FMCSA Doesn't Require Freight Brokers to Carry Liability Insurance. Here's What That Means.

The Three Things FMCSA Actually Requires

To obtain a freight broker license, FMCSA requires exactly three things:

That's the complete list. No contingent auto liability. No errors and omissions coverage. No cargo insurance. A broker who satisfies these three requirements is legally authorized to arrange loads across the country — and can do so carrying no insurance that would respond to an accident claim.

The Insurance Requirement Sits on the Carrier, Not the Broker

FMCSA does mandate liability insurance in the trucking industry — but the obligation is on the carrier, not the broker. Carriers operating in interstate commerce are required to maintain a minimum of $750,000 in auto liability coverage as a condition of their own operating authority. Hazmat carriers face higher minimums: $1,000,000 to $5,000,000 depending on the commodity.

This $750,000 floor has not changed since 1980. Adjusted for medical cost inflation, it covers a fraction of a serious trucking accident today — and covers nothing attributable to the broker who selected and dispatched the carrier.

The regulatory framework was written with a clear assumption: the carrier causes the accident, the carrier's insurance responds. Brokers were treated as intermediaries — arrangers of transportation, not parties with independent liability exposure. That assumption was legally valid until May 2026.

What Montgomery v. Caribe Transport II Changed

The Supreme Court's 9-0 ruling eliminated the legal shield brokers had operated under for decades. The Federal Aviation Administration Authorization Act (FAAAA) was widely interpreted to preempt state tort claims against freight brokers — meaning injured parties couldn't sue a broker in state court for negligently selecting the carrier that caused their accident.

Montgomery ended that. The Court held that the FAAAA does not preempt negligent carrier selection claims. State courts can now hold a broker directly liable when they failed to exercise reasonable care in choosing a carrier that went on to cause an accident.

This ruling did not trigger any change to FMCSA's broker licensing requirements. The bond threshold stayed at $75,000. The insurance mandate stayed at zero. Brokers now carry meaningful personal exposure to multi-million dollar verdicts with no federal requirement to carry the coverage that would protect them.

The Regulatory Gap in Plain Terms

Here is the situation as it currently stands:

The gap is not theoretical. A broker who dispatches a carrier that causes a fatal accident can face a wrongful death lawsuit in state court. The $75,000 bond pays nothing toward that judgment. The carrier's $750,000 policy — already inadequate — covers the carrier's liability, not the broker's. The broker's only protection is whatever contingent auto liability coverage they chose to purchase on their own.

The Market Is Moving Faster Than the Regulator

FMCSA has not proposed changes to broker insurance requirements following Montgomery. The agency's rulemaking process moves slowly, and broker licensing requirements have been structurally unchanged for years. Meaningful regulatory reform — if it comes — is likely years away.

The insurance market is not waiting. Contingent auto liability premiums for freight brokers have risen from $8,000–$12,000 per year in 2019 to $15,000–$25,000 per year in 2026 for brokers with clean records and documented vetting. Underwriters are now explicitly underwriting the quality of a broker's carrier selection process — not just their claims history.

Large shippers and carriers are also driving change contractually. C.H. Robinson — the largest freight brokerage in North America — raised its carrier insurance minimum to $1,000,000 in response to the ruling, and eliminated work with Conditional-rated carriers entirely. These are private contractual standards, not regulatory ones. The industry is self-regulating in the absence of FMCSA action.

What Brokers Should Actually Carry

Given that FMCSA requires none of it, the following coverage is what brokers need to evaluate based on their volume and exposure:

Brokers who can demonstrate systematic, documented carrier vetting to underwriters consistently secure better rates. Insurers are now asking whether you check authority status before every load, verify insurance in the FMCSA L&I database, document BASIC scores at the time of dispatch, and maintain a timestamped audit trail. These questions directly affect your premium — not as a future risk model, but as underwriting criteria today.

The Bottom Line

FMCSA's licensing framework was built for a legal environment that no longer exists. The $750,000 carrier minimum and the $75,000 broker bond predate the litigation environment that Montgomery has now formalized. The regulatory floor is the floor — not the target.

Every freight broker operating today should understand that they can be — and likely are — underinsured relative to their actual legal exposure. The three things FMCSA requires will keep your authority active. They will not protect your business or personal assets if a carrier you dispatched causes a serious accident.

The carriers you select, and the documentation you keep when you select them, are now part of your liability posture — whether you carry insurance or not.