Auto dealer bonds
Most states require licensed motor vehicle dealers to post a bond with the state motor vehicle agency. The bond protects buyers and the state if the dealer commits fraud, fails to deliver title or does not remit taxes and fees. Amounts vary by state and sometimes by dealer type.
Freight broker bonds
Property brokers registered with FMCSA must keep $75,000 in financial security on file, either as a surety bond on Form BMC-84 or as a trust on Form BMC-85. The bond protects motor carriers and shippers if the broker fails to pay.
How a dealer bond claim works
A customer or the state agency can make a claim on a dealer bond when the dealer breaks the licensing law, for example by failing to transfer title, rolling back an odometer or keeping tax and fee money. The surety investigates, and if the claim is valid it pays up to the bond amount. The dealer must then repay the surety, so a dealer bond is credit extended to the business rather than protection for it.
Some states set different bond amounts for new, used, wholesale or motorcycle dealers. Check the current requirement with your state motor vehicle agency before you apply, because amounts change through legislation.
Freight broker bonds in more detail
The BMC-84 is filed electronically by the surety with FMCSA. A broker's authority cannot become active until the financial security is on file, and FMCSA can suspend the authority if the bond is cancelled or drawn down below the required amount. Freight forwarders have the same financial security requirement.
Claims on a broker bond usually come from motor carriers who were not paid for loads, or from shippers. Sureties look at a broker's credit, experience in logistics, years in business and, for newer brokers, sometimes ask for collateral.
Information to have ready
- State dealer license type, or FMCSA MC number for brokers
- Business entity details and ownership
- Owners' credit authorization
- Prior bond history and any past claims
Frequently asked questions
Does a broker bond cover cargo damage?
No. It secures the broker's payment obligations, not freight loss. Cargo exposure is handled by insurance.
Can a broker use a trust instead of a bond?
Yes. FMCSA accepts a trust fund agreement on Form BMC-85 as an alternative to the BMC-84 surety bond, for the same amount.