Before you can legally haul freight for compensation in the United States, you need operating authority from the FMCSA. But "operating authority" is not one thing — it comes in three distinct types, and each one lets you do something different.
Choosing the wrong authority type (or missing one you need) can mean fines, revoked privileges, or months of waiting while competitors run loads you cannot touch. Here is what each type of authority actually means, what it costs, and how to decide which one your business needs.
What Is Operating Authority?
Operating authority — also called "MC authority" because it comes with an MC number — is your federal permission to operate as a for-hire carrier, broker, or freight forwarder in interstate commerce. It is separate from your DOT number, which is just a registration identifier.
Think of it this way:
- DOT number: Your registration — tells FMCSA you exist and allows them to track your safety record
- MC number / Operating authority: Your license to do business — says you are authorized to haul freight (or arrange transportation) for money
You need a DOT number if you operate a commercial vehicle in interstate commerce. You need operating authority if you want to get paid for it. Private carriers (hauling your own goods) need a DOT number but typically do not need MC authority.
If you have not gotten your MC authority yet, we have a step-by-step guide: How to Get MC Authority.
The Three Types of Operating Authority
FMCSA issues three types of motor carrier operating authority. Each one authorizes a different business activity:
1. Common Authority (Motor Carrier of Property — Common)
What it allows: Hauling freight for the general public for compensation. You can carry goods for any shipper or accept loads from any broker, as long as the freight is legal and you have the right equipment.
Who needs it: Owner-operators, trucking companies, and carriers who want to haul loads from load boards, brokers, or direct shippers without pre-existing contracts.
Key characteristics:
- You must serve the general public — you cannot refuse freight unreasonably (though in practice, you choose which loads to accept)
- Your rates and services are available to anyone
- This is the most flexible authority type for carriers
- You can haul spot market loads, broker freight, and direct shipper freight
- Most factoring companies (including CHC Factoring) require you to have active Common Authority
Bottom line: If you are an owner-operator or small carrier planning to haul freight for multiple customers and use load boards, you need Common Authority. This is what 90%+ of for-hire carriers hold.
2. Contract Authority (Motor Carrier of Property — Contract)
What it allows: Hauling freight under specific, written contracts with individual shippers. You only carry goods for shippers you have a signed agreement with.
Who needs it: Carriers who work exclusively with dedicated customers under long-term contracts and do not want or need to haul spot freight.
Key characteristics:
- You are not obligated to serve the general public
- Each shipper relationship requires a written contract
- Your rates are private — negotiated per contract, not publicly available
- You cannot pick up random loads from a load board under Contract Authority alone
- Less common in modern trucking — most carriers opt for Common Authority even if they primarily do contract work
Bottom line: Contract Authority made more sense decades ago when regulation was heavier. Today, most carriers get Common Authority even if they plan to work under contracts, because it gives them the flexibility to also haul spot freight when contract lanes are slow.
3. Broker Authority (Property Broker)
What it allows: Arranging the transportation of freight by hiring carriers — without owning or operating trucks yourself. Brokers match shippers with carriers and earn a margin on each load.
Who needs it: Freight brokers, freight agents starting their own brokerage, and anyone who arranges loads for carriers without personally hauling the freight.
Key characteristics:
- You do not haul freight — you arrange it
- Requires a $75,000 surety bond or trust fund (BMC-84 or BMC-85)
- You must have a BOC-3 process agent on file
- No insurance requirement for the broker entity itself (though most get E&O coverage)
- Cannot be combined with Common Authority on the same MC number if you are also a carrier — you can hold both, but they serve different functions
Bottom line: If you want to be a freight broker — finding loads, matching them with carriers, and earning the spread — you need Broker Authority plus a $75,000 bond. If you are a carrier who hauls freight, you do not need this.
Common Authority vs Contract Authority: Which Should You Get?
This is the question most new carriers ask, and the answer is straightforward: get Common Authority unless you have a very specific reason not to.
Here is why:
- Flexibility: Common Authority lets you haul any legal freight for any customer. Contract Authority limits you to written-contract customers only.
- Load boards: You need Common Authority to legally haul loads found on DAT, Truckstop, or any other load board. Contract Authority does not cover spot freight.
