Freight Brokers Face New Liability Exposure: Why Carrier Screening Matters More Than Ever

The Legal Landscape for Freight Brokers Has Changed

For years, freight brokers relied on a significant legal defense when facing claims after a catastrophic trucking accident: the argument that federal law limited their exposure for the actions of independent motor carriers they hired.

 

That defense has now been weakened.

On May 14, 2026, the U.S. Supreme Court issued a unanimous decision in Montgomery v. Caribe Transport II, LLC, ruling that state-law negligent hiring claims against freight brokers are not automatically prevented by the Federal Aviation Administration Authorization Act (FAAAA). The decision allows plaintiffs to pursue claims arguing that a broker failed to use reasonable care when selecting a carrier.

The ruling does not mean brokers are automatically responsible for every accident involving a carrier they hire.  However, it changes the conversation from:

“Are brokers legally protected from these claims?”

to:

“Can the broker prove they acted responsibly when selecting that carrier?”

That distinction is enormous.

Carrier Selection Is Now a Liability Management Issue

The days of simply finding a truck, confirming authority, and collecting a certificate of insurance may no longer be enough.

After this ruling, brokers should assume that plaintiff attorneys will examine the carrier selection process after a serious accident. They will likely ask:

1. Why was this carrier selected?
2. What safety information did the broker review?
3. Was the carrier’s safety history evaluated?
4. Were insurance requirements confirmed?
5. Did the broker have a consistent carrier qualification process?
6. Were warning signs ignored because capacity was needed quickly?

The question is no longer simply:

“Was the carrier insured?”

The question becomes:

“Was this a responsible carrier that a reasonable broker would have selected?”

Certificates of Insurance Alone Are Not Enough

A common mistake among brokers is believing that obtaining a certificate of insurance eliminates their risk.

It does not.

A certificate of insurance is only evidence that coverage may exist at a specific point in time. It does not confirm:

1. Is the policy is active today
2. Are limits are adequate
3. Does the carrier has exclusions that create gaps
4. Whether hired equipment is properly covered
5. What endorsements apply
6. Does the policy meets contractual requirements
7. Whether the insurer will respond to a specific claim

Brokers should establish procedures to verify insurance information through reliable sources, including:

1. Confirming active coverage with the carrier’s insurer or approved verification services
2. Reviewing policy limits
3. Confirming appropriate auto liability limits
4. Checking for cancellation notices
5. Reviewing additional insured requirements when applicable
6. Maintaining documentation showing when and how insurance was verified

Safety Ratings and FMCSA Reviews Are Now More Important

A broker should have a documented process for reviewing the safety profile of every carrier they utilize.

Important areas to review include:

1. Operating authority status
2. USDOT number
3. Operating history
4. Out-of-service history
5. Inspection violations
6. Crash history
7. BASIC scores
8. Safety rating
9. Enforcement history

However, the Supreme Court ruling does not create a specific checklist that brokers must follow. Instead, it reinforces the importance of having a consistent, documented carrier selection process. Therefore, brokers must show that they used the available safety information and applied reasonable judgment when selecting each carrier.

Create and Follow a Written Carrier Qualification Process

One of the biggest mistakes a broker can make is having a process that exists only informally.

A defensible carrier selection process should include:

1. Current operating authority verification
2. Current insurance verification
3. Review of safety history
4. Review of FMCSA data
5. Signed broker-carrier agreement
6. Confirmation of equipment requirements
7. Verification of driver qualification responsibilities
8. Confirmation of compliance with applicable regulations

The key is consistency.

A broker that carefully screens 95% of carriers but ignores the process when freight is tight creates a serious vulnerability.

Broker-Carrier Agreements Need Attention

Every broker should review their carrier agreements with legal counsel and insurance professionals.

Important contract considerations may include:

1. Carrier responsibility for its employees and independent contractors
2. Indemnification provisions
3. Insurance requirements
4. Compliance obligations
5. Safety obligations
6. Regulatory compliance responsibilities
7. Documentation requirements

A signed agreement does not eliminate liability, but a strong agreement can help establish expectations and demonstrate that the broker took reasonable steps.

Watch for Red Flags When Hiring Carriers

Some warning signs deserve additional scrutiny:

1. Recently established authorities
2. Frequent changes in company names
3. Unusual ownership changes
4. Poor inspection history
5. High number of violations
6. History of crashes
7. Inconsistent insurance information
8. Pressure to quickly accept loads without documentation
9. Mismatched equipment or operating authority

A carrier’s ability to move a load quickly should never outweigh the need to protect the broker’s reputation and liability position.

Documentation May Become Your Best Defense

After a severe accident, memories fade and conversations disappear.

Documentation remains.

Brokers should maintain records showing:

1. When carriers were approved
2. What safety information was reviewed
3. When insurance was verified
4. What agreements were signed
5. Why a carrier was selected
6. Any concerns that were identified and addressed

The goal is not to prove that every carrier will be perfect.

No screening process can guarantee that.

The goal is to demonstrate that the broker acted responsibly and used reasonable care.

Insurance Implications for Freight Brokers

This ruling also highlights the importance of reviewing broker insurance programs.

Brokers should discuss:

1. Contingent auto liability coverage
2. Professional liability/errors and omissions coverage
3. General liability coverage
4. Contractual liability exposure
5. Whether coverage responds to negligent hiring allegations
6. Whether limits are adequate given increased litigation trends

Many brokers have historically focused on protecting against cargo claims and operational issues while underestimating liability arising from carrier selection.

That approach may need to change.

The Bottom Line

The freight brokerage industry is entering a new era of accountability.

The Supreme Court’s decision does not require brokers to guarantee the safety of every carrier they hire. However, it does increase the importance of proving that carriers were selected responsibly.

The brokers that will be best positioned moving forward are those that:

1. Have a formal carrier qualification process
2. Verify insurance instead of simply collecting certificates
3. Review safety history
4. Maintain strong contracts
5. Document decisions
6. Train employees to follow consistent procedures

In the future, the best defense may not be a legal argument.

It may be the documentation showing that you did the right things before the accident ever happened..

To learn more about how proactive risk management and personalized advice can protect what matters most, contact Frost Insurance Agency.  Call us at 419-592-4476, email frost@frostins.com, or click here to start a conversation about your risks and goals.

Prefer a face-to-face review? Visit one of our four convenient locations in Archbold, Napoleon, Holgate, or Whitehouse — and let’s build a protection plan, not just a policy.