Providing BMC 84 Bonding Solutions to Canadian Companies
What is a Freight Broker Bond?
The Freight Broker Bond or BMC-84 surety bond is a license surety bond required by the Federal Motor Carrier Safety Administration (FMCSA) in the amount of $75,000. The FMCSA Freight Broker surety bond requirement is continuous, meaning that as long as the operating authority is in place, the surety bond requirement remains as well. This surety bond is required by all freight brokers operating in the United States.
Freight broker bonds provide a form of recourse for a motor carrier hired by a freight broker. If a motor carrier has not received payment for a job for which payment is due, a claim can be made against the surety bond. The Surety, the company providing the freight broker bond, could then be required to make payment up to the bond penalty amount if the issue is not resolved by the Broker. The surety would then attempt to collect the paid claim amount from the broker. Ultimately, the broker is responsible for any amount paid out on a claim.
FCA specializes in providing BMC 84 surety bonds to Canadian freight brokers with operations in the USA.
Freight Broker Bonds
The amount of the security required by the FMCSA. This security can be provided in the form of a BMC 84 Surety Bond.
This bond is required by the Federal Motor Carrier Safety Association for all Freight Brokers with contracted Motor Carriers operating in the USA.
The estimated annual bond premium for Canadian companies that require a BMC 84 Bond. Long-standing freight brokers may qualify for a lower rate.
Who Needs a BMC 84 Bond?
Freight Brokers operating in the USA that contract with motor carriers for land transportation are required by the Federal Motor Carrier Safety Administration (FMCSA) to post a $75,000 BMC-84 Surety Bond. Freight forwarders and brokers must post this $75,000 BMC-84 surety bond before receiving a freight broker license. Brokers that do not comply with the BMC-84 bond requirement may have their broker authority revoked by the FMCSA.
If a Freight Broker fails to remit payment for services rendered per their contractual agreement, the Motor Carrier is then able to make a claim against the bond and get paid directly by the surety company. However, in this case, the Freight Broker would then be liable to reimburse the Surety for the claim.
Fast & Easy Approvals for New and Long-Standing Freight Brokerages
FCA has been providing Canadian companies with surety bonds since 1919. We have set the standard for turnaround time for both new and existing clients. FCA is also the leading brokerage in Canada for the issuance of BMC 84 bonds.
The cost of your freight broker bond or BMC 84 bond is a percentage of the $75,000 bond amount as determined by a surety company. Generally speaking the cost ranges from 3-4% of the bond value. In certain cases, FCA Surety is able to negotiate lower rates as low as 1.8% for long standing freight brokers. Newer freight brokers may qualify for a lower rate after a year or two of conducting business without having any claims filed against the bond.
Freight broker surety bonds are valid for one year from the date it is issued. If either the broker or surety wishes to terminate the bond during that year, a 30-day notice of cancellation must be sent to the FMCSA. During the 30 days prior to cancellation, the surety remains liable for any claims filed against the bond.
In order to apply for a $75,000 BMC-84 surety bond, we require a completed application form from the company along with the following documents:
- Master Carrier number or Freight Forwarder number
- Canadian Employer Identification Number
- Tax ID # (US or Canadian)
- Driver’s License of the owner (s)
- Most Recent Year-End Financial Statements for the Company (if applicable)
To apply for a Freight Broker Bond please contact FCA Surety today to request the application forms to discuss any questions.
Yes. We work with multiple new freight brokerage companies each year. The application process is quite similar but in place of financial statements, the surety companies will require a copy of the owner(s) most recent personal tax filing. We also generally request a resume or some background on the principals. In addition the premium charged is generally closer to 5% annually.
Most Freights Brokers prefer the BMC 84 bond over the BMC 85 trust fund option. This is simply because with the bond, you will not need to post collateral with the surety. The surety will complete their underwriting and will determine a premium. Once this premium is paid the bond is issued and remains in place for a 12 month period with automatic renewals each year. By using the bond, the Freight Broker chooses not to tie up his cash or credit. This improves your liquidity, and helps you operate a more financially sound business. A BMC-85 trust fund, on the other hand, is a form of security provided by you as the freight broker. You must pay a yearly fee, and place $75,000 cash in a trust account to cover future bond claims.
For most freight brokers, the answer is yes. The trust fund (BMC-85) ties up your money by requiring 100% collateral, while the bond only requires an annual payment which is a percentage of the bond amount.
Why Choose FCA Surety?
Ease of Doing Business
We set the industry standard for turnaround time for both new and existing construction bond clients, you can expect excellence.
Trusted by Surety Markets
Outstanding relationships with all of the most reputable construction surety bond markets in the industry, giving you the power of choice.
Surety is What We Do
Our industry-leading team boasts seven full time dedicated surety professionals with a combined 80+ years of construction surety bond experience.
Chris Dardarian and FCA were great to work with! They provided timely and comprehensive advice and a product that suited our needs. Our situation was complicated by COVID but the transaction was handled efficiently.
FCA is one of the best companies we have had the pleasure of working with so far. Very professional, fast and timely. Looking forward to continue working with them.
Jamie Collum from FCA did a great job in assisting me throughout the process. Not only from bonding aspect but other aspects to relating to obtaining approvals and insurance Would definitely and highly recommend them. Gem of a guy.
Get A Free Consultation Today!
It all starts with a conversation today with one of our surety bonding experts. Once we determine which type of surety bonds you require, we will work tirelessly to expedite these bonds for you.