“How Much Will a $75K Bond Cost Me?” And Other Questions Answered

Posted: 15 Aug, 2013 by Bert Goo


20 Comments

Categories: Broker News


Update: DAT now offers a 75K surety bond at a special rate for DAT customers. Learn more.

As most of you are aware, the Moving Ahead for Progress in the 21st Century (MAP-21) Act takes effect in less than two months, on October 1. One of the provisions of the act requires that freight brokers secure a $75,000 bond or trust fund—a significant change from the $10,000 that is currently required.

From the comments on our own blog and other industry websites, it seems that brokers still have questions related to the new requirement. Over the past few weeks I’ve communicated with a number of reputable insurance companies that provide the $75,000 bond. Below are some of the things I’ve learned. Hopefully this will answer some of your frequently asked questions.

Q: The FMCSA requires that I have either a $75,000 surety bond or a $75,000 trust fund. What’s the difference?
A: A trust fund (BMC-85) requires that the broker put up the full $75,000 up front. That money goes into a central fund to pay any claims. With a surety bond (BMC-84), you pay an annual premium to a surety company which works to mitigate bond claims on your behalf. One note: the surety bonds are regulated by the government to make sure there is enough money set aside to pay any claims. BMC-85 trust funds are unregulated, so if you go that route, be sure you’re dealing with a reputable provider.

Q: How much will a $75,000 surety bond cost me?
A: The annual premium you’ll pay depends on your risk, which is determined by factors such as:
• The number of years your company has been in business.
• The financial condition of the company.
• The company’s credit score.

In my research, annual premiums ranged from the low $4,000s to mid $5,000s. Companies in business for many years with good credit scores will pay less; newer companies and those with lower credit scores will pay more.

Q: I’m new to the business. Can I still qualify for a $75,000 bond?
A: Brokers who have been in business less than two years may have to meet additional requirements. For example, the insurance company may check the personal credit score of the principals of the company. It may also require collateral to secure the bond.

Q: What paperwork is required apply for a $75,000 bond?
A: Each insurance company has its own requirements, but the following documents may be required:
• The company’s financial statements.
• Proof of insurance.
• A signed indemnity form that allows the insurance company to act on your behalf.
• An application form.

Q: Do I need to fill out and submit the BMC-84 form to the FMCSA?
A: After you’ve been approved for the bond, it’s usually the insurance company that will file the BMC-84 form with the FMCSA.

Leave your comments

  • profile

    Meme

    • 7/15/2015 10:13:28 AM

    If I get a Surety Bond of $75,000, and decide to cancel the broker license, will I get my money back if there weren't any claims that the bond paid out? Basically, will I get a refund of what I paid since it wasn't used?

    Reply 1 comment
  • profile

    lamon warnock

    • 7/28/2015 4:37:38 PM

    The short answer is the bond will vary in rate based on the owner's credit score, time in business and company financials. The lowest rate we offer on the $75,000 freight broker bond is $938. However, poor credit clients pay as high as $7,500 for the bond.

    Reply 3 comments
  • profile

    paul

    • 9/8/2015 7:57:41 AM

    i am a freight broker recently i had a shipper who just went bankrupt and failed to pay us 28K which we owe the carriers We as brokers did nothing wrong Under a BMC 84 freight broker surety bond does the bond usually pay our carriers claims we are a 26 yr old business w great credit and never before had a claim filed against our bond pls advise

    Reply 1 comment
  • profile

    BertG

    • 12/16/2015 6:07:01 PM

    DAT works with Integro, a large surety bond provider. DAT customers get a special rate. Here is the info: http://www.dat.com/products/broker-bond

    Reply 
  • profile

    fernando

    • 2/10/2016 12:37:53 PM

    Yeah but Integro sucks. I used DAT and got a quote it was like 2k per year. Just as a reference I have a 700 credit score and 200k in the bank. Another surety company from Google got me the bond for $1200 per year. Shop around, you won't regret it.

    Reply 2 comments
  • profile

    online loans with no credit check reviews

    • 4/20/2016 5:04:57 AM

    Heya i am for the first time here. I came across this board and I in finding It truly helpful & it helped me out much. I'm hoping to provide one thing again and aid others such as you helped me.

    Reply 
  • profile

    kevin

    • 8/19/2016 8:35:37 PM

    I am new and have terrible credit how much down would I need to get a 75000 bond and do I need my own authority or just license and bonding

    Reply 
  • profile

    david Dunn

    • 10/4/2017 12:04:09 PM

    How often do I pay for the bond. I understand it can be as low as 938 but how often do i have to pay that?

    Reply 
  • profile

    Rocio

    • 3/24/2018 3:19:58 PM

    It says that the required paperwork for $75000 bond depends on each insurance company, to include proof of insurance? Is there another kind of insurance aside from the bond?

    Reply 1 comment
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