Surety Bonds and Certificates of Insurance

As a Freight Broker, you are occasionally asked to provide a Certificate of Insurance(COI) when onboarding with a shipper or factoring company. Certificates of Insurance are provided to individuals or entities when they obtain Liability Insurance and serve as proof that an individual or entity holds valid coverage. Freight Brokers are required to maintain a BMC-84 surety bond, which is not a traditional insurance policy. Because of its classification, surety bonds are not accompanied by a COI.

What Does the BMC-84 Freight Broker Bond Cover?

The BMC-84 Bond is mandated by the Federal Motor Carrier Safety Administration (FMCSA) and is essential to maintain active broker authority. Surety bonds are a third-party agreement between the:

• Principal - Broker 
• Obligee - FMCSA
• Surety - Jet Surety

Surety bonds act as a financial guarantee, promising that the principal will fulfill any required obligations. For freight brokers specifically, it covers non-payment to carriers and shippers.

When Would a Broker Have a COI?

It is important to know that a broker’s surety bond protects carriers and shippers, not the broker. To protect themselves, a Freight Broker may acquire:

• Contingent Cargo Insurance - covers losses if a carrier’s insurance fails or is insufficient. 
• Business Liability Insurance - covers injuries or damages at the broker’s place of business. 

If a broker obtains either of these insurance types, they will be issued a  COI by the insurance provider. Although it isn’t required to obtain these forms of insurance, many shippers and carriers require it to work with them. Our article on 'How to Become a Freight Broker' addresses how these outside insurance types can benefit your company.

What Can a Broker Provide as Proof of Bonding?

When asked to verify your freight broker surety bond with a COI, you should first clarify your status as a broker. Some shippers and factoring companies mistake onboarding brokers for a trucking company. You can also provide your company’s Freight Letter, issued by Jet when you purchase your surety bond. This document outlines: 

1. General business information
2. Your bond number and limit
3. The effective and expiration date of the bond
4. Jet Surety's contact information

The information outlined can also be verified through the FMCSA on their Carrier Search Page. If the Freight Letter is not accepted as proof of bonding, feel free to have them contact us directly by email or phone. We are more than happy to verify the status of a brokerage and clear the air for any confusion.

If you have not obtained your freight broker surety bond or are interested in switching providers, you can apply online here or call us at (855) 470-3773.