You’ll need to get a motor carrier (MC) number from the Federal Motor Carrier Safety Administration (FMCSA) to apply for your freight broker license. But, the process doesn’t end after you get the license itself. Fulfilling all the legal requirements can be a long and exhausting process.

There are numerous steps that one should follow when it comes to starting your own freight brokerage like keeping up with real time updates and getting insurance. 

Have a look at an overview of freight broker license requirements guide below, which lists out the the steps you must take:

1. Obtain your MC authority from the FMCSA

The motor carrier (MC) number is a mandatory aspect in making your brokerage business legal. Acquiring your broker authority will take several weeks from the start of the procedure till the end. So, make sure you get started as soon as you can.

  • Obtain a PIN
    To start the process of obtaining your MC Authority online, you must first obtain a PIN from the FMCSA. While applying for a PIN, you require a valid credit card despite the fact that no charges will be made. The PIN will be safely delivered to your business’s address in 4-7 business days.

    PIN Cost – $0
  • Submit your MC Authority License Application
    It is also known as an authority, your license is a major component you’ll be needing in order to become registered as a freight broker with the FMCSA. Once you receive your PIN, you’re finally ready to submit an online OP-1 application for your MC Authority.

    For more detailed insight into this application, refer to this guide manual.

    Start by selecting the first option, “New or Additional Registration” and you can continue from there to fill out all the crucial information.
    The filing fee is $300 and is not refundable if you’ve made a mistake and need to refile. So, make sure all the information is accurate before submitting.

    Freight Broker License Cost – $300
  • Submit Biennial Updates
    It’s important to keep in mind that once you’ve acquired your DOT registration, you must file a biennial update by submitting an MCS-150 form online. Luckily, this process is free of cost.

    It’s important to provide this update even if your company has not changed its information, has ceased interstate operations, or is no longer in business.

    Biennial Updates Cost – $0

2. Get Liability Insurance

Liability insurance is legally required by the FMCSA for all freight forwarders and carriers, but not for someone operating only as a freight broker. Once you obtain your insurance, you’re supposed to submit proof to the FMCSA.

Liability Insurance Cost – Varies (only applies to forwarders/carriers)
The table below acts as a guide regarding Do’s and Don’ts while choosing a freight broker insurance.

S. No.Do’sDon’t’s
1Property and General LiabilityExcess Auto Liability
2Secondary Auto Liability InsuranceAdditional Insurance by Carrier
3Worker’s CompensationCarrier-supplied Insurance Certificates
4Contingent CargoRelying on the FMCSA for insurance data
5Errors and Omissions (E&O)Incomplete Carrier Qualification

Do’s and Don’ts to consider while selecting a freight broker insurance

3. Obtain Processing Agents

For every state in which your brokerage will be operating, you must procure a processing agent. If you’re only a broker, “operating” means having an office or making contracts. If you’re also a motor carrier, then “operating” refers to your freight passing through that state.

The part of the processing agent is to be the person who could be served with papers, if a claim is filed against your brokerage in that state.

There are many commercial companies who provide processing agents for free. The FMCSA has a list of firms who provide processing agents. Even you can get someone to work for you directly since freight agent training is easily available.

Once you have acquired the relevant processing agents, either you or the firm may need to submit a BOC-3 (Designation of Processing Agents) form both to the FMCSA and to each state in which you will be operating.

After submitting this form, the FMCSA suggests you keep a copy of it in your own files.

4. Getting your BMC-84 Bond or BMC-85 Trust Fund

As part of the MAP-21 law, all the freight brokers must obtain a bond or trust in the amount of $75,000 in order to acquire their freight broker license.

Firstly, it is important to understand what a surety bond is and why it is necessary. The BMC-84 and BMC-85 are different from one another, so how shall you decide which one is best for you?

  • BMC-84

    BMC-84 premiums can range from $750-$9,000 per year (they will differ based on your financial strength, e.g. personal credit). The BMC-84 bond typically needs zero collateral.

    If you’re interested in a BMC-84 bond quote, you can apply online now.

    Cost – $750 – $9,000 (Zero Collateral).

  • BMC-85

    BMC-85’s usually cost around $1,500 per year. Moreover, to the yearly premium, the BMC-85 trust will require you to submit $75,000 of collateral with a Bank, which is something several smaller or aspiring freight brokers simply can’t do for all the obvious and reasonable reasons.

    Cost – $1,500 (requires $75,000 collateral)

5. Getting your Unified Carrier Registration

The final step after getting either the BMC-84 or BMC-85 is to obtain your Unified Carrier Registration (UCR) in this legal process.

For freight brokers, it’s comparatively simple and cost-effective at only $76. If you are also a motor carrier, then your registration cost will change depending on the size of your fleet.

In either situation, you are required to re-register and pay the fee annually.

Fortunately, the process for registering has been updated recently. The UCR system registers and collects fees from the vehicle operators involved in interstate travel.

Registering in this system can be done online at the UCR application website. They also have a mobile application to do it at your convenience.

Summarization table of all the factors discussed above:

S. No.CategoryBMC-84BMC-85
1MC Authority$300$300
2Liability Insurance$300-$1,000$300-$1,000
3Processing Agents$0$0
4BMC Bond$750-$9,000 (Zero Collateral)$1,500 ($75,000 Collateral)
5Unified Carrier Registration$76$76
6Grand Total$1426 – $10,376$2,176 – $2,876

Cost Summary

Conclusion

In conclusion, navigating freight broker license requirements requires a brief understanding of regulations and legal procedures. Compliance ensures a smooth and ethical operation, encouraging trust and success in this competitive freight brokerage business sector.

Similar to learning about freight broker license requirements, explore an article that talks about the ways to prevent broker fraud.

Tushar C
Senior HR Officer at OpenFR8 | More posts

I'm a HR at OpenFR8 and a passionate blogger. Apart from my day job as HR, reading and writing books/blogs are two of my absolute favorite things to do. I like taking on new challenges and most importantly, I believe in bringing efficiency towards everything I do. I love expressing my thoughts and visions through the medium of words in the form of blogs or articles or books. Till this date, I've successfully published three short-novels on my own and will continue to do so.

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