The Number on the Certificate Isn't the Number You'll Collect

A freight broker I know — careful guy, good paper trail — moved a load of steel coils for a mid-size fabrication shop in Indiana. 45,000 pounds, $189,900 declared value on the shipper's paperwork. Before he tendered, he pulled the carrier's ACORD 25. $100,000 cargo liability on file. He documented it, noted that the value exceeded the limit, told himself the shipper's own insurance would cover the rest, and moved the load.

The carrier bent the trailer backing into a dock. $189,900 in steel coils are now scrap metal and a dock-safety hazard. The carrier's insurer paid.

Twenty-two thousand five hundred dollars.

The carrier had a clause in their bill of lading limiting liability to $0.50 per pound. Forty-five thousand pounds at $0.50 is $22,500. Completely legal. The broker's carrier agreement was silent on the subject. The shipper was out $167,400 and looking for someone to explain why.

That story predates Montgomery v. Caribe Transport II. The broker had no state-court negligent-selection exposure back then. He does now. And the cargo liability problem — the one that cost his shipper $167K — that was always there.

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What the Carmack Amendment Actually Does

The Carmack Amendment, 49 U.S.C. § 14706, is the federal law that governs carrier liability for cargo loss and damage in interstate commerce. It preempts state-law cargo claims against the carrier — this is a different preemption argument than the one brokers were hiding behind before Montgomery, and it still holds. Carmack is the only game in town if a shipper wants to sue a carrier for a lost or damaged load.

The default rule under Carmack is that the carrier is liable for the actual loss or damage. Reasonable market value at destination, measured against what the cargo would have sold for in a fair transaction. That sounds like full recovery.

Except the same statute gives carriers the right to limit that liability. 49 U.S.C. § 14706(c)(1)(A): a carrier may establish rates for transportation that include a released value of the property, and the carrier's liability is limited to that released value. The mechanism is the shipper being given a reasonable opportunity to choose between the limited-liability rate and a higher rate for full-value coverage. If the shipper takes the lower rate — or never even knew there was a choice — the limitation sticks.

That's the Carmack trap. The carrier isn't hiding anything. The option is there in theory. But in the day-to-day rhythm of spot freight, most shippers don't know to declare a higher value, most brokers don't mention it, and most load confirmations don't pause to explain it.

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Three Ways the Limitation Shows Up

The bill of lading. The carrier's own bill of lading — not a third-party form, the carrier's document — often includes language like "liability limited to $X per pound" or "released value of $Y per hundredweight." When the delivery confirmation gets signed, those terms come with it. The average broker never reads the carrier's bill until there's a claim. By then it's academic.

The carrier's tariff. Most asset carriers publish a tariff or reference one by name in their paperwork. A tariff can include released rates, liability caps, exclusion lists for high-value commodities. It's long. It's dense. It reads like it was written by someone who wanted it not to be read. Brokers don't audit tariffs at tender time. Carriers know this.

The special contract. This is the one that catches specialty freight. 49 U.S.C. § 14101(b) lets a shipper and carrier contract out of Carmack entirely in writing. A properly executed special contract can remove the liability floors, restructure claim timelines, change how damages are calculated, require arbitration — anything the parties agree on. When you're managing a dedicated lane with a single carrier hauling $600K semiconductor equipment loads, the question of whether a special contract governs that relationship isn't hypothetical. It's the difference between a carrier writing a check for $600K or $75K.

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Why the ACORD 25 Can't Tell You What You Need to Know

When you pull a carrier's certificate of insurance, you see a cargo limit. $100K. $250K. $1M if you've required it in your carrier qualification process. That number is the policy limit — the maximum the insurer pays before they stop writing checks.

What the certificate doesn't tell you:

Whether the carrier has a Carmack limitation in their tariff or bill that applies to loads in your commodity class. Whether the shipper has a declared-value option and knows to use it. Whether the policy excludes your freight type by name — refrigerated cargo, high-value electronics, building materials — as a sub-limit below the face amount. Whether the insurer's A.M. Best rating is strong enough that a large claim actually gets paid without years of litigation.

The certificate verifies that a policy exists. It does not verify that the policy will respond to your specific load for the full value you're expecting.

This isn't a knock on insurance verification. You still pull the certificate. You still verify it against the FMCSA L&I database and look at the filing history. That step catches lapses, cancelled coverage, and misrepresented limits. It just doesn't solve the Carmack problem, because Carmack isn't an insurance question — it's a contract question.

