Florida 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 Florida freight broker license bond needs.
What Are They?
Technically, there are no Florida freight broker license bonds because Florida does not issue licenses to freight brokers on a state level. Every freight broker license—formally known as a Motor Carrier (MC) Operating Authority—is issued federally by the Federal Motor Carrier Safety Administration (FMCSA). The bond that is required as part of the licensing process is called a BMC-84 freight broker bond. It gets its name from the title of the original bond form, which is no longer in use.
Purchasing a BMC-84 bond obligates a freight broker to do business in accordance with all applicable laws and regulations governing its contractual relationships with shippers and carriers. Any violation that causes a shipper or carrier to incur a financial loss can result in the injured party filing a claim against the freight broker’s BMC-84 bond.
Who Needs Them?
Every freight broker applying for a new MC authority from FMCSA or renewing an existing one must purchase a $75,000 BMC-84 bond for the financial protection of FMCSA and the shippers and carriers the freight broker does business with. The bond must be renewed before its expiration date, so there is always an active bond in force. Failure to do so can result in the revocation of the freight broker’s MC authority.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
Purchasing a BMC-84 bond creates a legally binding contract involving these three parties:
- As the licensing agency requiring the bond, FMCSA is the bond’s “obligee.”
- The freight broker purchasing the bond and legally obligated to pay all valid claims against it is the bond’s “principal.”
- And the party guaranteeing the principal’s payment of claims is the “surety.”
As the bond’s guarantor, the surety normally pays a valid claim on behalf of the principal, resulting in a debt owed by the principal to the surety. So, the principal’s obligation to pay claims becomes an obligation to repay the surety. If the principal fails to live up to that obligation, the surety can take legal action against the principal to recover the claim amount, plus court costs and potential legal fees.
What Do They Cost?
Two factors go into determining the annual premium cost for a BMC-84 bond: the $75,000 bond amount and the premium rate set by the surety on a case-by-case basis. The surety’s main concern is the risk of not being repaid for claims paid on the principal’s behalf. Consequently, the underwriting focus is on the principal’s creditworthiness, financial status, and industry experience (which is a good predictor of the likelihood of claims).
The better a BMC-84 bond applicant’s personal credit score is, the lower the risk to the surety and the lower the credit rate. Most will pay a premium rate in the vicinity of one to four percent. Applicants with a weak credit history or a newly formed business present more risk and will pay a premium rate on the higher end of this range (or more in certain circumstances).
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Our surety bond professionals will get you the Florida freight broker license bond you need at a competitive rate.