Transportation Broker Bond

MAP-21 (Moving Ahead for Progress in the 21st Century Act of 2012) increased the minimum financial responsibility for freight brokers from $10,000 to $75,000. Congress recognized that $10,000 was grossly insufficient to protect carriers and shippers from broker fraud and non-payment. A single load of produce can be worth $30,000-$50,000, so the old $10,000 bond was meaningless protection. The new $75,000 requirement took effect on October 1, 2013.

A BMC-84 is a surety bond issued by a bonding company. You pay an annual premium (1-15% of $75,000) and the surety guarantees payment up to $75,000. A BMC-85 is a trust fund where you deposit $75,000 in cash or securities with a licensed trust company. The BMC-85 costs more upfront because you tie up $75,000 in cash, but there is no annual premium. Most brokers choose the BMC-84 bond because it preserves working capital.

Motor carriers and shippers who have a contractual relationship with you can file claims. The most common claim scenario: a carrier hauled a load for you and you did not pay them. The carrier files a claim against your bond. The surety investigates and, if the claim is valid, pays the carrier. You then owe the surety that money back. Claims must be filed within the applicable statute of limitations, typically 2-3 years.

Yes, but you will pay significantly more. With a recent bankruptcy, expect premiums of 10-15% ($7,500-$11,250 per year) and the surety may require collateral. Tax liens are a red flag because they suggest you have trouble paying obligations, which is exactly what the bond guarantees. Once the bankruptcy is 3+ years old and tax liens are resolved, rates drop. Rebuilding your credit score is the fastest way to reduce your bond premium.

You or your surety must file a cancellation with FMCSA. The surety provides 30 days notice to FMCSA on Form BMC-84 (cancellation rider). During that 30-day period, the bond still covers transactions. After cancellation, FMCSA revokes your broker authority. Any claims arising from transactions during the bond period can still be filed against the bond for the applicable limitations period.

Yes. Separately from the bond, FMCSA requires a BOC-3 filing (Designation of Process Agents). This designates a person in each state where you operate to accept legal papers on your behalf. The BOC-3 is required for all motor carriers, brokers, and freight forwarders. It typically costs $30-$50 per year and is filed by a process agent company. Your bond agent can often arrange this for you.