Obtaining a Freight Broker License in Michigan

  • Home
  • Obtaining a Freight Broker License in Michigan

Obtaining a Freight Broker License in Michigan

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 Michigan BMC-84 bond needs.

Who Needs a Freight Broker License?

It’s mandatory for anyone planning to operate as a freight broker in the United States to first obtain an “operating authority” from the Federal Motor Carrier Safety Administration (FMCSA). 

What Are the Steps in the Licensing Process?

Technically, a freight broker operating authority is obtained through an online registration process, not through licensing, but that’s a meaningless distinction. 

Freight broker registrations are submitted and processed online, through the Unified Registration System (URS). There are several things you will need to do before you submit an application, such as:

  • If you’re planning to establish a freight brokerage firm, choose a legal structure and create a business entity.
  • Register the business with the Internal Revenue Service and the Michigan Department of Treasury.
  • Decide whether you are going to apply for a broker authority as a “Broker of Household Goods” or a “Broker of Property (except Household Goods),” or as both. 
  • In every state where you will maintain an office or write contracts, you will need to designate a process agent to accept legal service on your behalf. If you don’t want to deal with multiple agents in multiple states, you can choose an FMCSA-approved blanket process agent company that can represent you in any state. Document your choices by listing all of your process agents on one Form BOC-3, and file it with FMCSA, or ask the blanket process company to do that for you.
  • Purchase a $75,000 BMC-84 freight broker bond or furnish FMCA with a BMC-85 Trust Fund Agreement. (Most brokers go the surety bond route because it doesn’t require them to tie up $75,000 indefinitely.)

Having accomplished all of the above, you’ll be ready to sign on to URS, the Unified Registration System, complete your application, and pay the required $300 registration fee. The system will generate your MCN right away, and you can use that as proof of your registration until you receive your operating authority documents in the mail within about 10 business days. 

Why Is a Freight Broker Surety Bond Required?

In purchasing a BMC-84 bond you are guaranteeing that you will comply with all FMCSA regulations. You are also agreeing to compensate a shipper, carrier, or FMCSA (the “obligee” requiring the bond) for any financial loss caused by your failure to comply. The most common cause of claims against a BMC-84 bond is the freight broker’s failure to pay fees owed to carriers.

How Are Freight Broker Bond Claims Paid?

The terms of a BMC-84 surety bond agreement make the payment of all valid claims mandatory for the freight broker (the bond’s “principal”). However, the bond’s guarantor (the “surety”) guarantees the payment of claims by the principal, and typically will pay a claim on the principal’s behalf and be reimbursed by the principal after the fact. A principal who fails to reimburse the surety can end up as the defendant in a lawsuit brought by the surety.

What Do They Cost?

The annual premium for a BMC-84 freight broker depends on the premium rate assigned by the surety. The surety’s main underwriting concern is the risk of not being repaid for claims paid on behalf of the principal. That risk is assessed based on the principal’s personal credit score.

A high credit score gives the surety little reason for concern and is rewarded with a low premium rate. On the other hand, a low credit score is a red flag for risk and warrants a higher premium rate. With good credit, the average premium rate is between one and four percent. 

Get a Quote

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