insurance Requirements for Freight Brokers:

• Public liability and cargo insurance are mandatory, with specified minimum limits.
• A $75,000 Freight Broker surety bond or trust fund agreement is also required.

Filing the BMC-84 Freight Broker Bond:

• The surety company files the bond electronically with the FMCSA.
• The filed bond and other insurance requirements can be viewed using the FMCSA insurance lookup tool.

Avoiding Claims Against the Freight Broker Bond:

• Compliance with FMCSA regulations, especially avoiding fraud and ensuring timely payments.
• Claims can only be filed for interstate loads.
• Documenting any changes to shipment prices is crucial.

Other Insurance Products for Freight Brokers:

• While BondExchange specializes in bonds, agents often utilize brokers for liability and cargo insurance.
• Marketing resources are available, and agents can leverage print-mail relationships for discounted services.

In summary, this guide covers the essential aspects of BMC-84 Freight Broker bonds, providing insurance agents with the knowledge needed to assist freight brokers effectively.