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					<h3 class="page-title">Freight Broker Bond: BMC-84</h3>
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					<p>Several different industries require certain licensing criteria to be met, and the freight brokerage business is no different. In addition to being registered as a licensed freight broker with the FMCSA, brokers new and old need to have a freight broker bond in place if they want to operate legally. A freight broker bond, also known as a BMC-84, is a form of insurance put in place by the broker that work to protect customers while conducting business.</p>
					<p>With a BMC-84 in place, a freight broker’s customers have some form of assurance that, should things go wrong, they will not suffer financial losses. For instance, if a broker fails to remit payment to a shipper or a motor carrier, a claim against a BMC-84 bond can be made. The federal requirement to have this type of insurance helps ensure that licensed freight brokers will deliver on their promises to customers, as the law requires.</p>
					<p>A BMC-84 bond is not insurance in the traditional sense but instead is extended as a form of credit to the broker who holds the bond. Claims are covered by the bond company at first, but repayment is necessary by the freight broker after a claim is paid. Currently, the BMC-84 bond requirement must be met by all freight brokers, with a bond amount of at least $75,000.</p>
					
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					<h3 class="page-content-title">What’s the Difference Between BMC-85 and BMC-84?</h3>
					<p>The FMCSA offers freight brokers two different types of security they can use to meet licensing requirements: BMC-84 and BMC-85. Here’s how each works to benefit the freight broker as well as shipper and carriers with which the broker interacts.</p>
					<p>BMC-84 bond: This is the most common type of security put in place by freight brokers because of its unique structure. Instead of having $75,000 on hand to use as collateral, a BMC-84 bond of that amount is issued on behalf of the broker. When a claim is made, the bond agency covers the claim amount, up to the total of the bond, and then the broker repays that amount. The BMC-84 can be a more affordable solution to meeting the federal requirement than the alternative, a BMC-85 trust.</p>
					<p>BMC-85 trust: As another option for meeting the FMCSA requirement, licensed freight brokers may set aside a trust fund, or a <a href="/bmc-85">BMC-85</a>. This structure involves putting $75,000 into a secure trust that is pledged as collateral for future claims against a broker. Any legitimate claims are paid from the trust. The trust account is managed by a bank or another financial institution for an annual fee, typically costing $1,500 per year.</p>
					<p>For many licensed brokers, having the initial amount to place into a BMC-85 trust is not realistic, but it is available as an option for those who do not want to go through the process of getting a BMC-84 bond.</p>
					
					
					<h3 class="page-content-title">How Much Will a Freight Broker Bond Cost?</h3>
					<p>One of the reasons a freight broker bond is preferred to a BMC-85 trust is because of the cost difference between the two security options. A BMC-84 bond is priced as a percentage of the total bond amount, determined by certain financial factors. A surety agency offering a BMC-84 will review a freight brokers credit score and personal financial history, business financials if an established brokerage, a business plan for a new brokerage, and past claims against the broker.</p>
					<p>Because a freight broker bond is considered a form of credit, a broker’s personal credit history holds the most weight when determining the cost of the bond.</p>
					<p>After evaluating the broker’s financial standing and history, the surety agency provides the percentage rate of the total bond amount the broker must pay to put the bond in place. In most cases, the rate ranges from 1 to 12%, with the lowest-risk brokers able to get the lowest possible rate. This amounts to a total cost of $750 (1%) up to $9,000 (12%) for a BMC-84 bond, as opposed to the $75,000 deposit into a trust fund plus annual maintenance and management fees.</p>
					
					<h3 class="page-content-title">The BMC-84 Bond Process</h3>
					<p>Getting a freight broker bond is not a difficult process, but it does require you to follow certain steps. First, registering your freight brokerage business with the FMCSA is necessary, as this step allows you to gain your freight broker authority. Without this registration, you cannot operate legally as a freight broker.</p>
					<p>After your registration is complete, you can submit an application for your BMC-84 bond easily. The surety agency you work with may ask for certain information, such as your business plan or financial details, so they can accurately price your bond. Once these details are reviewed, you are provided with the percentage cost of your bond and the process is nearly complete. You will need to pay the bond price, and then sure your bond details are electronically filed with the FMCSA. The surety agency should take care of this final step for you, but be sure to ask that they have the ability and plan to do so. After your bond is filed with the FMCSA, you are ready to begin working with shippers and motor carriers as a freight broker.</p>
					
					
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