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.
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.
Regulations required that a Freight Broker or Forwarder post financial security in an amount no less than $75,000.
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.
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.
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.
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.
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.
Axcess Surety is the premier provider of surety bonds nationally. We work individuals and businesses across the country to provide the best surety bond programs at the best price.
