Freight broker surety bond

[don jipping]

The BMC-85 Brokers Trust Fund can be funded with a letter of credit issued by the bank, or the broker may make deposits on a regular basis to until trust is fully funded. How much $ the broker actually deposits into the trust over a year depends on the agreement with the trustee(financial institution authorized by the FMCSA and DOT). Generally, the trust is fully funded within 12 months.
During this funding period the broker has authority to broker freight even though trust is not completely funded.
If the broker decides they no longer wish to conduct business, they notify trustee and funds on deposit are returned provided there are no outstanding claims against broker.
One must remember that the BMC-85 Brokers Trust Fund is actually an asset of the broker. It is their $ in the trust held by the trustee to satisfy FMCSA compliance. The trustee in essence acts as the claims dept for the broker.
Most authorized BMC-85 providers have a claims dept that do nothing but investigate broker claims. They are transportation specialists who are focused on freight claims only,thereby providing optimum protection of the monies on deposit in the trust.
As you stated, once broker has been established for a period of time they may want to switch over to a bond. But, as stated previously, they still can be difficult to obtain and maintain year after year with fewer companies issuing the BMC-84.
Hope this will inform readers of the differences.

don jipping
1st Security Financial Corporation

[Admin]

Very informative post, thanks Don.

I am curious, are there any fees when a broker withdrawals all funds from the account? If not then I suppose the banks make their money only from the interest made from the trust fund?

[don jipping]

Trustees will vary on terms for withdrawal of trust funds. Generally all monies are returned to broker in full, minus any misc. processing fees.
don