- Factoring: Most factoring companies require active Common Authority. Without it, you may not qualify for same-day funding on your invoices.
- Growth: Even if you start with one dedicated customer, you will eventually want to diversify. Common Authority means you can take on new customers without filing additional paperwork.
- You can still do contract work: Having Common Authority does not prevent you from signing long-term contracts with shippers. It just means you are not limited to only those contracts.
The only scenario where Contract Authority alone makes sense is if you exclusively haul for one or two shippers under dedicated agreements and never plan to touch the spot market. Even then, most carriers get Common Authority for the optionality.
Can You Hold Multiple Authority Types?
Yes. A single company can hold Common Authority, Contract Authority, and Broker Authority simultaneously. Many larger trucking companies do exactly this — they haul freight under their carrier authority and broker excess freight to other carriers under their broker authority.
Each authority type requires its own filing fee ($300 each) and may have separate insurance or bonding requirements. For example:
- Common + Contract Authority: Same insurance requirements, just two $300 filing fees. Gives you maximum flexibility as a carrier.
- Common + Broker Authority: Requires both carrier insurance (liability + cargo) and the $75,000 broker bond. Allows you to haul freight and broker freight you cannot cover yourself.
- All three: Possible but uncommon for small operations. Typically seen in larger companies with both assets and brokerage divisions.
Important note: If you hold both carrier and broker authority, keep the operations clearly separated. The FMCSA and shippers both get nervous when a company is simultaneously the carrier and the broker on the same load. That is called double brokering, and it is illegal. (More on this: What Is Double Brokering and How to Protect Yourself)
What Each Authority Type Costs
Here is the full cost breakdown for each authority type in 2026:
Common Authority (Carrier)
- FMCSA filing fee: $300
- BOC-3 process agent: $30 to $100 (one-time filing)
- Insurance — Primary liability: $750,000 minimum coverage required ($5,000 to $12,000+ per year)
- Insurance — Cargo: Most shippers and brokers require $100,000 minimum ($500 to $2,000+ per year)
- UCR (Unified Carrier Registration): $176 per year for 0-2 vehicles
- IFTA (if crossing state lines): Varies by state, typically $10 to $30 application fee
- Timeline: Authority grants in about 20 business days after filing, then a 10-day protest period
Contract Authority (Carrier)
- FMCSA filing fee: $300
- BOC-3 process agent: $30 to $100
- Insurance: Same as Common Authority — $750,000 liability, cargo as required by contracts
- Timeline: Same as Common Authority
Broker Authority
- FMCSA filing fee: $300
- BOC-3 process agent: $30 to $100
- Surety bond (BMC-84): $75,000 face value — annual premium typically $900 to $3,000+ depending on credit score
- Alternative — Trust fund (BMC-85): $75,000 deposited with a financial institution (ties up capital)
- No truck insurance required (you do not own trucks)
- E&O insurance: Optional but recommended ($1,000 to $3,000 per year)
- Timeline: Same filing timeline, but bond must be in place before authority activates
Insurance Requirements by Authority Type
This is where the authority types diverge most in practical terms:
- Common and Contract carriers (general freight): $750,000 minimum primary liability insurance. Hazmat carriers need $1,000,000 to $5,000,000 depending on what they haul.
- Brokers: No trucking insurance required — just the $75,000 surety bond. However, most reputable brokers carry contingent cargo insurance and E&O (errors and omissions) to protect against claims.
Your insurance must be filed with FMCSA (form BMC-91 or BMC-91X for carriers, BMC-84 for broker bonds) before your authority becomes active. No insurance on file = your authority stays in "pending" status and you cannot legally operate. (More on insurance costs: Trucking Insurance for Owner-Operators)
Authority Status: What "Active," "Pending," and "Revoked" Mean
Your authority has a status on the FMCSA's SAFER system. Here is what each status means:
- Active: You are authorized to operate. Insurance is on file, no pending revocations. This is where you want to be.
- Pending / Application Pending: You filed but either the waiting period has not passed, or your insurance has not been filed yet. You cannot legally operate under pending authority.
- Inactive: Your authority exists but is not currently usable — usually because insurance lapsed or you voluntarily deactivated it.
