Freight Broker Bond
What is a Freight Broker Bond?
A freight broker is a person or entity responsible for arranging the transportation of property by a motor carrier. All freight brokers must register with the Federal Motor Carrier Safety Administration (FMCSA).
A freight broker surety bond, also known as BMC-84, is a mechanism for protecting shippers/motor carriers. Having a BMC-84 bond helps ensure that you as the broker abide by the Federal Motor Carrier Safety Administration (FMCSA) rules and regulations. The cost of a freight broker bond ranges from $938 to $9,000. The pricing is calculated as a small percentage of the full $75,000 bond amount, typically between 2-12 percent.
Understanding the Freight Broker Bond Process
Effective October 1, 2013, the FMCSA requires freight brokers to post a $75,000 bond during the registration process. Freight brokers must complete a freight broker bond application with a surety bond company during the registration process. The freight broker bond premium is paid on an annual basis. The premium amount is determined during the underwriting process and is a percentage of the bond amount. No collateral is required.
Like most industries, not all surety bond companies are created equally. The best ones provide a fast turnaround, sell to industry-leading companies, and offer more competitive premium rates.
While you are required to obtain a freight broker bond to function as a freight broker, you have the freedom to choose the surety bond company that best suits your circumstances, so choose wisely.
Pricing & Terms
Surety bond costs are a percentage of the full bond amount, which is usually determined by your personal credit. Providing industry experience, strong personal credit, and business/personal financials will help lower your bond rate. Reach out for a quote today.
Freight Broker Bond Price Calculation
Underwriters consider several factors in determining the price calculation of the premium that must be paid. The most important factors are credit history/score of the freight broker, length of business experience, and financial strength of the freight broker.
The credit history/score of the freight broker is the most heavily weighted factor in the price calculation, but the ability of the underwriter to review financial statements and business experience allows for a more comprehensive analysis of the freight broker’s application. The more detail the underwriter can review, the more likely a freight broker may overcome negative credit history.
Those freight brokers with solid credit histories, experience, and financial strength pay a lower bond percentage than those with poor credit histories, lack of experience, and financial weakness. Bond percentages typically range between 2 percent to 3 percent. That amounts to about $1,500 to $2,250 annually for those with solid credit histories. Those with poor credit histories will pay between 4 and 15 percent of the $75,000 bond, amounting to about $3,000 to $11,250 on an annual basis.
Bond Purchase Process
1. Find Your Bond
2. Request Quote
3. Buy Online
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Frequently Asked Questions
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