After Montgomery, Shippers Have a Broker Problem Too

I've talked a lot about Montgomery from the broker side. Rightfully so — the Supreme Court's May ruling that state-law negligent-selection claims aren't preempted by the FAAAA is a genuine liability shift for anyone who arranges freight for a living. But there's a side of this conversation that I almost never hear.

Who hired that broker?

A shipper at a mid-size regional food manufacturer moves twelve loads a week through the same three brokers they've used for years. They sign rate confirmations, pay invoices, and file the paperwork. Nobody in their traffic department has ever pulled the broker's FMCSA registration, looked at whether the broker carries a BMC-84 or a BMC-85, or asked whether the broker has contingent cargo insurance. If something goes wrong with one of those loads, the shipper's lawyer is probably going to read about Montgomery, flip the question around, and ask: what did you do to make sure the broker you hired was actually competent?

That's not settled law the way Montgomery is settled law. I'm not a lawyer and I'm not predicting a wave of shipper-liability rulings. But here's what I've learned from watching litigation shake out after freight accidents: plaintiffs' counsel reads everything. If the broker did something indefensible and the shipper never made any effort to know who they were working with, that can become part of a story that a jury hears.

The scenario nobody wants to run through

MC-1384721, DOT-3712048. Operating since fourteen months ago. The SAFER snapshot shows a satisfactory safety rating carried over from the old authority they bought — not their own operating history. The broker who booked them doesn't know that. They pulled the MC, saw "satisfactory," and moved on.

The shipper hired that broker five years ago through an introduction at a trade show. The vendor agreement is three pages, last updated in 2021. There's no due-diligence clause. Nobody at the shipper has ever verified that the broker's operating authority is active, checked whether their bond is a BMC-84 or BMC-85, or confirmed that the broker carries contingent cargo coverage.

The load is $220,000 worth of finished food product heading from Chicago to Dallas. The carrier jackknifes in Missouri. Total loss. The broker had liability limits that barely cover their own exposure, let alone the shipper's cargo claim. And when the shipper's insurance carrier goes to recover, they start pulling the broker's carrier-selection file — and find it's mostly empty.

Now the shipper is getting questions from their insurer, their lawyer, and eventually from the plaintiff's attorney who joined the case on behalf of a third party injured in the accident. One of those questions is going to be: did you do anything to evaluate this broker's practices before you handed them your freight?

What a shipper should actually be checking

Most shippers have no process for this at all. Here's what the floor looks like — not best practice, just a defensible baseline.

Is the broker's authority active and in good standing? This takes thirty seconds on FMCSA's Licensing & Insurance search. You want to see "AUTHORIZED FOR PROPERTY" with an active status and no safety fitness determinations pending. A broker whose authority was revoked for failure to maintain the surety bond and then reinstated is a signal worth flagging. How recent is the reinstatement?

BMC-84 or BMC-85 — and does it matter to you as a shipper?

Under 49 CFR § 387.307, a licensed freight broker must maintain at least $75,000 in financial security, filed with FMCSA as either a BMC-84 surety bond or a BMC-85 trust fund. That $75,000 exists to protect shippers and carriers who suffer loss from the broker's failure to pay. The BMC-84 is an insurance-backed bond. The BMC-85 is a trust fund that the broker funds themselves.

Here's the "so what" at the point where you're deciding whether to hand a broker your freight: neither form guarantees you'll actually collect. The BMC-84 bond has to be drawn on by a claim process that can take months and still get contested by the surety. The BMC-85 trust fund is only as good as the money the broker actually deposited — there's no insurer backing it if the fund runs short. And $75,000 is the minimum. On a load worth $220,000, that bond covers a fraction of your loss even if the claim goes perfectly.

None of that means you shouldn't check. It means you should check and understand what you're actually looking at. A broker who can't prove their bond is current is a broker you don't use. A broker on a BMC-85 is worth asking whether they actually maintain the fund balance required — you won't always get a straight answer, but asking puts the question on the record.

Does the broker carry contingent cargo insurance?

This isn't legally required. It's commercially available and some brokers carry it; many don't. Contingent cargo coverage pays when the underlying carrier's cargo policy doesn't — either because the carrier's insurer denies the claim or because the carrier goes dark after the loss. For high-value lanes, asking your broker upfront whether they carry contingent cargo and in what amount is a completely reasonable question. A broker who answers confidently and can produce evidence of it is a different kind of partner than one who doesn't know what you're talking about.

What's the broker's FMCSA complaint history?

FMCSA maintains a complaint database for brokers. It's underused and not perfectly reliable, but a broker with multiple unresolved complaints is flying a flag. A broker with a pattern of complaints about using unauthorized carriers or failing to pay carriers — those both tell you something about how they operate.

The pattern that should worry shippers most

The freight brokerage industry has a long tail of extremely small operations: one or two people, home office or a small suite, doing volume because they've built relationships over the years. Nothing wrong with that. I've done business with excellent small brokers.

But the due-diligence standard on those relationships tends to drift. When you've been working with someone for three years and nothing's gone wrong, the instinct is to trust the track record and skip the paperwork. That instinct is fine for most loads. For loads where the exposure is real — high value, hazmat, anything going across multiple state lines — that assumption can get expensive.

Montgomery didn't create a new legal obligation for shippers to vet their brokers. What it did was sharpen the entire freight industry's attention on who's making selection decisions and what they knew when they made them. A plaintiff's lawyer who can't get everything they want from the broker can start looking at the chain above the broker. You want the answer to "what did you do to verify your broker's competence?" to be something other than "I've known them for three years."

That answer doesn't have to be exhaustive. It has to exist and it has to be current.

How I document this

At DOTScreener, the broker screening file looks like this: I pull the broker's MC on FMCSA's L&I search, confirm their authority is active and that they're licensed for property brokerage (not just freight forwarding or passenger service), and I note the bond type — BMC-84 or BMC-85 — and the surety or trust fund custodian. I look at the FMCSA complaint summary and note the count and status. If the broker has a BMC-84, I verify the issuing surety is still active on the FMCSA bond filing — bonds lapse just like carrier insurance does. I ask the broker directly about contingent cargo coverage if the lane warrants it, and I document the answer.

That process takes maybe ten minutes per broker, and I do it at onboarding and then again once a year or any time there's a meaningful change in the relationship. DOTScreener's broker screening feature pulls the MC lookup, authority status, bond filing, and contingent cargo flag in one screen so I'm not jumping between FMCSA databases — it runs the same check I'd do manually and surfaces the red flags first. The surety-bond status, BMC type, and reincarnation check (whether this broker's principals have had authority revoked previously under a different entity) all come back in the same pull.

I keep a record of every broker check the same way I keep a carrier selection record. The date, what I found, who approved the vendor relationship. If the relationship ever comes up in discovery — and after Montgomery, the whole freight industry should assume it eventually might — I want to show that I treated broker selection the way I treat carrier selection. With a process, not just a handshake.

The bottom line

Shippers are not off the hook just because they hired a broker to handle carrier selection. Montgomery expanded broker exposure, but the legal logic doesn't stop at the broker's door. If you're a shipper and you've never verified your broker's authority, bond status, or carrier-selection practices, you're carrying risk you can't see.

Start with the basics: active authority, bond type, bond status current. Ask about contingent cargo on high-value freight. Document it. Repeat annually. It's not a large ask for the exposure it covers.

— Mason Lavallet

Founder, DOTScreener.com