- Revoked: FMCSA took away your authority. This happens due to insurance cancellation, safety violations, or failure to maintain required filings. Getting revoked authority reinstated is a process — do not let it happen.
Why this matters for cash flow: If your authority lapses (insurance drops off, UCR expires), brokers and factoring companies will see it immediately on FMCSA's system. Many will refuse to work with you until it is restored. Keep your filings current.
Common Mistakes When Filing for Authority
New carriers make these errors constantly:
- Filing for Contract Authority instead of Common. Some new carriers see "contract" and think it means they can do contract work. It does not — it limits you to pre-signed contracts only. If you want flexibility, file for Common.
- Not filing insurance immediately. Your authority clock starts ticking when you file, but it will not activate until insurance is on record. File your insurance the same day you file your authority application.
- Forgetting the BOC-3. Process agent designation is required before your authority becomes active. It is cheap and easy — do not let it hold you up.
- Letting authority go inactive accidentally. If your insurance policy renews and your insurer is slow to re-file with FMCSA, your authority can drop to inactive. Monitor your SAFER record monthly.
- Not understanding the protest period. After FMCSA grants your authority, there is a 10-day window where existing carriers can protest. Protests are rare for small carriers, but they do happen. Your authority is not truly active until this period passes without protest.
How Authority Type Affects Freight Factoring
Your operating authority status directly impacts whether you can factor your invoices and get same-day payment:
- Active Common Authority: This is what factoring companies look for. With active Common Authority, you can factor invoices from any broker or shipper you haul for.
- Contract Authority only: Some factoring companies will work with Contract Authority carriers, but options are more limited. You can only factor invoices from shippers you have written contracts with.
- Pending or Inactive Authority: Most factoring companies will not fund you until your authority is fully active. This creates a cash flow gap for new carriers — you have a truck, you have loads available, but you cannot factor until FMCSA processes your application.
- Broker Authority: Brokers do not factor their own invoices in the traditional sense (they are paying carriers, not getting paid per-load). However, some financial products exist for broker cash flow.
At CHC Factoring, we work with carriers who have active Common Authority. The process is straightforward — once your authority is active and you are hauling loads, we can fund your invoices the same day you deliver. No waiting 30 to 45 days for broker payments.
Maintaining Your Authority: Ongoing Requirements
Getting authority is step one. Keeping it active requires ongoing attention:
- Insurance: Must remain continuously on file. Any lapse can trigger authority inactivation within days.
- UCR registration: Annual renewal required. Failure to renew can result in fines and eventually affect your authority status.
- BOC-3: Must remain current. If your process agent goes out of business, file a new one immediately.
- Biennial update: FMCSA requires carriers to update their registration information every two years. Miss it and your DOT number (and authority) can be deactivated.
- Safety rating: Serious safety violations can lead to authority revocation. Keep your CSA scores clean.
- Broker bond (if applicable): Must remain continuously in force. If your bond cancels, your broker authority revokes — and you have 10 days before it takes effect.
Quick Reference: Which Authority Do You Need?
- Owner-operator hauling freight from load boards: Common Authority
- Small carrier with multiple customers: Common Authority
- Carrier with one dedicated shipper (and nothing else): Contract Authority (but Common is still recommended)
- Carrier who wants maximum flexibility: Common Authority (can still do contract work)
- Someone who wants to broker freight without owning trucks: Broker Authority
- Carrier who also wants to broker overflow freight: Common Authority + Broker Authority
- Private carrier hauling your own goods: No operating authority needed (just DOT number)
The Bottom Line
For most truckers and owner-operators reading this, the answer is simple: get Common Authority. It gives you the widest flexibility to haul freight, work with brokers, use load boards, and qualify for services like freight factoring that keep your cash flow healthy.
Contract Authority is a legacy category that rarely makes sense as a standalone choice in modern trucking. Broker Authority is for a completely different business model — arranging freight rather than hauling it.
Whatever authority type you hold, keep it active. Lapsed insurance, missed renewals, or expired filings can shut down your ability to haul — and get paid — overnight.
Already have your authority and hauling loads? If you are tired of waiting 30 to 45 days for broker payments, freight factoring gets you paid the same day you deliver. Get a free quote from CHC Factoring — rates from 2%, no reserve, no startup fees.