BMC-84 Surety Bond
If you are a freight broker or freight forwarder, the Federal Motor Carrier Safety Administration requires that you file a trust agreement or surety bond. It is in the amount of $75,000 and you should file it before getting a license. This way the agency makes sure you meet certain standards and demonstrate financial responsibility in case of claims from shippers or motor carriers. While you can get a trust agreement (form BMC-85), a surety bond (form BMC-84) is considered a much more affordable option. If you choose it, you do not have to pay full collateral upfront. Instead, you will only pay an annual premium that is usually 2-4% of the bond amount.
How does BMC-84 Surety Bond work?
As a broker, you hire a motor carrier to do the job, and you are to pay for it. If so happens that you fail to pay in due time, the motor carrier can file a claim that can be made on the surety bond. The company that offers guarantee behind the bond is to pay up to the bond penalty amount.
The rates for the surety bond vary greatly. Also, it depends on such factors as the bond applicant’s qualification, their credit, and financial standing, as well as others.