Contingent Cargo vs Motor Truck Cargo Insurance: Who Buys Which?
Motor truck cargo insurance is the trucking company's own policy on the freight it hauls. Contingent cargo insurance is the freight broker's backup policy for loads it arranges but never touches. They are bought by different businesses and respond at different times, and one does not replace the other.
Side-by-Side Comparison
| Motor Truck Cargo Insurance | Contingent Cargo Insurance | |
|---|---|---|
| Who buys it | The motor carrier hauling the load | The freight broker or 3PL arranging the load |
| When it responds | First, as the primary policy on the freight | After the carrier's cargo policy does not pay, under the contingent policy's own terms |
| Whose liability it covers | The carrier's liability for freight in its care | The broker's exposure when a shipper looks to the broker for the loss |
| Required by FMCSA | Only for household goods carriers and household goods freight forwarders ($5,000 on any one vehicle, $10,000 at any one time and place; 49 CFR 387.303T(c), 387.403T(a), 387.405) | No. The broker's federal requirement is $75,000 in financial security (49 CFR 387.307) |
| Who asks for proof | Brokers and shippers, before they tender a load | Shippers, in the broker-shipper contract |
| Limit set by | The carrier, to meet what its brokers and shippers require | The shipper contract and the value of freight the broker arranges |
| Written to protect | The motor carrier | The freight broker |
Which Is Right for You?
Choose Motor Truck Cargo Insurance if:
- You haul freight on your own truck, under your own authority or leased to a carrier that requires it
- Brokers or shippers ask you for a certificate showing a cargo limit before they give you a load
- You haul household goods across state lines and need the federal cargo filing
Choose Contingent Cargo Insurance if:
- You hold freight broker authority and arrange loads on other companies' trucks
- Your shipper contracts make you responsible if a carrier's cargo claim is denied
- You want protection when a carrier's policy has lapsed or excludes the commodity that was lost
The Most Common Mistake
A motor carrier assuming the broker's contingent cargo policy protects the carrier. It does not. Contingent cargo protects the broker, and an insurer that pays a claim under it can pursue the carrier for the loss. A carrier that hauls a load its own cargo policy excludes, such as a commodity or a refrigeration breakdown the policy does not cover, can be left paying the loss out of its own pocket, up to the full value of the freight unless the shipping contract limits it.
Frequently Asked Questions
What is contingent cargo insurance?
Contingent cargo insurance is a policy bought by a freight broker or 3PL. It can cover freight the broker arranged when the motor carrier's own cargo insurance does not pay a valid claim, for example because the carrier's policy lapsed, excludes the commodity, or has a limit lower than the loss. What it pays depends on the contingent policy's own terms.
Does a motor carrier need contingent cargo insurance?
No. A motor carrier needs motor truck cargo insurance, which is primary coverage on the freight it hauls. Contingent cargo is a broker's coverage. A company that holds both carrier and broker authority typically carries both policies, one for each side of the business.
Is cargo insurance required by the FMCSA?
Only for household goods carriers and household goods freight forwarders, which must file cargo coverage of $5,000 for goods on any one vehicle and $10,000 for losses at any one time and place (49 CFR 387.303T(c); for forwarders 387.403T(a) and 387.405). Other for-hire carriers have no federal cargo filing. In practice brokers and shippers set the requirement by contract, and a carrier without cargo coverage will usually not be tendered their loads.
Does contingent cargo insurance replace checking a carrier's insurance?
No. Contingent cargo is a backstop, and insurers expect the broker to verify each carrier's cargo coverage before tendering a load. Brokers confirm the carrier's cargo limit, the policy dates, and exclusions that matter for the load, such as reefer breakdown or theft-prone commodities.
Does a freight broker's $75,000 bond cover cargo claims?
No. The BMC-84 bond or BMC-85 trust is financial security for the broker's obligations under its contracts to arrange transportation, such as paying carriers their freight charges (49 CFR 387.307; 49 U.S.C. 13906(b)). It is not cargo insurance and is not there to pay for lost or damaged freight.
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