California Freight Broker License Bonds

 

California Freight Broker License Bonds

Surety Bond Professionals is a family owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your California freight broker license bond needs.

 

What Are They?

There are no state-specific California freight broker license bonds, because all freight brokers, regardless of location, are licensed by the Federal Motor Carrier Safety Administration (FMCSA). A federal freight broker license is called a Motor Carrier Operating Authority, or MC Authority. As part of issuing an MC Authority, FMCSA requires applicants to purchase a license bond known as a BMC-84 freight broker bond. 

Purchasing a BMC-84 bond is a freight broker’s pledge to operate in a completely lawful and ethical manner and make all required payments to shippers and carriers. Not living up to that pledge can result in an injured party filing a claim for damages.

 

Who Needs Them?

FMCSA requires any freight broker seeking a new or renewal MC Authority to purchase a $75,000 BMC-84 bond. (The bond gets its name from the original bond form.) Failing to maintain an active BMC-84 bond in force can result in revocation of a freight broker’s MC Authority. 

Speak with a Surety Bond Professionals agent today to discuss your bonding needs.

 

How Do They Work?

A BMC-84 bond is a legally binding contract among three parties known as the bond’s “obligee,” “principal,” and “surety.”

  • The obligee requiring and protected by the bond is FMCSA.
  • The principal required to purchase the bond and legally obligated to pay valid claims against it is the freight broker.
  • And the surety is the party guaranteeing the payment of claims.

When a shipper or carrier files a claim against a BMC-84 bond, typically over a nonpayment issue, the surety will determine whether the claim is legitimate before approving it for payment. Although it’s the principal who is legally obligated to pay claims, the surety has guaranteed payment and usually pays a valid claim initially, essentially extending credit to the principal. 

That initial payment creates a debt to the surety that must be repaid. If the principal does not repay the surety, the surety can take legal action to recover the claim amount.

 

What Do They Cost?

To purchase a BMC-84 bond, the principal will pay a small percentage of the $75,000 bond amount. That percentage is the premium rate, which the surety establishes based on an underwriting assessment of the principal’s creditworthiness. With a creditworthy principal, the risk of claims against the bond is low, as is the risk of not being repaid for claims paid on the principal’s behalf. Consequently, the premium rate will also be low, most likely three percent or less.

A principal with lesser credit presents a higher risk to the surety and can pay a premium rate anywhere as high as four to six percent.

 

Get a Quote

Our surety bond professionals will get you the California freight broker license bond you need at a competitive rate.