Obtaining a Freight Broker License in Arizona

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Obtaining a Freight Broker License in Arizona

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?

Federal registration is mandatory for all freight brokers. The Federal Motor Carrier Safety Administration (FMCSA) issues licenses in the form of an “operating authority” that is evidenced by a MCN (motor carrier number).

What Are the Steps in the Licensing Process?

Applications for a freight broker operating authority are submitted online through the Unified Registration System (URS). But first, there are a few preliminary steps that must be completed, including:

  • Creating a legal business entity: if you will be operating your own brokerage and registering it with the Arizona Secretary of State or Arizona Corporation Commission as applicable, depending on the legal structure you chose for your business.
  • Registering the business with the Internal Revenue, the Arizona Department of Revenue, and city or county tax authority.
  • Deciding which type of operating authority you are seeking—“Broker of Household Goods” or “Broker of Property (except Household Goods),” or both.  
  • Designating either a blanket process agent that can accept legal service on your behalf in any state in the country, or a process agent in every state where you will maintain an office or write contracts. Complete a single Form BOC-3 (Designation of Process Agents) listing all your process agents, or have the form completed by a blanket agent, and submit it to FMCSA. 
  • Purchasing a BMC-84 freight broker bond in the amount of $75,000, or providing FMCSA with a BMC-85 Trust Fund Agreement. Most brokers opt for the BMC-84 bond, which does not require them to tie up $75,000 in capital as a BMC-85 arrangement does.

Now you’re ready to complete and submit your online application through the Unified Registration System (URS). When you’re done and have paid the $300 registration fee ($600 if applying for both types of freight broker authorities), you’ll receive your MCN number automatically. But you may have to wait up to 10 business days for your operating authority documents to arrive in the mail.

Why Is a Freight Broker Surety Bond Required?

FMCSA (the bond’s “obligee”) instituted the bonding requirement to help ensure the integrity of the brokerage industry in the United State. A BMC-84 bond requires a freight broker (the bond’s “principal”) to operate in accordance with all FMCSA regulations or pay the price for violations, such as not paying fees due to carriers. It places the legal obligation to compensate parties that have been harmed financially by the principal’s unlawful actions squarely on the principal’s shoulders.

How Are Freight Broker Bond Claims Paid?

There is a third party to the legally binding surety bond agreement—the “surety” guaranteeing the payment of valid claims against the bond. As the guarantor, the surety normally pays a legitimate claim up front, then collects reimbursement from the principal. Not being repaid gives the surety the right to pursue legal action against the principal to recover the amount of that debt.

What Do They Cost?

The annual premium for a BMC-84 freight broker bond depends on the premium rate assigned by the surety at the time the bond is purchased. That premium rate is determined through an underwriting assessment of the risk that the premium might not readily reimburse the surety for claims paid on behalf of the principal. That assessment is based in large part on the principal’s personal credit score.

A high credit score shows that the principal has been financially responsible in the past and is unlikely not to repay a debt to the surety. Because the risk to the surety is low, the premium rate should also be low, usually in the range of one to four percent. A low credit score is indicative of higher risk and results in a higher premium rate.

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