Freight Broker Insurance Requirements 2025

May 27, 2025

Freight Broker Insurance Requirements 2025

If you plan to start a freight brokerage business in 2025, you need to understand freight broker insurance requirements. Insurance helps you protect your business and build trust with shippers and carriers. It’s also essential for complying with federal laws.

In this guide, we’ll break down what insurance you need as a freight broker, how much it costs, and how it fits into your larger startup plan.

Freight Broker Surety Bond Or Trust Fund

To attain and keep your freight broker authority from the Federal Motor Carrier Safety Administration (FMCSA), you need to show that your business is financially responsible.

You can do this by getting a surety bond or a trust fund. Both options meet the FMCSA’s insurance requirement but differ in structure, cost, and implications for your business.

BMC-84 Surety Bond

A BMC-84 surety bond is the most common choice for most freight brokers. With this option, you pay a percentage (usually between 1 and 10% annually) of the total $75,000 bond based on your credit score and financial history. That means if your credit is strong, your upfront costs are lower.

One of the biggest advantages of a surety bond is the lower initial cost. You don’t have to tie up your own capital, which can help you save cash for other start-up expenses. That’s why many new brokers choose the BMC-84 when launching their business.

BMC-85 Trust Fund Agreement

The BMC-85 is a trust fund agreement, where instead of monthly or annual premiums, you deposit $75,000 of your own money into a trust account. This money stays in the account and is used only if you fail to meet your responsibilities.

Unlike the surety bond, this option doesn’t involve a third-party guarantee. You’re fully funding the protection yourself.

If you have the available funds and want full control without borrowing, the BMC-85 might make sense. Just be prepared to leave that money untouched for as long as you’re operating under FMCSA authority.

The table below is a brief summary of how both options compare.

	BMC-84 surety bond	BMC-85 trust fund agreement
Financial requirement	Annual premium (typically 1 to 10% of $75,000), based on creditworthiness.	Full $75,000 deposited upfront into a trust fund.
Upfront cost	Lower initial cost. Premium varies with credit score.	High initial cost. Requires full $75,000 deposit.
Credit check	Yes. Premium rates depend on credit score.	No credit check required.
Access to funds	Capital remains available for business use.	Funds are tied up in the trust and are therefore inaccessible.
Annual fees	Annual premium based on credit.	Annual trust management fees.
Ideal for	Startups or freight brokers with limited capital.	Established brokers with sufficient capital.

General Liability Insurance

General liability insurance offers protection against common risks that can arise during daily operations. While not mandated by law, many shippers and clients require freight brokers to have this insurance. This insurance’s coverage typically includes the following:

Bodily injury: If a third party, such as a client or vendor, sustains an injury on your business premises, this insurance covers medical expenses and legal fees.
Property damage: Covers damages to third-party property caused by your business activities.
Personal and advertising injury: Protects against claims of libel, slander, or false advertising.

It serves as a safety net, ensuring that unforeseen incidents don’t interrupt your freight brokerage operations.

Contingent Auto Liability Insurance

Contingent auto liability insurance activates when a contracted motor carrier’s primary auto liability coverage rejects a claim.

This insurance guarantees that freight brokers are not held financially responsible for accidents or damages that occur during the transportation of goods by third-party carriers. It’s a key safeguard against unforeseen liabilities in the logistics chain.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions (E&O) insurance, protects freight brokers against claims of negligence or mistakes in their professional services.

This coverage is vital for scenarios where a broker’s error, such as incorrect documentation or failure to secure proper transportation, leads to a client’s financial loss. It covers legal defense costs and any settlements or judgments, ensuring that a single oversight doesn’t jeopardize the broker’s business.

Property Insurance

Property insurance helps freight brokers protect their physical assets, including office spaces, equipment, and inventory. This coverage safeguards against losses due to events like fire, theft, vandalism, and certain natural disasters.

