BMC-84 Freight Broker Bonds

Freight Brokers and Freight Forwarders in the United States are required to post financial security to passengers and carriers doing business with these brokers. One form of financial security is a BMC-84 Surety Bond. Learn more about how to easily obtain these bonds, what they cost and what they guarantee.

What is a BMC-84 Bond?

A BMC-84 bond is a surety bond that protects against motor carriers and shippers against a Freight Broker or Freight Forwarder’s failure to faithfully perform, fulfill, and carry out all contracts, agreements, and arrangements made by the Freight Broker or Freight Forwarder. These bonds are a way to ensure that carriers and shippers are paid in a timely manner. Should the Freight Broker or Freight Forwarder not fulfill their agreement, a claim can be made against the surety bond.

BMC-84 Bonds are required by the Federal Motor Carrier Safety Administration (FMCSA) under Title 49 U.S.C. 13904 of the Transportation Code. BMC-84 Bonds are often called Freight Broker Bonds, Trucking Bonds, or ICC Broker Bonds as well.

What is the Required Amount of a BMC-84 Bond?

Regulations required that a Freight Broker or Forwarder post financial security in an amount no less than $75,000.

How Do You Obtain a Freight Broker Bond?

Freight Broker Bonds can be purchased instantly by many with no financial statements and only a credit check of the Owners. However, Freight Brokers looking for better pricing or those with credit challenges will need to go through underwriting. This usually includes completing an application, providing business financial statements and personal financial statements.

Can You Get a BMC-84 Bond with Bad Credit or Bankruptcies?

Generally, yes. Even those with credit challenges can normally obtain a freight broker bond. These freight broker should be prepared to provide an explanation behind the credit challenges. Also, personal and business financial statements may be required. Freight Brokers with credit challenges should also expect to pay higher bond rates.

How Does a Freight Broker Bond Work?

A Freight Broker or Forwarder is the Principal on the BMC-84 Bond. The Freight Broker pays money to the Bond Company called the Surety. In exchange for the bond premium and the Freight Broker’s promise to reimburse (indemnify) the Bond Company for losses, the Bond Company provides a promise to the FMCSA (the Obligee) that the Bond Company will pay claims up to the bond amount if the Freight Broker does not pay the contracted shippers and motor carriers.

What Does a BMC-84 Bond Cost?

A BMC-84 Bond cost depends on how strong the Freight Broker is. A company with strong financials and credit can expect to pay less than $1,000 per year for this bond. Alternatively, a Freight Broker with credit challenges may pay 10% or more per year. Freight Brokers often have the option to pay for their bond premium over time directly through the bond company or through a premium finance company.

Freight Broker Bonds are required to be in place as long as the Freight Broker is operating. Therefore, the bond must be renewed each year and the bond premium will also be due each year.

BMC 84 vs. BMC 85

Instead of posting a surety bond to guarantee payment, Title 49 also allows a Freight Broker or Freight Forwarder to set up a trust to guarantee payment to shippers and motor carriers. This trust must be accompanied by form BMC-85. The BMC-85 also must be in the amount of $75,000. The BMC-85 requires the Freight Broker to fully fund the trust upfront. This is a significant disadvantage of the trust for most Freight Brokers. However, funds in the trust can be invested responsibly. This may be an advantage for Freight Brokers who have excess cash. The potential benefit would need to be weighed against the cost of the Trustee’s services.

Cancellation of BMC-84

At any time, the surety bond company or freight broker can cancel the Freight Broker Bond. Notice must be given to the Federal Motor Carrier Safety Administration at its office in Washington, DC, and will become effective thirty (30) days after actual receipt of said notice by the FMCSA.

Claims Against a BMC-84 Bond

It is important for Freight Brokers and Forwarders to understand that BMC-84 bonds are not insurance. In exchange for writing these bonds, the Broker agrees to indemnify the bond company. If a claim occurs, the bond company will investigate the claim. If it is valid, the bond company will pay the claim and seek reimbursement from the Freight Broker.

Claims should be avoided. Not only will the bond company seek reimbursement, but claims could also cause the Freight Broker’s bond to be canceled. It may also make it difficult and more expensive to obtain bonding in the future. This can put the Freight Broker’s business at risk.

BMC-84 Bonds are the financial security of choice for most Freight Brokers and Freight Forwarders. Working with a surety bond expert will make sure getting these bonds is as easy and cost effective as possible.

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Josh Carson, AFSB

Vice President at Axcess Surety

Vice President of Axcess Surety. Surety Bond and financial expert dedicated to helping contractors, businesses and individuals understand and obtain surety bond credit.

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Contents hide

1 What is a BMC-84 Bond?

2 What is the Required Amount of a BMC-84 Bond?

3 How Do You Obtain a Freight Broker Bond?

3.1 Can You Get a BMC-84 Bond with Bad Credit or Bankruptcies?

4 How Does a Freight Broker Bond Work?

5 What Does a BMC-84 Bond Cost?

6 BMC 84 vs. BMC 85

7 Cancellation of BMC-84

8 Claims Against a BMC-84 Bond

All Rights Letters in Surety Bonding

Increased Limits of the SBA Surety Bond Guarantee Program

Parties to a Surety Bond

Surety Backed Letter of Credit

1 2 3 … 25 Next »

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