Date Published: September 16, 2014
The transportation law, MAP-21, small- to mid-size carriers who also act as brokers must meet “$75K financial security requirement”. There are primarily two ways to accomplish this; the Freight Broker Surety Bond (BMC-84) or the Freight Broker Trust Fund Agreement (BMC 85).
What is a Freight Broker Bond (BMC-84)?
Freight broker surety bonds are filed with the Federal Motor Carrier Safety Administration (FMCSA). A specific bond form is required, form (BMC-84). The bond serves as proof the 
broker or forwarder has met financial responsibility requirements of the FMCSA. With a BMC-84 bond, the cost is a percentage of the bond amount, or premium, paid to the surety provider. The cost of the BMC-84 surety bond is as little as $938.00 per year for highly qualified applicants. Using the bond to meet the financial security requirements all the applicant has to come up with financially is the bond premium* and this is paid annually. The bond is a guarantee with reserves in place to pay for potential claims.
*Collateral may be required for some freight broker bonds depending on the specific underwriting criteria.
What is a Trust Fund Agreement (BMC-85)?
The technical terminology for the BMC-85 is: Broker’s or Freight Forwarder’s Trust Fund Agreement under 49 U.S.C. 13906
The BMC-85 trust fund option requires $75,000 full collateral deposited with a bank, trust company or other insured institution. The broker or forwarder’s money is held by the financial institution in escrow for the duration of their license for the benefit of the FMCSA. The trust fund would be used to show reserves are in place to pay for potential claims.
Compare the BMC-84 Bond and the BMC-85 Trust Fund Agreement
There are first difference between BMC-84 and BMC-85 is quite obvious; with the former, all one has to come up with is the bond premium. With the latter, the applicant has to deposit the entire $75k, however at some point in time one can get he entire $75k back where the bond premium is a sunk cost. There may, however some small fees associated with maintaining a trust account with
The second difference is a little more subtle, but still a very important difference. With the surety bond, the Surety company will work with you to to resolve claims and avoid cancellation. With the frequency of false claims in the freight broker industry, the support of experienced claim specialists is critical to timely resolution.
Claims against trust fund agreements are usually settled quickly with cash from the fund. It is a pay first, ask question later situation with little to no preliminary investigation. If a claim is found to be false, payment may be returned, but this often takes additional time and aggravation.
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