Obtaining a Freight Broker License in Georgia
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 of your BMC-84 bond needs.
Who Needs a Freight Broker License?
Nobody can operate as a freight broker in the United States without first obtaining an “operating authority” from the Federal Motor Carrier Safety Administration (FMCSA).
What Are the Steps in the Licensing Process?
Freight broker authorities are granted through a registration process, but for all intents and purposes they are licenses. The MCN (motor carrier number) that is a freight broker’s proof of registration is generated automatically upon completion of the registration process, though the official operating authority papers won’t arrive in the mail for up to another ten business days.
All freight broker registrations are submitted and processed at the federal level, through the Unified Registration System (URS). But there are a few things that must be done before beginning an application, such as:
- Creating a legal business entity if your plan is to open your own freight brokerage firm.
- Registering the business with the IRS, and the Georgia Department of Revenue.
- Deciding whether you will apply for an operating authority as a “Broker of Household Goods” or “Broker of Property (except Household Goods),” or both.
- Naming a process agent in every state where you will have an office or write contracts. Alternatively you may select an FMCSA-approved blanket process agent company that can accept legal service on your behalf in any state. If that’s the case, the blanket process agency can complete your Form BOC-3 (Designation of Process Agents) for you and file it with FMCSA. Otherwise, that’s something you will need to do.
- Purchasing a $75,000 BMC-84 freight broker bond or providing FMCSA with a BMC-85 Trust Fund Agreement.
Finally, when all the above has been accomplished, you’re ready to submit your application online through URS, the Unified Registration System, and pay the $300 registration fee.
Why Is a Freight Broker Surety Bond Required?
FMCSA (the bond’s “obligee”) requires either a $75,000 surety bond or a trust fund agreement in the same amount to guarantee that you will operate in compliance with FMCSA regulations and compensate any party financially injured by your noncompliance. Most freight brokers choose to purchase a surety bond for a modest annual premium rather than tie up $75,000 in a trust fund. The broker is the “principal” in the legally binding surety bond agreement.
How Are Freight Broker Bond Claims Paid?
When a claim is filed, it’s the job of the bond’s guarantor (the “surety”) to make sure it’s valid before approving it for payment. Having guaranteed the payment of claims, the surety typically will pay a valid claim initially. But that doesn’t eliminate the principal’s obligation to pay claims; it simply shifts it to an obligation to repay the surety. The surety can take legal action against a principal who fails to repay that debt.
What Do They Cost?
The annual premium you will pay for a freight broker bond is determined by the premium rate the surety will establish for you through an underwriting assessment of the risk the surety will take on if it becomes necessary to pay a claim on your behalf. The main factor in that assessment is your personal credit score, which is a good indicator of how responsible you have been about paying your debts in the past.
A high credit score suggests that you present little risk to the surety, which should earn you a low premium rate. Someone with lesser credit would be viewed as a higher risk, which would warrant a higher premium rate. The average freight broker with good credit pays a premium rate that’s in the range of one to four percent.
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