Does a freight broker need contingent cargo insurance?
Asked by: Dr. Nia Bogisich DDS | Last update: October 13, 2025Score: 4.3/5 (65 votes)
What insurance should a freight broker have?
General liability protection only goes so far, but it doesn't protect against assertions of negligence, mistakes, or malpractice. Professional liability insurance covers freight brokers against errors and omissions that may occur while arranging shippers and receivers for clients or while shipments are in transit.
Which of the following is a requirement for a freight broker?
As a broker, you'll need an MC number and DOT number, both of which are issued by the U.S. Department of Transportation. If these numbers sound familiar, it's because truckers also need MC and DOT numbers for registration. In addition to these requirements, you'll also need a FF number from the FMCSA.
Are freight brokers responsible for cargo claims?
Your freight brokerage is only charged with paying a cargo claim if they've opted into this responsibility contractually.
Do freight brokers need contingent cargo insurance?
If you're a freight broker, the answer is yes, absolutely. While you're not under any legal obligation to carry contingent cargo insurance, in most cases, there are still significant reasons almost all freight brokers do need it.
New Freight Brokers Don't Need Contingent Cargo Insurance?
Who is responsible for cargo insurance?
As the shipper, you are responsible for arranging insurance as necessary. In some cases, the option of insuring cargo is something the carrier or freight forwarder will specifically highlight to you. The level of the insurance premium depends on several factors, including: the value and nature of the goods.
Do brokers need an MC number?
Despite the FMCSA update that will eventually remove the need for MC numbers, most brokers and carriers are still required to have one.
What is the responsibility of a freight broker?
Freight Broker duties and responsibilities
Gathering information from clients to determine their shipping needs. Obtaining shipping quotes from carriers and passing them on to clients. Booking freight service through carriers for clients. Coordinating the pickup and drop off of shipments.
What is a surety bond for freight brokers?
A freight broker surety bond is a type of license and permit bond that freight brokers must obtain to get or renew a license. The freight broker surety bond requirement exists to help establish credibility and prevent fraud or failure to pay motor carriers or shippers in a timely manner.
How much is contingent cargo insurance?
Contingent cargo insurance can cost between $1,200-$2,500 per year for the minimum necessary limit of $100,000 per load. The higher the risk level of your goods, the more expensive they will be to insure.
Is cargo insurance mandatory?
Cargo insurance is not legally mandatory for trucking companies but is often essential for financial protection.
How much can you make owning a freight brokerage?
The national average salary for a freight broker in the United States is $62,105 per year , with an average additional compensation of $28,000 per year for commissions. Many factors influence the salary of a freight broker, especially location.
What type of insurance do brokers need?
General liability coverage is one of the typical insurance coverage brokers carry. Some property owners or managers may require brokers to have this coverage to protect against client injuries, damage to client properties, and even advertising exposures.
What are the disadvantages of using a freight broker?
One of the biggest downsides to using a freight broker is not having total control over the shipment. Once the load is given over to the broker, the shipper's ability to manage that load may be hindered. Freight brokers must make money somehow. They do that by charging more for a load than they're paying the carrier.
Is freight insurance the same as cargo insurance?
Put simply: Freight insurance protects the freight forwarder or carrier who has a legal responsibility for the goods. In the event of a claim, the value is often calculated on the basis of weight. Cargo insurance is designed to protect the sender of the goods – so the manufacturers, wholesalers and retailers.
How much do freight brokers make per load?
What Percentage Do Freight Brokers Take. The amount of commission that brokers take can vary from 12% to 20%. This percentage is not based on the load's price. It is mostly based on the broker's experience, and the reputation of the company the broker works for.
What is a freight broker liable for?
Even though freight brokers play a limited role in the transportation of a good in interstate commerce, they can be found liable for the negligent acts and/or omissions of a motor carrier or its driver if they maintain a high level of control over the delivery, or provide the motor carrier the equipment needed to ...
Why do freight brokers make so much money?
Commission-based compensation structures
If you're an independent licensed freight broker, you're typically paid a commission percentage, as well as some extra for shipping the freight to the carriers. A larger company will usually get a base salary plus commission, fees, and benefits.
How much is freight broker insurance?
The cost of your freight broker insurance will heavily depend on several factors including the size of your business, the level of coverage you want to opt in for, and the clients you work with. The average freight broker in the United States pays around $3,000-$3,600 per year for insurance.
Do brokers need to be regulated?
They must obtain permission to act as brokers and comply with FCA rules and guidance related to consumer credit activities. They must also comply with the Consumer Credit Act, which regulates consumer credit agreements and protects consumers' rights in credit transactions.
How much does an MC number cost?
If you do not already have a US DOT number or other authority, you must begin the online registration process via our Unified Registration System. This process requires a credit card. There is a $300 fee for each operating authority requested.
What is contingent cargo insurance?
Contingent cargo insurance is a type of coverage designed to protect transportation intermediaries, such as third-party logistics providers, property brokers, and other forwarders who do not issue bills of lading or have custody of cargo, from the financial responsibility of cargo loss or damage during transit.
Is cargo insurance necessary?
Yes, it Exists, and Yes, You Absolutely Need it. If you're a small to mid-size shipper, a lack of risk management and cargo insurance coverage can quickly drain profits and damage reputations. “Game Over” is a high price to pay for getting tripped up by an unforeseen snag in your supply chain.
How much cargo insurance do I need?
As far as cargo insurance, you should expect to carry around $100,000–$300,000 for non-hazardous cargo coverage. This amount will increase as the value or liability of the freight increases.