For brokers operating from a physical location or maintaining valuable equipment, property insurance provides business continuity by covering repair or replacement costs in the event of damage or loss.

Contingent Cargo Insurance

Trucking companies typically provide insurance protection against cargo damage. However, contingent cargo insurance is needed in scenarios where the carrier’s claim is insufficient or denied.

Contingent cargo insurance acts as a secondary layer of protection, covering the broker’s liability and ensuring clients are compensated for cargo loss. This coverage helps maintain trust and credibility with clients and demonstrates a commitment to safeguarding their goods throughout the transportation process.

Workers’ Compensation Insurance

Workers’ compensation insurance is key for freight brokers who employ staff. It covers medical expenses and lost wages if an employee is injured or becomes ill due to job-related activities.

Besides supporting employees during recovery, this insurance protects the business from potential legal liability lawsuits related to workplace injuries.

Factors That Affect Freight Broker Insurance Cost

Freight broker insurance premiums can vary widely based on the various key factors, including:

Business size and revenue. Larger brokerages with higher revenues and shipment volumes typically face increased premiums.
Coverage limits and policy types. Opting for higher coverage limits or additional policy types.
Credit history and financial stability. A strong credit score and stable financials can lead to more favorable rates, while weaker financial indicators may increase costs.
Type and value of freight. High-value, fragile, or hazardous goods pose greater risks. This means insurance providers will charge higher premiums to cover potential cargo losses.
Claims history and safety record. A history of insurance claims or safety violations can raise red flags for insurers, leading to higher premiums.
Deductibles and policy terms. Choosing higher deductibles can reduce your premium costs, but it also means you’ll pay more out-of-pocket in the event of a claim.

How To Get Your Freight Broker Insurance: A Step-by-Step Guide

Here are the steps involved in getting your freight broker insurance.

Assess your insurance needs

Besides a surety bond or trust fund, which the FMCSA requires, additional policies can provide better coverage for your brokerage. Consider the following when deciding what extra coverage to get:

The type of freight you handle (e.g. hazardous materials, high-value goods)
Whether you lease or own office or warehouse space.
How much control or liability you assume when working with motor carriers.
Your use of physical property or business assets.
The type of insurance coverage your client wants.

Search for insurance companies

Identify insurance companies that specialize in freight brokerage coverage and the trucking industry. Consider factors like their experience, coverage options and limits, financial stability, policy exclusions, claims process, and customer service.

It’s best to gather quotes from multiple providers to compare costs, liability limits, and other key details.

File required insurance forms with the FMCSA

Your insurance company will need to submit specific forms to the FMCSA to validate your coverage:

BMC-84 or BMC-85: For your surety bond or trust fund agreement.
BMC-91 or BMC-91X for general liability insurance.
BMC-34: For cargo insurance (if applicable).

Maintain and review your insurance coverage

Assess your insurance policies regularly to ensure they align with your business operations. Your coverage needs may change as your brokerage grows.

FAQs

1. Why does freight broker insurance matter?

Freight broker insurance protects your business from financial losses due to claims, legal issues, or accidents during shipments. It also builds trust with clients and carriers.

2. Does insurance affect my ability to find clients?

Yes. Shippers and carriers are more likely to trust and work with brokers who are properly insured.

3. Do freight brokers need cargo insurance?

Cargo insurance is not required for brokers by the FMCSA, but shippers may ask for it. Even if you don’t physically handle goods, having this coverage gives clients peace of mind.

Final Thoughts

Meeting freight broker insurance requirements is key for compliance. It also protects your business, clients, and your future in this thriving industry. Whether you’re just starting out or growing your brokerage in 2025, having the right coverage in place gives you credibility and peace of mind.

Our 90-Day Freight Broker Course walks you through setting up a legally compliant brokerage. You’ll learn about relevant transportation laws and how to secure FMCSA authority and insurance coverage.

Start your freight broker journey the right way – enroll today.

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