Freight Broker Bonds

A $75,000 Federal Requirement for Every Licensed Freight Broker

If you operate as a freight broker or freight forwarder in the United States, federal law requires you to maintain a surety bond of at least $75,000. This bond, known as a BMC-84 bond, is mandated by the Federal Motor Carrier Safety Administration (FMCSA) and is a non-negotiable condition of your broker operating authority.

Without a valid BMC-84 bond on file with the FMCSA, you cannot legally operate as a freight broker. Your operating authority will not be activated until the bond is filed, and if the bond lapses or is cancelled, the FMCSA will revoke your authority.

The purpose of the bond is to protect motor carriers. It guarantees that you, the broker, will pay carriers for the transportation services they perform under your brokered loads. If you fail to pay a carrier and they suffer a financial loss, the carrier can file a claim against your bond.

At Grit Insurance Group, we help freight brokers obtain their BMC-84 bonds quickly and at competitive rates. Most freight broker bonds can be issued within a few business days.

What Is a Surety Bond?

The Three Parties of a Surety Bond 

What Is a BMC-84 Bond?

The BMC-84 is the specific form designation used by the FMCSA for the freight broker surety bond. "BMC" stands for Bureau of Motor Carriers, the predecessor agency to the FMCSA. The "84" is simply the form number. When people refer to a freight broker bond, a BMC-84 bond, a broker surety bond, or an FMCSA bond, they are all talking about the same thing.

The BMC-84 bond is a three-party agreement. The principal is the freight broker (you). The obligee is the FMCSA on behalf of the motor carriers you do business with. The surety is the bonding company that issues the guarantee.

The bond amount is $75,000. This is the maximum amount the surety will pay out on valid claims during the bond term. It is not a deposit you make. It is the limit of the surety's financial exposure on your behalf.

There is an alternative to the BMC-84 bond called the BMC-85 trust fund agreement, which requires you to deposit $75,000 in cash or securities into a trust account. Most brokers choose the surety bond because it requires significantly less capital upfront.

What Does a Freight Broker Bond Cover?

A freight broker bond guarantees that the broker will pay motor carriers for transportation services as agreed. If a broker fails to pay a carrier for a load that was delivered, the carrier can file a claim against the broker's bond.

The bond covers unpaid freight charges owed to motor carriers who transported loads brokered by the bonded freight broker. If a carrier performs the work and the broker does not pay, the carrier has recourse through the bond.

The bond does not cover cargo damage, cargo theft, freight claims from shippers, or disputes between the broker and shipper. It is specifically designed to protect carriers from non-payment by the broker. Other types of insurance, such as contingent cargo insurance and general liability insurance, address those other risks.

It is also important to understand that the $75,000 bond amount is an aggregate limit, not a per-claim limit. If multiple carriers file valid claims, the total payout across all claims is capped at $75,000. Once the bond is exhausted, carriers with remaining unpaid claims would need to pursue the broker directly for recovery.

 Who Needs a Freight Broker Bond?

Any person or company that operates as a property freight broker or freight forwarder under FMCSA authority needs a BMC-84 bond (or BMC-85 trust). This includes freight brokers who arrange transportation of property by motor carrier but do not physically transport the goods themselves, and freight forwarders who assemble and consolidate shipments and assume responsibility for transportation from origin to destination.

If you are applying for new broker authority through the FMCSA's Unified Registration System, you will need to have your BMC-84 bond filed before your authority is activated. The bond must remain in effect for as long as you hold your operating authority.

Motor carriers who only transport freight under their own authority (not brokering loads to other carriers) do not need a BMC-84 bond. However, if a carrier also brokers loads to other carriers, they need both carrier authority and broker authority, and the broker authority requires the bond.

How Much Does a Freight Broker Bond Cost?

The $75,000 bond amount is the surety's exposure limit, not the cost to the broker. Your actual cost is the annual premium, which is a percentage of the bond amount.

For brokers with strong credit (typically a personal credit score of 700 or higher), premiums generally range from $750 to $2,250 per year, which represents 1% to 3% of the $75,000 bond amount.

