Your Broker's $75K Bond Doesn't Cover Your Freight. Here's What Does.

A shipper I know — consumer electronics, $400K load of tablets headed from Memphis to a fulfillment center in Phoenix — found out the hard way that the words "I'm bonded and insured" don't mean what most people think they mean.

The carrier's cargo policy came back as active. ACORD 25 in the file. $250K in cargo coverage. Load went out on a Thursday. Friday morning, the trailer was found abandoned at a truck stop in Amarillo. No driver. No freight. Turned out the driver had arranged the whole thing with a third party. Classic staged theft.

The carrier's insurer denied the claim. "Employee dishonesty" exclusion, which is buried in most cargo policies because the underwriting assumption is that the motor carrier bears responsibility for its own people. No payout.

So the shipper turned to the broker. The broker had contingent cargo coverage — $100K, which wouldn't have covered the full load anyway, but something is better than nothing. Except the broker's contingent policy had a "theft by the carrier's employees or agents" exclusion, which is common language in contingent forms because the insurer doesn't want to backstop the carrier's own staffing decisions.

The final recovery on $400K of electronics was under $30K. And not once, before any of this happened, had the shipper asked the broker a single question about their contingent cargo coverage.

What the $75K Bond Actually Covers

Every freight broker operating in the U.S. must have a surety bond or trust fund on file with FMCSA. The requirement is in 49 CFR § 387.307(a): no broker shall engage in brokering transportation property unless they've filed a surety bond or trust fund in an amount not less than $75,000. This is the BMC-84 (surety bond) or BMC-85 (trust fund), and brokers' authority is revoked if it lapses.

That $75K is not cargo coverage. It is not sitting there to reimburse you if your freight disappears or arrives damaged.

The bond exists to cover unpaid freight charges and financial obligations the broker fails to fulfill — primarily, the money a broker owes to the carrier if the shipper doesn't pay and the broker takes the cash anyway. It's a payment assurance mechanism for the carrier side of the transaction. If a broker collects freight charges from a shipper and disappears before remitting to the carrier, the carrier can make a claim against the bond.

Cargo damage? Not what it's for. Cargo theft? Also not what it's for.

I understand why shippers conflate this. "Bonded" sounds comprehensive. But in freight brokerage, "bonded" means the broker met a financial security requirement designed to protect carriers from non-paying brokers — not a promise to the shipper about what happens to their freight.

The Contingent Cargo Gap

Many brokers voluntarily carry contingent cargo coverage. This is insurance that activates when the underlying carrier's cargo policy fails or is insufficient — it's a backstop, not a primary policy. It's sometimes called "excess contingent cargo liability" and sometimes just "contingent cargo."

Key word: voluntarily. FMCSA does not require freight brokers to carry contingent cargo insurance. There's no CFR section mandating it, no BMC form filing for it, no minimum limit. A broker can operate with no contingent cargo coverage whatsoever and remain fully FMCSA-compliant.

That surprises most shippers. They assume the regulatory framework requires something. It doesn't.

The brokers who carry contingent cargo do it for two reasons: their shipper customers demand it as a condition of doing business, and they don't want to eat a loss when a carrier's insurer denies a claim. But even when a broker has a contingent policy, the coverage varies enormously:

Limits. Contingent cargo policies often top out at $100K or $250K. For a $400K electronics load, that's already a gap. The limit should match the freight values you're actually moving.

Deductibles. I've seen contingent cargo policies with $10K, $25K, even $50K deductibles. The broker isn't going to eat that deductible on a $50K claim — and they probably can't on a $10K claim either. If the deductible is higher than typical claim values, the policy is functionally useless.

Exclusions. Employee dishonesty. Theft by the carrier. Improperly loaded freight. High-value commodities listed separately. Some contingent cargo forms specifically exclude electronics, jewelry, pharmaceuticals, and spirits because underwriters know these categories attract theft. If you're shipping those categories and you haven't asked about commodity exclusions, the answer might be unpleasant.

Trigger language. This matters more than most people realize. Most contingent cargo policies require that the carrier's primary policy have denied the claim or been exhausted before the contingent policy kicks in. That means the shipper waits out the carrier's claims process — weeks or months — before the broker's carrier can even be notified. If the carrier's insurer is in dispute about the denial, the contingent trigger might not activate cleanly.

The "Tell Me About Your Contingent Cargo" Conversation

Shippers who actually vet brokers before tendering freight — and post-Montgomery, that's a group that should be growing — are starting to add a specific item to the checklist. Not "are you insured" but: "What does your contingent cargo policy cover, what are the limits and deductible, and what are the major exclusions?"

