Cargo Insurance for Freight Brokers: What You Must Know
Are Freight Brokers Liable for Cargo Damage?
Under the Carmack Amendment, primary liability for cargo loss sits with the carrier. However, freight brokers face civil claims from shippers when they select negligent carriers, fail to verify carrier authority or insurance, or misrepresent services. Contingent cargo insurance fills this exposure gap.
Types of Cargo Insurance Freight Brokers Need
- Contingent Cargo Insurance: Responds when the carrier's policy fails to pay. Typically $100K–$1M per occurrence.
- Broker Contingent Liability: Broader than contingent cargo; covers broker errors in carrier selection, routing, and documentation.
- Freight Broker Bond (BMC-84): FMCSA mandates a $75,000 surety bond for all licensed freight brokers.
- Errors & Omissions (E&O): Covers professional mistakes in quoting, routing, or documentation that cause shipper losses.
Annual Premium Ranges for Freight Brokers
| Coverage Type | Annual Cost |
|---|---|
| Contingent Cargo ($500K limit) | $1,200–$3,500 |
| Broker E&O ($1M limit) | $2,000–$6,000 |
| BMC-84 Bond ($75K) | $900–$3,000/yr |
Frequently Asked Questions
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