For brokers with average credit (scores in the 600 to 699 range), premiums typically range from $2,250 to $7,500 per year, or 3% to 10% of the bond amount.

For brokers with poor credit, prior bond claims, or limited business history, premiums can reach 10% to 15% of the bond amount, or $7,500 to $11,250 per year. Some surety markets specialize in higher-risk applicants, so even if your credit is challenged, options may be available.

Factors that affect your freight broker bond premium include your personal credit score, your business financial history, whether you have had prior bond claims, how long you have held your broker authority, and the surety market's assessment of your overall risk profile.

How Much Do Contractor Bonds Cost?

What Credit Score Is Needed for a Surety Bond? 

How to Get a Freight Broker Bond

Here is the process from start to finish.

Contact your bond agent. Tell us you need a BMC-84 freight broker bond. At Grit, you can call us at (801) 505-5500 or request a quote online. We will confirm your details and match you with a surety market.

Complete the application. The surety will review your personal credit, your business information, and your financial history. For brokers with good credit, the application is typically a short form. For applicants with credit challenges or prior claims, the surety may request additional documentation.

Get approved and receive your bond. Once the surety approves your application, they issue the BMC-84 bond document. The surety files the bond electronically with the FMCSA on your behalf. You can verify that your bond has been filed by checking your authority status on the FMCSA's SAFER System.

Your authority activates. Once the bond is filed and the FMCSA processes it (along with any other required filings like the BOC-3 process agent designation), your broker operating authority becomes active and you can legally begin brokering loads.

The entire process, from application to authority activation, typically takes one to two weeks, though the bond itself can often be issued within a few business days.

Freight Broker Bond Renewals and Cancellations

Your freight broker bond must remain continuously active for as long as you hold your broker authority. Most BMC-84 bonds are issued on an annual basis and must be renewed each year.

Your surety will send a renewal notice before your bond expires. Pay close attention to this notice. If your bond lapses, the FMCSA will revoke your broker authority, and you will not be able to legally broker loads until a new bond is filed and your authority is reinstated.

If you decide to cancel your bond (for example, if you are closing your brokerage), the surety must provide the FMCSA with 30 days written notice before the cancellation takes effect. During that 30-day period, you are still responsible for any obligations that arise under loads brokered before the cancellation date.

If you are switching surety companies, coordinate the timing carefully with your bond agent to ensure there is no gap in coverage between the old bond and the new one. A gap in coverage, even a single day, can result in revocation of your authority.

What Happens If a Claim Is Filed Against Your Freight Broker Bond?

If a motor carrier believes you owe them money for transportation services and you have not paid, they can file a claim against your BMC-84 bond. Here is what happens.

The surety receives the claim and investigates. They review the load documentation, the broker-carrier agreement, proof of delivery, and any payment records. If the claim is valid and the broker has not paid the carrier, the surety pays the carrier up to the remaining bond amount.

Then the surety comes to you for reimbursement. When you obtained the bond, you signed a general indemnity agreement making you personally responsible for repaying the surety for any claims paid. If you do not reimburse the surety, they can pursue legal action to recover the amount.

Bond claims have serious consequences beyond the immediate financial impact. A history of claims can make it difficult or expensive to renew your bond, increase your premiums significantly, damage your reputation with carriers and load boards, and in severe cases, lead to revocation of your broker authority.

The best way to avoid claims is simple: pay your carriers on time, every time. Maintain clear records of every load, every agreement, and every payment. If a payment dispute arises, address it immediately rather than letting it escalate to a bond claim.

Freight Broker Bond vs Contingent Cargo Insurance

These are two different products that protect against two different risks. Many brokers carry both.

A freight broker bond (BMC-84) protects motor carriers from non-payment by the broker. It is a federal requirement. Without it, you cannot hold broker authority.

Contingent cargo insurance protects the broker (and by extension, the shipper) in the event that a carrier's own cargo insurance does not cover a loss or damage claim. It is not federally required, but many shippers require their brokers to carry it as a condition of doing business.

The bond guarantees you will pay carriers. Contingent cargo insurance covers the value of goods in transit if something goes wrong. They serve completely different purposes, and having one does not eliminate the need for the other.

 Surety Bonds vs Insurance