As the freight and logistics sector continues to grow, so too does the litigation risk facing freight brokers — particularly in catastrophic loss cases. Courts, legislators and regulators are increasingly scrutinizing broker conduct, authority and vetting practices, prompting important questions for insurance defense counsel. The evolving landscape raises both practical and strategic concerns in defending brokers and insurers against negligence claims.
Two Paths to Exposure
Broker liability claims typically follow one of two theories:
1. Employer-by-Control: Plaintiffs argue the broker exercised sufficient control to be considered an employer or co-carrier. This hinges on operational details — dispatch authority, payment structures or control over the driver’s conduct.
2. Negligent Selection and Vetting: The more common claim is that the broker “knew or should have known” the motor carrier was unsafe. This theory exposes brokers to liability even when they comply with federal registration and insurance requirements.
These allegations are particularly dangerous in high-value cases involving death or serious injury — cases in which plaintiffs seek to circumvent statutory limitations on liability.
Statutory Framework and Federal Registration
The statutory definitions in 49 CFR § 371.2 distinguish brokers from motor carriers, while 49 U.S.C. §§ 13901–13906 outlines the registration and financial responsibility standards. Brokers must explicitly document the authority under which they act, per § 13901(c). Failure to do so may leave them vulnerable to a “co-carrier” classification.
Importantly, brokers are not required to carry bodily injury insurance. Their financial responsibility is limited to surety bonds for payment of freight charges — a key distinction that plaintiffs’ attorneys often try to blur in litigation.
Pending Legislation: Raising the Stakes
The Fair Compensation for Truck Crash Victims Act (H.R. 6884) proposes raising the required minimum insurance for motor carriers from $750,000 to $5 million, indexed to medical inflation. While this increase targets motor carriers, not brokers, it may indirectly fuel litigation strategies that aim to attach liability to brokers — especially in cases involving underinsured carriers.
Brokers are not required to carry bodily injury insurance. Their financial responsibility is limited to surety bonds for payment of freight charges — a key distinction that plaintiffs’ attorneys often try to blur in litigation
Concurrently, proposed legislation in both the House and Senate would create a uniform carrier selection standard. Brokers and shippers would be shielded from negligent selection claims if they verify carrier registration, insurance and safety compliance within 45 days of the shipment date. If enacted, this safe harbor would provide a powerful defense — but for now, it remains a proposal.
Federal Preemption: FAAAA to the Forefront
Defense counsel must understand the preemptive power of the Federal Aviation Administration Authorization Act (FAAAA), codified at 49 U.S.C. § 14501. It bars states from enforcing laws that impact a broker’s prices, routes or services. Courts in the Fourth, Fifth, Sixth, Seventh and Eleventh Circuits have consistently held that negligence and negligent hiring claims against brokers fall within this preemption.
Notably:
• In Hamby v. Wilson (E.D. Tex. 2024), the court found negligent brokering claims were central to the broker’s service and preempted.
• In Mays v. Uber Freight (W.D.N.C. 2024), the court rejected application of the FAAAA’s “safety exception,” dismissing claims outright.
• Only the Ninth Circuit (Miller v. C.H. Robinson, 2020) has held that tort claims may be saved by the safety exception — creating a circuit split and continued litigation risk.
Trial-Level Risks and Strategic Considerations
Despite favorable rulings on preemption at the appellate level, trial courts may still deny summary judgment where factual disputes exist — particularly if the broker held dual authority or operated in a way that resembled a motor carrier. Defense counsel should be prepared to address operational records, communications and even indemnity contracts early in discovery.
Additionally, as seen in Diamond Transportation v. Kroger (6th Cir. 2024), indemnity provisions can trigger significant exposure for brokers and upstream defendants. Timely tendering and assumption of defense obligations are critical.
Looking Ahead: Technology, Fraud and Transparency
With FMCSA’s January 2026 compliance deadline approaching for updated broker registration systems, the agency is also moving to eliminate MC numbers in favor of USDOT numbers — aimed at reducing fraud. At the same time, proposed broker transparency rules may soon require mandatory electronic recordkeeping and faster information sharing with shippers and carriers.
Defense attorneys should also monitor developments related to fraud and identity theft in the broker-carrier relationship. A rise in impersonation schemes has led to increased complaints to FMCSA, with implications for liability and coverage.
Key Takeaways for the Road Ahead
Insurance defense practitioners representing brokers must navigate a shifting matrix of federal regulation, preemption arguments, proposed statutory reforms and evolving trial court attitudes. Staying abreast of legislative activity and aggressively pursuing early dispositive motions based on federal preemption may be the most effective tools in limiting exposure. In the meantime, robust carrier vetting practices, contractual clarity and accurate documentation remain essential for minimizing risk.
