Obtaining a Freight Broker License in Ohio
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 Ohio BMC-84 bond needs.
Who Needs a Freight Broker License?
Obtaining an “operating authority” (which functions as a license) from the Federal Motor Carrier Safety Administration (FMCSA) is mandatory for anyone planning to operate as a freight broker in the United States.
What Are the Steps in the Licensing Process?
Applications for a freight broker operating authority are submitted and processed through the Unified Registration System (URS). But first, you must:
- Establish a legal business if you will be opening your own freight brokerage.
- Register your business with the Ohio Secretary of State, the Internal Revenue Service, the Ohio Department of Taxation. Check out the advice on the Secretary of State website.
- There are two types of freight broker operating authorities—“Broker of Household Goods” and “Broker of Property (except Household Goods).” or both. Decide which one you are applying for, or whether you will apply for both.
- You need to be represented by a process agent in every state where you will have an office or write contracts, or by an FMCSA-approved blanket process agent company that has agents in all states. Complete Form BOC-3 (Designation of Process Agents), and file it with FMCSA, or if you have designated a blanket company, you can have them complete and submit it on your behalf.
- Provide FMCSA with a BMC-84 freight broker bond in the amount of $75,000 or a $75,000 BMC-85 Trust Fund Agreement.
Once you have completed all of these tasks, you’re ready to create an account on URS, the Unified Registration System, complete the online application and pay the $300 registration fee. The system will assign your MCN number immediately, but you may have to wait up to ten business days for your operating authority documents to arrive in the mail.
Why Is a Freight Broker Surety Bond Required?
A BMC-84 bond serves two key purposes:
- It guarantees that you will comply with all FMCSA regulations, and
- Obligates you to compensate any injured party for a verified financial loss stemming from your noncompliance.
In this manner, a freight broker bond provides financial protection for both FMCSA (the bond’s “obligee”) and for the shippers and carriers you do business with.
How Are Freight Broker Bond Claims Paid?
Although the terms of a BMC-84 bond legally obligate a freight broker (the bond’s “principal”) to pay all valid claims, the bond’s guarantor (the “surety”) typically will pay a claim initially and then be reimbursed by the principal. Failure to repay the surety can result in the surety suing the principal to recover the amount of the claim.
What Do They Cost?
To purchase a BMC-84 freight broker bond you will pay an annual premium that is calculated by multiplying the $75,000 bond amount by the premium rate established for you by the surety. It’s a bargain compared to having to tie up $75,000 in cash or credit if you were to opt for a BMC-85 trust fund agreement.
The surety will set your premium rate through an underwriting evaluation of the risk that you might not provide reimbursement for claims paid on your behalf. The main factor taken into account is your personal credit score.
The higher it is, the lower the risk to the surety, and the lower your premium rate. The average for freight brokers with good credit is between one and four percent. Someone with a lower credit score is assumed to be a greater risk and will be assigned a higher premium rate.
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