Surety bonds

How does the BMC-84 broker bond work?

The requirement. Under 49 CFR 387.307, a property broker must have a surety bond or trust fund of $75,000 in effect, and FMCSA will not register a broker until it is. The registration stays in effect only as long as the bond or trust fund does. The bond or trust fund is meant to ensure the broker's financial responsibility by providing for payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements, or arrangements for the supplying of transportation by authorized motor carriers. The section as published in the eCFR is effective January 16, 2026, and has been amended several times since 2023, so read the current text before you rely on this page.

BMC-84 and BMC-85. The two ways to meet it:

• BMC-84, surety bond. A surety company issues a bond for the broker, and a BMC-84 is filed with FMCSA.
• BMC-85, trust fund. The broker sets up a trust fund agreement with a financial institution and holds $75,000 in assets that can be turned into cash within 7 calendar days. Acceptable assets include cash, irrevocable letters of credit from a federally insured depository institution, and Treasury bonds. A BMC-85 is filed with FMCSA.

The three parties. A bond has three:

• Principal. The broker. The party with the obligation.
• Obligee / claimants. The people the bond protects. For the broker bond, the shippers and motor carriers who are owed under the broker's contracts.
• Surety. The company that issues the bond and stands behind the promise to the claimants.

Who a bond protects. A surety bond is not insurance for the broker. It protects the claimant. If a broker fails to pay a carrier it owes, the carrier can look to the bond. The surety does not take on the broker's risk in the way an insurer takes on a policyholder's. A bond agreement commonly lets the surety recover what it pays from the principal, typically through an indemnity agreement the principal signs to get the bond. SBA's surety bond guarantee program, for example, requires the surety to obtain a written indemnity agreement from each principal. A claim paid on the bond may therefore be a debt the broker owes, not a free benefit. Read your own indemnity agreement.

When claims are paid. The regulation requires the surety (or the financial institution holding a trust fund) to notify FMCSA within 2 business days of certain payments or determinations that take the bond or trust fund below $75,000, such as a payment the broker consented to, a payment on a claim the broker did not answer within 7 business days, or a payment on a judgment. FMCSA then notifies the broker, and the broker's operating authority is suspended unless, within 7 business days, the broker shows the notice was sent in error, restores the $75,000, or satisfies the pending claims without using bond or trust assets. If the broker is determined to be in financial failure or insolvency, the bond or trust is cancelled and claims against it are accepted for 60 calendar days after FMCSA's public notice. Read the section for the exact steps, deadlines, and definitions. They are written in detail.

Staying in effect. The bond or trust fund must remain in effect continuously until terminated, and it may be cancelled only on 30 days' written notice to FMCSA. Replacing one with another does not end the earlier surety's or trustee's liability for damages from contracts the broker made before the replacement took effect.

A bond is not the broker's other coverage. The broker bond does not replace contingent auto liability, professional liability, or cyber. They answer different problems.

What does a surety bond cover, and what doesn't it?

Bond forms vary. Read the bond and the indemnity agreement. In general:

What a bond is for

• Paying valid claims by the people the bond protects, up to the bond amount, when the principal fails to meet the obligation the bond guarantees
• For the broker bond, payments to shippers or motor carriers if the broker fails to carry out its contracts, agreements, or arrangements
• A guarantee that the work or obligation will be completed, which is how the SBA describes surety bonds more generally

What it does not do

• It is not insurance for you. It does not protect the broker from its own debts, and under a typical indemnity agreement a claim paid can create a debt to the surety.
• It does not pay for your negligence or errors. That is professional liability.
• It does not pay for freight loss or accident claims. Those are motor truck cargo, contingent auto liability, and primary auto liability.
• It is limited to its stated amount. Claims beyond the bond amount are not covered by the bond.
• It does not replace the rest of what a broker is required to do. Authority, registration, and other federal requirements are separate.

What affects the cost of a surety bond?

We don't publish prices, and we don't publish bond premium percentages. Cost is set by the surety and the licensed agent you work with. The $75,000 figure above is the amount of the financial security the regulation requires, not what a broker pays for it. These are the factors that generally move it:

• The bond amount required. The amount the rule or the obligee sets
• The applicant's credit. Personal and business credit history, depending on the surety
• Financial strength. Financial statements, cash, and liquid assets
• Industry experience. Time in business and brokerage experience
• Claims history. Past bond claims or unpaid carrier complaints
• Collateral. Some sureties ask for collateral, such as a letter of credit or cash deposit, depending on the risk
• The indemnity agreement. Who signs and what they are agreeing to
• Business structure. Owners and guarantors

If you use a trust fund instead, the cost is different: you tie up $75,000 in assets rather than paying a bond cost.

Who typically needs a surety bond?

• Brokers and dispatchers: Freight brokers need the financial security under 49 CFR 387.307. A dispatcher who does not arrange transportation as a broker should check with FMCSA about whether registration and financial security apply.
• New authority: A new brokerage needs its financial security filed before it operates. A new carrier's federal filings are primary auto liability, not this bond. See primary auto liability.
• Small fleets: Carriers are not required to file the broker bond, but may meet other bond requirements, such as a fuel tax or license bond. See "Other bonds" below.
• OTR and local haul: Some fuel-tax licensing jurisdictions may require a bond. Ask your base jurisdiction.
• Towing and repair: Some states and cities ask towing businesses for a license or permit bond. Requirements vary by location, so ask the agency that licenses you.
• Couriers: Only if a contract, license, or permit requires one.

Other bonds T&L businesses may meet. These come from agencies and contracts, not from BreadRoute, and each one has its own rules. Ask the agency or customer that requires it for the exact form and amount:

• Fuel tax and IFTA-related bonds. Some jurisdictions that license fuel-tax filers may require a bond. Maryland's regulations, for example, let the Comptroller require an IFTA license applicant to post a surety bond in certain cases. IFTA licensing runs through your base jurisdiction, so ask it.
• License and permit bonds. Some state and local licenses ask for a bond. Washington's tow truck operator registration, for example, requires a surety bond filed with the state. Ask the agency that issues the license.
• Customs bonds. Under CBP's rules, imported merchandise generally is not released at entry unless a single-entry or continuous customs bond (or a cash deposit) is filed. Whether this applies to you depends on your role in the import, so ask CBP.
• Contract or customer-required bonds. A customer, lender, or public contract may ask for a bond to guarantee that work will be completed, which is how SBA describes surety bonds. Read the contract.