When a broker hands a load to a trucking company, the trucker’s cargo insurance is supposed to answer for lost or damaged freight. Sometimes it doesn’t: an exclusion applies, or the limit runs out. The customer may then look to the broker. Contingent cargo coverage is built for that moment, but wording varies by insurer. The form a federal court read in 2013 was excess over other insurance, reduced what it paid by whatever the trucker had already paid, and had its own limits. Federal rules don’t make brokers buy it. When a broker has to carry it, the requirement comes from a contract.
What the coverage is designed to do
Under the Carmack Amendment, 49 U.S.C. 14706, the carrier that receives the freight and the carrier that delivers it are liable to the shipper for actual loss or injury to the property. The statute names carriers and freight forwarders. It doesn’t mention brokers. A broker, under 49 CFR 371.2, arranges transportation by an authorized motor carrier for pay and doesn’t haul the load. How Carmack liability works.
That doesn’t stop a customer from coming after the broker when the carrier’s insurance falls short. In a 2013 federal case from Illinois, a load of athletic shoes was stolen from a parking facility. The broker’s customer demanded reimbursement from the broker, the broker settled, collected $100,000 from the trucker’s insurer, and claimed the rest under its contingent cargo endorsement. That endorsement added coverage for property of others the broker had arranged to move under a brokerage agreement with an independent trucker. Other insurers’ forms are worded differently.
It sits behind the carrier’s policy
The word contingent matters. The endorsement in that case said it was excess over any other collectible insurance, and that anything payable would be reduced by all sums paid by or on behalf of the trucker. A separate endorsement capped theft of wearing apparel at $100,000 for both the motor truck cargo and contingent cargo coverage. The court applied the cap, subtracted the $100,000 the trucker’s insurer had paid, and the amount payable under the contingent cargo endorsement came out to zero. A separate claim under the policy’s motor truck cargo form was left for trial.
The lesson isn’t that the coverage is worthless. It’s that the wording decides everything: what triggers it, what gets subtracted, and which commodity limits apply. When I look at a contingent cargo quote, those are the pages I read first.
What FMCSA requires of brokers
- A $75,000 bond or trust fund. Under 49 CFR 387.307, a broker must have a $75,000 surety bond (Form BMC-84) or trust fund (Form BMC-85) in effect before FMCSA will register it. That security provides for payments to shippers or motor carriers if the broker fails to carry out its contracts or arrangements for transportation. What the BMC-84 bond is.
- No federal cargo insurance requirement. In Part 387, cargo security requirements apply to household goods motor carriers and household goods freight forwarders. Nothing there requires a property broker to carry cargo insurance.
- The bond isn’t cargo insurance. The rule ties it to a broker that fails to carry out its contracts. It isn’t written as coverage for freight that gets stolen or wrecked.
Where the requirement really comes from
Shipper and broker agreements can set their own insurance terms. In the Illinois case, the broker’s agreement with its customer required $100,000 per occurrence of motor truck cargo insurance, and the broker’s own agreement with the trucker required cargo coverage of at least $100,000. The contingent cargo limit in that policy was the lesser of the limit the brokerage agreement required or the amount on the declarations page, so the contract terms fed directly into what the policy would pay.
Before you sign a shipper agreement, send me the insurance section. If it asks the broker to carry cargo coverage, I want to see exactly what it asks for and compare it to the form before you agree to it.
Why a carrier’s cargo policy may not pay
Carrier cargo policies have their own exclusions, and a certificate of insurance won’t necessarily show them. In a 2008 Kentucky Court of Appeals case, a truck loaded with a retailer’s goods was stolen while the driver was inside a truck stop. The carrier’s cargo insurer denied the claim under an exclusion for unattended vehicles. The court held that the retailer couldn’t rely on the certificate for the policy’s full terms; the certificate said it was issued as a matter of information only and conferred no rights on the holder. What a certificate of insurance does and doesn’t prove.
Contingent cargo forms can carry conditions too, such as the theft limit for certain commodities in the Illinois case. Ask how the form treats theft of the freight you arrange before you need it. Carriers carry their own coverage; see whether a trucking company needs cargo insurance and how cargo insurance works.
How it differs from contingent auto liability and forwarder coverage
Contingent cargo deals with the freight. Contingent auto liability is aimed at claims for injuries to other people when a truck you arranged is in a crash. A 2015 Illinois appellate case involved a truck broker’s contingent automobile liability policy that said it did not apply if there was valid and collectible auto liability insurance of any nature. The truck’s $1 million auto policy, which also covered the broker as an additional insured, paid its full limit. The court held the contingent policy owed nothing, read it as covering only a complete failure of the primary insurance, such as an invalid policy or an insolvent insurer, and refused to treat it as excess coverage. A broker program can include both; see freight broker insurance.
Freight forwarders are a different case. Carmack treats a freight forwarder as both the receiving and delivering carrier, and 49 CFR 387.401 defines a forwarder as one that assumes responsibility for the shipment from receipt to destination. A forwarder’s cargo exposure is its own as a carrier, not contingent on someone else’s, and its coverage should be built with that in mind. Commercial trucking insurance is the carrier side.
Common questions
Does FMCSA require freight brokers to carry cargo insurance?
No. Brokers must have a $75,000 surety bond or trust fund on file (BMC-84 or BMC-85). Federal cargo security rules apply to household goods carriers and household goods forwarders, not property brokers.
Is a broker liable for cargo under the Carmack Amendment?
Carmack puts liability on the receiving and delivering carriers and on freight forwarders, and the statute doesn’t mention brokers. Customers can still press claims against brokers; in one Illinois case, the broker’s customer demanded reimbursement and the broker settled.
Does contingent cargo pay if the carrier’s insurer pays part of the loss?
It depends on the wording, which varies by insurer. One endorsement reviewed by a federal court reduced anything owed by all sums paid by or on behalf of the trucker, which left nothing payable under that endorsement on that claim.
Is the BMC-84 bond the same as cargo insurance?
No. Under 49 CFR 387.307, the bond provides for payments to shippers or carriers if the broker fails to carry out its contracts. It isn’t written as cargo insurance.
What should I have ready for a quote?
Your MC or USDOT number, your shipper contracts and their insurance terms, the freight you broker, and any past claims. Bring the contracts: in one policy a court reviewed, the contingent cargo limit was tied to the limit the brokerage agreement required.
Sources
- 49 CFR Part 387 (eCFR): minimum levels of financial responsibility, including 387.307 broker bond or trust fund, household goods cargo security, and Subpart D freight forwarders
- 49 CFR Part 371 (eCFR): brokers of property
- 49 U.S.C. 14706 (Cornell LII): liability of carriers under receipts and bills of lading (Carmack Amendment)
- U.S. District Court, N.D. Illinois, No. 11 C 8367 (Feb. 5, 2013): broker’s contingent cargo liability endorsement
- Illinois Appellate Court, 2015 IL App (1st) 133549: truck broker’s contingent automobile liability policy
- Kentucky Court of Appeals (July 11, 2008): unattended-vehicle cargo exclusion and reliance on a certificate of insurance
General information about contingent cargo coverage for freight brokers and forwarders as of October 2026, not legal advice; policy wording, your contracts, 49 CFR Part 387 and 49 U.S.C. 14706 control. Coverage depends on underwriting and the terms, conditions and exclusions of the policy actually issued.