Freight brokers are not motor carriers, and the FMCSA knows it. Rather than requiring brokers to carry motor carrier liability insurance, the agency created a separate financial responsibility requirement that reflects the broker’s actual role: connecting shippers with carriers, not operating trucks.
Here is exactly what the FMCSA requires of licensed freight brokers, what the surety bond covers, and the most common compliance mistakes brokers make.
The FMCSA Insurance Requirement for Freight Brokers
Under 49 CFR § 387.307, freight brokers must maintain one of the following forms of financial responsibility:
- BMC-84 surety bond — a $75,000 bond issued by a licensed surety company
- BMC-85 trust fund — a $75,000 trust agreement with a federally insured depository institution
The $75,000 figure was established by the Moving Ahead for Progress in the 21st Century Act (MAP-21) in 2012 and has not changed since. Before MAP-21, the requirement was only $10,000 — the tenfold increase was intended to drive unqualified operators out of the brokerage market and provide more meaningful protection for shippers and carriers.
What the BMC-84 Surety Bond Actually Does
The BMC-84 surety bond is not insurance in the traditional sense. It is a guarantee — the surety company commits that if the broker fails to pay valid claims for cargo loss, property damage, or unpaid transportation charges, the surety will pay those claims up to $75,000.
Critically, surety bonds are not like insurance policies. When a surety pays a claim, it has the right to seek full reimbursement from the broker. The bond protects claimants; it does not protect the broker from the financial consequence of a claim.
Claims that can be made against a broker’s BMC-84 include:
- Shipper claims for cargo loss caused by the broker arranging an unqualified carrier
- Carrier claims for unpaid freight charges owed by the broker
- Claims arising from broker negligence in carrier selection
BMC-84 vs. BMC-85: Which Should You Use?
Most small and mid-sized freight brokers use the BMC-84 surety bond because it requires no cash outlay of the full $75,000. A surety bond typically costs 1–3% of the bond amount annually — approximately $750–$2,250 per year depending on the broker’s credit profile.
The BMC-85 trust fund requires the broker to deposit the full $75,000 in a federally insured depository institution and file a trust agreement directly with the FMCSA. While this eliminates the annual surety premium, it ties up $75,000 in working capital — making it practical only for well-capitalized operations that prefer not to work with a surety company.
| BMC-84 Surety Bond | BMC-85 Trust Fund | |
|---|---|---|
| Upfront cost | 1–3% annual premium | $75,000 cash deposit |
| Annual cost | $750–$2,250/year | None (after initial deposit) |
| Capital requirement | Low | High |
| Best for | Most brokers | Capitalized operations |
Does a Freight Broker Need Cargo Insurance?
FMCSA does not require freight brokers to carry cargo insurance. However, many shippers — particularly larger shippers and 3PLs — contractually require brokers to carry contingent cargo insurance as part of their broker agreements.
Contingent cargo insurance covers cargo claims that are not paid by the motor carrier’s cargo policy — for example, if the carrier’s insurer denies a claim or the carrier goes insolvent. It’s “contingent” because it only pays when the primary carrier coverage fails. Typical limits are $100,000–$250,000.
Brokers who work with high-value shippers or national 3PLs should strongly consider contingent cargo coverage as a competitive differentiator, even when not contractually required.
How the BMC-84 Filing Works
Once you obtain a surety bond, the surety company files the BMC-84 directly with the FMCSA electronically. The FMCSA updates your broker authority status in SAFER within 1–2 business days of receiving the filing.
Your broker authority remains inactive until both the BMC-84 is filed and active and your broker application is approved. Check your status at the FMCSA SAFER System — look for active broker authority and an active financial responsibility filing.
If the bond lapses — due to non-payment of the annual premium or insurer cancellation — the surety must notify the FMCSA. The FMCSA will then initiate revocation of your broker authority, typically with 30 days’ notice.
Frequently Asked Questions
What insurance does a freight broker need?
FMCSA requires freight brokers to maintain a $75,000 surety bond (BMC-84) or trust fund (BMC-85). This is not motor carrier insurance — it’s a financial guarantee against broker non-performance. Many shippers also contractually require brokers to carry contingent cargo insurance, though this is not a federal requirement.
How much does a freight broker surety bond cost?
A $75,000 BMC-84 surety bond typically costs $750–$2,250 per year, depending on the broker’s personal credit score and business history. Brokers with strong credit pay the lowest rates.
Does a freight broker need cargo insurance?
FMCSA does not require it. However, many shippers and 3PLs contractually require freight brokers to carry contingent cargo insurance. Even when not required, it provides meaningful protection if a carrier’s cargo policy fails to pay a legitimate claim.
What happens if a freight broker’s surety bond lapses?
The surety notifies the FMCSA, which initiates revocation of the broker’s operating authority. The broker has typically 30 days to reinstate the bond before authority is revoked. Operating as a broker without an active BMC-84 is a violation subject to civil penalties.
For a full overview of the FMCSA insurance framework including motor carrier requirements, see our FMCSA insurance requirements complete guide.