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What Your Carrier Agreement Should Actually Say

Most carrier agreements I've reviewed have a cargo liability section. Most of them say something like: "Carrier shall maintain cargo liability coverage of not less than $100,000 per occurrence." A few say $250K. Some well-run brokerage operations require $250K minimums on all loads or push carriers toward $1M on high-value lanes.

Here's what almost none of them say: that the carrier may not invoke a Carmack liability limitation on loads tendered under this agreement.

Those are two different things. "Maintain coverage of $100K" tells you the insurer will write up to $100K in checks. It says nothing about whether the carrier's bill of lading is simultaneously capping their liability at $22,500. Both can be true at the same time. The policy exists. The cap applies. The carrier's insurer pays the lower of the two.

If you want to close that gap in your carrier agreement, the language needs to do more work. Something like: "Carrier agrees not to limit its liability for cargo loss or damage below the actual declared value of the shipment without the express prior written consent of Broker and the applicable shipper." That's not magic language and it's not legal advice — but it's a meaningful difference from "maintain coverage." It shifts the burden. A carrier who won't sign that clause is telling you how they handle claims before one ever happens.

For high-value or commodity-specific lanes, go further. Identify the cargo types you regularly tender, the value ranges you see, and whether the carrier's coverage and Carmack stance line up. If you're moving $300K medical imaging equipment on a regular lane with a single carrier, that carrier agreement deserves specific language about that freight class.

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The Declared-Value Option Brokers Don't Mention

Carmack requires that shippers be given a reasonable opportunity to declare a higher value and pay a higher rate for full coverage. In practice, this means the carrier offers two options: the released rate with the liability cap, or a higher rate that buys full-value coverage. The shipper chooses.

Most shippers don't declare a higher value for three reasons. They don't know it exists. They assume their own cargo insurance handles the gap. Or the broker who tendered never brought it up.

That third reason is the one worth sitting with. After Montgomery, brokers can be sued in state court for negligent selection. The argument from a plaintiff's lawyer won't stop at "you picked a dangerous carrier." It will extend to "what responsibilities did you undertake toward this shipper?" A broker who moves a shipper's $300K load on a carrier with a $100K cargo limit and a Carmack tariff in place — and never mentioned the declared-value option, never noted the coverage gap, never suggested the shipper confirm their own coverage — that's a conversation nobody wants to have under oath.

I'm not saying brokers are cargo insurance advisors. We're not. But if you know the gap is there and you don't say anything, you've made a choice. Make it consciously and document it.

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High-Value Loads and the Gap You Can't Ignore

For any load where the cargo value exceeds the carrier's stated limit, document the decision. Not a mental note. A dated record tied to the load and the carrier screening.

At a minimum: note the carrier's cargo limit, note the load value, note what you did about the gap. If the shipper confirmed their own cargo coverage in place above the carrier limit — write it down. If you required the carrier to obtain a special endorsement for the load value — get that in writing and date it. If you made a judgment call to use a carrier with a $100K limit on a $95K load, that's fine — just document why the carrier was otherwise acceptable and that you reviewed the alignment.

For genuine high-value loads — electronics, pharmaceuticals, specialized equipment — the right move is a carrier with a limit that matches the load, clean Carmack language in your agreement with them, and a record that shows you connected those dots before the truck rolled. Contingent cargo coverage is not the answer here. Contingent coverage pays when the carrier's insurer wrongfully denies a valid claim. If the carrier invoked a legitimate Carmack limitation and the insurer paid $22,500 on a $189K load, that denial isn't wrongful. Contingent coverage doesn't respond to a contract term the carrier had every legal right to exercise.

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How I Document This

When a load value is at or above a carrier's cargo limit, the notation in the screening record looks like this:

If the load is below the carrier's limit with room to spare, I note that too — briefly, just enough to show the question was asked and answered. The timestamp matters as much as the note. Discovery on a cargo claim isn't just "what did you know?" It's "what did you know before the truck left the dock?"

DOTScreener's Carrier Selection Record timestamps the full screening at the moment of selection — carrier data, coverage, any flags — and stores it under the load rather than in a folder someone might update later. That immutability is the point. A record you can still edit after a claim is a liability, not a defense.

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The broker with the steel coils had done most of the things right. He'd verified the certificate, documented the coverage limit, kept a file. What he hadn't done was check whether the carrier's bill of lading included a Carmack limitation, or say anything to his shipper about the gap between $100K coverage and $189K cargo value.

He told me he thought about that distinction a lot during the call where the shipper asked him to explain what happened.

He thinks about it before every high-value tender now.

— Mason Lavallet

Founder, DOTScreener.com