The Liability Policy Won't Pay for the Stolen Electronics

The truck was stolen outside Nashville. Forty-eight thousand pounds of consumer electronics, gone. The carrier — MC-1247893 / DOT-3567102, two and a half years of authority, clean Unsafe Driving BASIC — had $750,000 in BIPD coverage showing active on FMCSA's L&I database the morning the load moved. The broker checked it. Standard stuff. What nobody checked: the cargo policy. It had lapsed five weeks earlier. The insurer had filed a cancellation notice with FMCSA twenty-two days after the effective lapse date, and the broker's tool hadn't caught the update yet.

The shipper wanted $380,000 back. The carrier had nothing in force to pay it with. The broker had a timestamped diligence record showing a liability check. That is not the same thing.

This is about the gap between those two.

Two Policies. Two Underwriters. Two Completely Different Events.

Every motor carrier running general freight is required by federal law to maintain minimum public liability insurance. That's 49 CFR § 387.9 — $750,000 for most general commodities. This is the BIPD figure: bodily injury, property damage, environmental restoration. It responds when a CMV hits another vehicle, injures people, or backs through a warehouse wall. It does not cover the freight on the truck.

Cargo insurance covers the freight. Loss, theft, damage in transit — that's the cargo policy's job. These two policies come from different underwriters, are filed separately with FMCSA, and respond to completely different triggering events. They share space on the same ACORD 25 certificate, which is probably why so many brokers treat them as one thing.

They're not.

When you pull a carrier's L&I filing and see two lines — one liability, one cargo — and both show "active," you've confirmed the right basic structure. You have not confirmed that the cargo policy limits are adequate, that the commodity you're tendering is covered, or that the policy hasn't lapsed since the last filing. You've confirmed a filing exists.

Cargo Insurance Has No Federal Floor for General Freight

This surprises people. The $750,000 BIPD minimum is set in 49 CFR § 387.9 and enforced by FMCSA operating authority. There is no equivalent federal cargo minimum for general commodity carriers.

49 CFR Part 387 does impose cargo requirements on household goods movers — $5,000 per vehicle, $10,000 per occurrence. Those numbers are so low they're basically a formality. But for a dry-van carrier hauling retail goods, industrial equipment, auto parts, or electronics, FMCSA sets no cargo minimum at all. What the carrier carries in the way of cargo coverage is determined by the market, their shipper and broker contracts, and their own risk appetite.

What that looks like in practice: a carrier can have a current $750,000 BIPD policy and a $50,000 cargo policy. Or a $100,000 cargo policy with a $50,000 per-occurrence sublimit. Or a cargo policy that explicitly excludes consumer electronics over $10,000 per unit. Every one of those carriers shows up identically in a basic coverage check.

Most broker carrier agreements require a cargo minimum — $100,000 is standard in templates I've seen across the industry. On a high-value lane, that number is inadequate by a factor of three or four. The contract term is only as good as the verification behind it.

What Cargo Policies Actually Cover — and What They Don't

The standard cargo policy covers physical loss or damage to goods in transit. "All risk" policies cover any cause not explicitly excluded. "Named perils" policies cover only the causes listed. The difference between those two structures is massive at claim time, and your certificate of insurance will not tell you which type the carrier has.

Some exclusions that show up across most cargo policies:

Inherent vice. Produce that was already turning when it was loaded, eggs that crack from normal road vibration, frozen goods that degrade because they were improperly conditioned before pickup. The insurer's position is that the damage was latent in the cargo, not caused by transit. This is why carriers who haul produce should have produce-specific riders, and why brokers who tender perishables without asking about them are taking a risk they may not have priced.

Temperature control caused by driver error. A reefer unit that breaks down mechanically will generally trigger cargo coverage. A reefer unit that the driver set twenty degrees too warm will often fall into a driver-error exclusion. That's a distinction that shows up in every reefer claim and that a one-sentence attestation at pickup can help sort out — and which is worth having in your carrier agreement.

Theft by the carrier's own employees. When the driver disappears with the trailer, that's not third-party theft in most cargo policy definitions. It's employee theft, which requires either a crime policy endorsement or a separate fidelity bond to trigger. Carriers who operate with single drivers — owner-operators running under a carrier's authority — often have policies that exclude this scenario entirely.