The broker's answer tells you several things. A broker who gives you a confident, specific answer — "we carry $500K in contingent cargo through Chubb, $10K deductible, we exclude livestock and household goods but everything else is covered" — knows their own policy. That's a good sign.

A broker who says "we're bonded and insured, you're covered" and can't get more specific than that has not actually read their contingent policy. Which means they also don't know if it would cover your load. Which means you shouldn't assume it would.

There's no FMCSR requiring this conversation. But a competent plaintiff's attorney arguing a negligent-selection or negligent-broker claim after Montgomery v. Caribe Transport II doesn't need a regulation. They need a reasonable shipper standard of care. And "you were shipping $400K in tablets and you never asked the broker about their cargo coverage limits or exclusions" is a reasonable care argument waiting to be made.

What FMCSA's L&I Filing Doesn't Show You

You can pull a broker's FMCSA authority record. It'll show their BMC-84 or BMC-85 filing status, the surety company name, the $75K amount. It's accurate as of when they filed.

It won't show you whether they have contingent cargo. It won't show you the limit, the deductible, the commodity exclusions, or whether the policy is in an AM Best A-rated carrier. That information lives in the broker's voluntary insurance program, not in a FMCSA filing.

DOTScreener's broker screening surfaces the broker's bond status — whether it's a BMC-84 or BMC-85, who the surety is, whether the bond is currently active — alongside their FMCSA broker authority and any OOS indicators. It's a starting point for the conversation, not a substitute for it. The contingent cargo piece still requires asking.

But knowing the bond status before you pick up the phone puts you in a better position. You know what they're required to have. The next question is what they chose to carry voluntarily — and whether that voluntary coverage is adequate for what you're actually shipping.

Why This Matters More Now Than It Did a Year Ago

Before Montgomery, shippers had limited options when a broker's carrier failed. The federal preemption doctrine in the FAAAA was used by courts in the 7th and 11th Circuits to knock out state-law claims against brokers before they got anywhere. The Supreme Court reversed that unanimously in May 2026. State-law negligent-selection and negligent-broker claims are now viable in every jurisdiction.

That changes the due-diligence calculus for shippers. It's not just about whether you can sue the carrier — you can now have a direct negligence theory against the broker for how they selected the carrier, how they monitored the load, whether they had adequate financial backstop when something went wrong. The broker's contingent cargo coverage, its limits, and its exclusions are now facts that show up in discovery.

"Did you know, before this load, that the broker's contingent cargo policy excluded theft by the carrier's employees?"

If the answer is "no, I didn't know," the follow-up is "why not?"

There's a version of this where the shipper's lawyer argues that reasonable freight shippers, on high-value loads, verify the broker's contingent cargo coverage and confirm it's adequate for the commodity and the exposure. That argument didn't have much traction when federal preemption made the claim difficult to bring. It has more traction now.

What to Actually Collect Before You Tender

For any load above $100K, before I tender, I want the broker's contingent cargo documentation on file. What I'm collecting:

• Name of the insurer providing contingent cargo coverage and their AM Best rating (A or better)
• Policy limit and per-occurrence deductible
• Effective date range
• A direct answer to whether the commodity I'm shipping has any exclusion or sublimit in that policy
• The certificate holder language — I want it to show my company as a certificate holder if possible

I put this in the carrier screening record for that shipment. If the broker can't or won't answer these questions, I treat that as a red flag about the broker's operational maturity — the same way I'd treat a carrier who couldn't tell me their OOS rate.

DOTScreener's broker screening gives me the bond status, the authority record, any OOS flags, and the broker's FMCSA history. That's the base layer. The contingent cargo conversation is the layer on top of that, and it's still a conversation I have to initiate. The tool doesn't replace the question. It tells me enough about the broker to know whether the conversation is worth having.

How I Document This

One clear record per load above a value threshold I've set (I use $75K):

• Broker MC number and current bond status, date checked
• Broker authority type: common carrier authority? Broker-only? Both?
• Contingent cargo carrier name, limit, and deductible — either from a certificate the broker provided or a direct verbal confirmation noted in the record
• Any commodity exclusions that apply to this load
• Whether I accepted the load anyway and why, if there were gaps

That record goes in my TMS notes for the load and a copy goes in the carrier file. If there's ever a cargo claim, I want to show that I asked. And if the broker's contingent policy didn't cover the claim, I want the documentation showing I was told what it covered before I made the decision to tender.

The post-Montgomery world for shippers isn't about becoming an insurance expert. It's about asking the question. Documenting the answer. And knowing enough to understand when the answer should give you pause.

— Mason Lavallet

Founder, DOTScreener.com