Freight brokers have long faced scrutiny following serious truck crashes and collisions, particularly when a motor carrier's insurance is insufficient to cover a catastrophic loss. Recent legal developments, however, may increase the likelihood that brokers' carrier-selection practices, contractual relationships, and risk management procedures are examined in litigation.
While the transportation industry does not face a fundamentally new exposure, the evolving liability environment reinforces the importance of disciplined carrier vetting, clear operational boundaries, and a well-structured insurance program.
Plaintiffs looking upstream in Supreme Court ruling’s wake
In May, the Supreme Court unanimously held, in (opens a new window) arising from their selection of motor carriers. The court ruled that even after passage of the 1994 Federal Aviation Administration Authorization Act, which preempts many state laws related to motor carrier and broker services, Congress preserved states’ ability to regulate safety matters involving motor vehicles.
“Before Montgomery, brokers could argue that federal law preempted some state law liability claims,” said Matt Payne, U.S Transportation Practice Leader at Lockton. “Now, plaintiffs have additional avenues to pursue brokers following serious trucking accidents.”
Post-Montgomery, plaintiffs may no longer rely on the federal exemption that prevented broker negligence suits in certain states. They more aggressively pursue theories of liability and increasingly examine contractual relationships, carrier oversight, and the influence exercised by brokers, carriers, and shippers.
Freight brokers generally arrange transportation rather than owning trucks or transporting freight themselves. But following a crash or collision, plaintiffs and their attorneys will often look beyond motor carriers to identify additional sources of recovery. In part, this is because many smaller carriers carry only federally required minimum insurance limits, often $1 million or less.
The Montgomery decision may make this strategy more common.
"The stakes are higher today because claim severity continues to rise and nuclear verdicts remain a significant concern across the transportation industry,” Payne said.
“When a catastrophic loss exceeds a carrier's insurance limits, plaintiffs will naturally look upstream for additional sources of recovery, and that can include freight brokers."
Strengthening carrier selection and oversight
Although it may not dramatically expand broker liability, freight brokers should not dismiss the Montgomery ruling. Instead, it should serve as a reminder to practice reasonable care in selecting a carrier, reinforce risk management practices and act quickly when red flags become known.
For best-in-class organizations, that may require little change. For larger and more sophisticated freight brokers, carrier vetting has long been a core risk-management function.
Others may need a more structured carrier-selection framework with established standards and continuous oversight.
"Effective carrier vetting begins with a documented, consistently applied process,” Payne noted. “It's not enough to have standards on paper; organizations need to apply them consistently and maintain robust and easily retrievable records."
At a minimum, brokers should review publicly available safety and compliance data, including:
Department of Transportation Safety Ratings
Crash history
Hours-of-service compliance
Vehicle maintenance records
Driver fitness metrics
Organizations may also benefit from objective carrier-selection criteria and formal exception procedures. Consistently applying documented standards can strengthen defensibility if selection decisions are challenged.
Vetting should not end when a carrier joins an approved network. Carrier safety, compliance, and insurance programs can change over time, making ongoing monitoring essential.
Brokers should maintain an arm's-length relationship with carriers and avoid actions that suggest operational control, such as directing routes, influencing driver activities or imposing transportation requirements. Maintaining a clear separation between broker and carrier roles — both in practice and in contractual language — can help reduce litigation risk.
Contracts should reinforce the parties’ distinct responsibilities, establish insurance requirements, and confirm that carriers retain responsibility for vehicle operations, driver supervision, and regulatory compliance. Just as importantly, contractual provisions must align with actual business practices. Gaps between documented responsibilities and day-to-day operations can create challenges if relationships are later scrutinized.
Contracts should be reviewed periodically to ensure they remain aligned with evolving legal standards and exposures. Given the heightened focus on carrier selection and broker liability, organizations may benefit from involving experienced counsel in reviewing policies, procedures, and contractual arrangements.
"Montgomery did not create a definitive carrier-vetting standard or a clear definition of reasonable vetting,” Payne said. “That means brokers should periodically review their practices, documentation, and contracts as the case law continues to evolve."
Reinforcing insurance programs
Finally, the ruling highlights the importance of understanding how liability may flow through the transportation chain following a serious accident.
Many motor carriers continue to operate with minimum liability limits that may be insufficient for today's claim environment. Freight brokers should work with their advisors to ensure coverage remains appropriate.
Beyond individual claims, the decision may also affect organizations' broader cost of risk. As underwriters place greater emphasis on carrier-selection and risk-management practices, transportation governance and strong narratives may increasingly influence insurance pricing, capacity, and underwriting outcomes along with the defense of claims.
It’s especially important that freight brokers and their advisors:
Evaluate contingent liability exposures.
Assess whether policy limits remain appropriate for today’s litigation environment.
Periodically review carrier selection, documentation, and oversight practices to ensure they remain aligned with evolving legal and litigation expectations.
Clearly communicate carrier selection and risk management practices to underwriters.
“Post-Montgomery, freight brokers must navigate a more complicated legal landscape,” Payne said. “Disciplined carrier oversight and a well-structured insurance program will be essential to managing evolving liability exposure.”
Learn more (opens a new window) about Lockton's Transportation & Logistics team.
Contributors:
Jay Gnadt, Senior Vice President of Loss Control Data & Analytics, Lockton
Rick Bridges, Marine Account Executive, Lockton