Freight Broker Bonds (BMC-84) are surety bonds required by the Federal Motor Carrier Safety Administration (FMCSA) for those operating as transportation brokers with carriers performing interstate deliveries. The FMSCA requires that all brokers must file a bond (BMC-84) or trust (BMC-85) before obtaining a license. BMC-84 bonds are in place to protect the shippers and motor carriers if they are not paid by a transportation broker. The penal sum of the bond is set at $75,000. Previously, the bond was set at $10,000 but increased to $75,000 in 2013 due to legislation signed into place by President Obama called MAP-21. Some refer to the BMC-84 bonds as ICC (Interstate Commerce Commission) broker bonds or FMCSA broker bonds.
How do I get a freight broker bond?
If you find yourself in need of a freight broker bond, you should contact your surety or insurance broker. Your surety bond broker will send you an application specific to the transportation industry and this bond type. In some cases, you may be asked to present business or personal financial statements, especially if your personal credit history is less than perfect or you are new in business. The cost of the bond will depend on the financial strength and business history of the applicant. Very strong applicants can expect to pay 1.25% – 3% or $938 – $2,250 annually, while applicants with poor credit or who are new entrants into the business may pay as high as 10% – 13% or $7,500 – $9,750 annually. Each applicant is different, and the rate is based off multiple factors.
What if I do not want to pay for a bond?
There are two ways to satisfy the requirement to become a licensed freight broker. For those who have significant assets, there is an option to utilize a BMC-85 Trust. This option requires that the license holder places $75,000 in cash into a trust fund. The funds are not accessible for the entire duration that the license is active. While this may be a suitable option for larger corporations with significant assets, many prefer to go the traditional bond route as only a percentage of the bond must be paid on an annual basis. Additionally, with the BMC-85 there may be a higher chance that the trust companies pay claims without performing the proper amount of due diligence. Sureties will fully investigate the claim and only pay if there is a valid claim upon investigation.
Can I still get a BMC-84 bond if my credit is not perfect?
Yes, freight brokers with a credit score of 650 or lower, or no credit history can still receive a bond, however the bond premium will be higher for that individual. Bond rates typically go from 5% or $3,750 annually to 10% -13% or $7,500 to $9,750 annually based on credit score and other factors. To lower your freight broker bond premium, try to; pay off any unpaid debt, resolve any civil judgements, clear up any tax liens, submit more financial documents showing your financial strength, or provide a personal resume showing your experience in the field.
Lexington National does not write BMC-84 bonds directly. Please contact your licensed insurance broker for help obtaining a bond. If you do not have an agent and need one, please contact us and we will attempt to you assist you in finding an agent.