Insurance for Freight Brokers

What underwriters look at

Freight brokers don't haul freight, but that doesn't mean they're insulated from claims when a shipment is lost, damaged, or delayed. One of the fastest-growing sources of litigation in this industry is the negligent selection claim, where a shipper or receiver alleges the broker failed to properly vet the motor carrier it hired, particularly when that carrier turns out to have a poor safety record, lapsed insurance, or a history of cargo claims. These claims can name the broker directly even though the broker never touched the freight, and they've become a significant driver of professional liability exposure in the brokerage space.

Federal regulation requires licensed brokers to maintain a BMC-84 surety bond or BMC-85 trust fund as a condition of operating authority, but that bond is designed to protect shippers and carriers from a broker's failure to pay, not to cover liability claims against the broker itself. Brokers sometimes confuse the bond requirement with actual liability coverage, leaving a real gap when a claim arises from a carrier selection dispute or a contract breach allegation.

Contingent cargo coverage fills another gap, protecting the broker if a hired carrier's own cargo insurance fails to pay or is insufficient for the loss. Because brokers rely entirely on the paperwork and representations of the carriers they hire, verifying active authority, adequate cargo limits, and current insurance before every load, and documenting that verification, has become as important to risk management as the coverage itself.