Freight Broker Guide
A freight broker does not own the truck or employ the driver. When a hired carrier causes a serious crash, the broker is still often named in the lawsuit. Contingent auto liability is the policy built for that moment.
It is the broker's other big contingent line, next to contingent cargo insurance. This guide covers why brokers get sued over crashes they did not cause, what the policy pays, how it differs from cargo, general liability and errors and omissions, what underwriters ask, and what one 2026 quote cost.
A truck crash with serious injuries can lead to claims larger than the carrier's policy limit. That gives the injured party a reason to look past the carrier. Lawsuits against brokers tend to rest on three ideas.
After a serious truck crash, the injured person's lawyer looks for every company tied to the load. The motor carrier and its driver come first, but the shipper and the broker are often named too. Being named does not mean the broker did anything wrong. It does mean the broker has to answer the lawsuit and pay for a defense.
The most common theory against a broker is that it picked a carrier it should have known was unsafe. The claim points to the carrier's safety record, its insurance, its authority or its inspection history at the time the load was tendered, and asks what the broker checked before it handed over the freight.
A second theory is that the broker acted like the carrier, or like the carrier's employer. The lawsuit points to things such as setting the driver's route or schedule, tracking and directing the driver, fining the carrier, or being listed as the carrier on the bill of lading. The more a broker controls how the load moves, the easier this claim is to make.
How these claims end depends on the facts and the state. What a broker controls is what it can prove: that it checked the carrier first, and that the carrier ran the load.
Contingent auto liability protects the broker when it is sued over a crash by a carrier it hired, and the carrier's own auto liability does not respond or is used up. A negligent selection claim is the classic example. The policy pays under its own terms, up to its own limit.
"Contingent" is the key word. The carrier's auto liability comes first. The broker's policy is there for the gap: the carrier's policy was cancelled, the claim falls outside it, or the damages run past its limit. It is not a substitute for the carrier's own insurance.
Defense costs depend on the form. Some pay defense on top of the limit; others count it against the limit. Common conditions tie coverage to the carrier vetting you described on the application. Read your own form, and show your agent any shipper contract before you sign it. If it makes you accept carrier-like liability, a contingent form may not cover that.
Brokers often carry five or six coverages, and their names sound alike. Each one answers a different kind of claim. Only the bond is required by federal law.
| Policy | What it pays for | Who requires it | Typical trigger |
|---|---|---|---|
| BMC-84 surety bond | Carriers and shippers the broker fails to pay, up to $75,000. It is a guarantee, not insurance for the broker. | Federally required for broker authority (a $75,000 BMC-84 bond or BMC-85 trust). | The broker does not pay a carrier or shipper what it owes under the brokered load. |
| Contingent cargo | A covered loss or damage to freight when the motor carrier's own cargo policy does not pay. | Not federally required. Shippers and broker contracts ask for it. | A cargo claim the carrier's cargo insurer denies, or a carrier policy that lapsed or has too low a limit. |
| Contingent auto liability | The broker's liability when it is sued over a crash by a carrier it hired, and the carrier's auto liability does not respond or is used up. | Not federally required. Shippers and contracts ask for it. | A bodily injury or property damage lawsuit naming the broker, often for negligent selection. |
| General liability | Injury or property damage from the broker's own premises and operations, such as a visitor hurt at the office. | Not federally required. Landlords and some contracts ask for it. | An accident at or caused by the broker's own business, not a truck on the road. |
| Errors and omissions | Money a client loses because of a professional mistake by the broker, under the policy's terms. | Not federally required. Some shippers ask for it. | A claim that the broker made an error in handling a load, such as wrong paperwork or a missed instruction. |
| Hired and non-owned auto | Liability from cars the broker rents or that employees drive for work, such as a staff member driving to a meeting. | Not federally required. | A crash in a rented or personal vehicle used on broker business. It does not cover the trucks you hire. |
The common mix-up is between contingent auto and hired and non-owned auto. Hired auto covers cars your own staff drive for work. It does not cover the trucks you book. Our BMC-84 surety bond guide explains the bond, and the contingent cargo claim denied guide shows how the cargo side responds when the carrier's insurer says no.
The underwriter is pricing one question: if a hired carrier crashes, how likely is it that the broker is blamed? So the freight broker application spends a full section on how you pick and handle carriers. Expect questions like these.
It also asks for gross receipts, commodities by percent ("general freight" is not accepted), loads brokered and three years of claims. Answer with what you actually do, not what you plan to do.
A written policy you follow on every load is your best answer to a negligent selection claim and to the underwriter's questions. Start with these steps and adjust them to your freight.
Our free FMCSA carrier lookup shows a carrier's authority and insurance filing in one place. The broker carrier setup documents guide covers each document in the packet and what it is checked against.
In one 2026 quote for a small, new freight broker, the contingent auto liability premium was $4,250. Contingent cargo on the same policy was $1,850. That is one quote, not a typical range. Fees and the state's surplus lines tax were added on top. The contingent cargo insurance cost guide walks through the full quote line by line.
A crash claim can be far larger than a lost load, which is one reason the auto line priced higher in that quote. Revenue, freight type, loads brokered, claims and your carrier vetting all move the price.
We place contingent auto liability with contingent cargo on one policy, through Lloyd's of London underwriters, reached through a surplus lines wholesaler. Quotes come by email off a written freight broker application, not an online rater. A brand-new brokerage can be quoted; the application asks for the owner's experience instead of loss history. Premium financing is available. We place broker E&O too, and we write the BMC-84 bond ourselves. See contingent cargo insurance for the combined policy and freight broker insurance for the full program.
It is insurance that protects the broker when it is sued over a crash by a motor carrier it hired, and the carrier's own auto liability does not respond or is used up. It pays under the terms of the broker's contingent policy. It is not a replacement for the carrier's own liability insurance.
No. The only federal requirement for broker authority is the $75,000 BMC-84 bond or BMC-85 trust. Contingent auto liability is asked for by shippers and contracts, and it protects the broker's own business when a lawsuit names it.
Usually not. General liability is built for the broker's own premises and operations, and most forms exclude auto claims. A lawsuit over a hired carrier's crash is the job of contingent auto liability, so check your own forms with your agent.
It depends on the form. Some policies pay defense costs in addition to the limit, and some count defense against the limit. Read your own policy, because in a lawsuit that names the broker, defense can be a large part of the cost.
In one 2026 quote for a small, new freight broker, the contingent auto liability premium was $4,250, next to $1,850 for contingent cargo on the same policy. That is one quote, not a range. Revenue, freight type, loads brokered, claims and your carrier vetting all move the price.
Yes. A brand-new brokerage can be quoted; the application asks for the owner's experience instead of loss history. We send the application and samples of the two documents brokers most often lack, a broker-carrier agreement and an owner experience letter.
Send us your MC number. We send the freight broker application with sample documents, quote contingent auto liability and contingent cargo on one policy, and add broker E&O and the BMC-84 bond if you need them.