Loading and unloading negligence by the shipper. If the shipper's dock crew loads the freight and packages it badly, the cargo carrier may disclaim coverage on the grounds that the damage predated transit. This shows up constantly in produce claims and in any load where the shipper controls the loading sequence.

These exclusions aren't hidden. They're in the policy language. They're also completely invisible in the FMCSA L&I database, which shows the policy number, the insurer's name, the coverage type, and the effective/expiration dates. Nothing about exclusions. Nothing about per-occurrence sublimits. Nothing about commodity schedules.

The Commodity Mismatch Problem

A cargo policy written for a carrier who hauls general dry goods may not cover the specific freight you're tendering. Some policies explicitly exclude:

Consumer electronics above a stated per-unit or per-load value. Liquor, tobacco, and pharmaceuticals without a specific endorsement. Medical equipment and devices. Precious metals, fine art, and antiques. Anything requiring active temperature management beyond a stated range.

If you're tendering $380,000 of consumer electronics on a dry van and the carrier's cargo policy excludes electronics over $100,000 per occurrence — which is not an unusual exclusion — you have zero cargo coverage on that load even if the policy number is current and active.

On any load over $150,000 in commodity value, the cargo check needs to include the declarations page, not just the certificate. The declarations page shows the commodity schedule, the per-occurrence limits, and the named endorsements. Most carriers will send it if you ask. If a carrier won't send their declarations page on a $300,000 load, that's a useful answer about how that relationship is going to work at claim time.

How to Actually Verify Cargo Coverage

The L&I database is the starting point. Go to safer.fmcsa.dot.gov, pull the carrier's snapshot, and look at the active insurance filings. Confirm that a cargo line is showing active as of today's date and that the most recent filing isn't a cancellation notice.

That's the starting point. It's not the finish line.

The only way to confirm live cargo coverage on the date of tender is to call the insurer directly. Not the carrier's 1-800 certificate number. The insurer's main verification line. Give them the policy number off the L&I database or the ACORD 25, give them the MC or DOT number, and ask them to confirm the policy is in force today, the coverage limit, and whether there are any commodity exclusions relevant to your freight type. Write down the name of the rep, the time of the call, and what they told you.

This call takes four minutes. On a load over $150,000, that four minutes is worth more than every checkbox on your standard vetting form.

The reason it matters more now than it did before May 14: Montgomery v. Caribe Transport II, LLC came down from the Supreme Court as a unanimous opinion holding that the FAAAA does not preempt state-law negligent-selection claims against freight brokers. Before May 14, federal preemption blocked most of those claims. It doesn't anymore. A plaintiff's lawyer can take your carrier file into state court in any state and ask why you selected this carrier for this load.

If the answer is "we checked liability but not cargo," on a load that subsequently had a six-figure cargo loss, you're explaining a four-minute phone call you didn't make. That's a rough deposition.

How I Document This

When I confirm cargo coverage, the diligence file gets:

A date-stamped pull from FMCSA's L&I database showing the active cargo line on the tender date. I screenshot it with the timestamp visible.

A call log: date, time, insurer's name, phone number dialed, name of the rep, policy number confirmed active, coverage limit stated, expiration date, and any material limitations or exclusions disclosed. If they told me electronics over $50,000 aren't covered, that goes in the note.

The carrier's current ACORD 25. If it's more than 90 days old, I ask for a new one before the load moves. An old cert proves the carrier had coverage at some prior date. It doesn't prove they have it today.

On loads over $150,000 commodity value: the declarations page with the commodity schedule.

On loads over $500,000 stated value: written confirmation from the carrier that the load falls within their policy terms and that their insurer has been notified where required. Some cargo policies have conditions on high-value single loads that the carrier is supposed to report to the insurer. Many don't know this. Asking the question either confirms coverage or reveals a gap before the truck rolls.

That file doesn't just reduce your legal exposure. It cuts the claims process in half if something goes wrong, because you've already got a verified coverage chain on paper before the load moved.

The four-minute phone call and the screenshot take less time than the argument you'll have with a shipper six months from now about who owed what to whom. Make the call.

— Mason Lavallet

Founder, DOTScreener.com