Minimizing Freight Broker Liability for Loss or Damage to Cargo

Minimizing Freight Broker Liability for Loss or Damage to Cargo

By Brian Schrumpf of the Fuentes Firm published on January 28, 2015.

Brokers frequently face claims from their customers for loss or damage to cargo. While the motor carrier that transports the cargo may actually be at fault, customers often look to the broker for loss or damage to cargo because the customers hire the broker. As a practical matter, for business reasons, and to maintain positive client relationships, the broker often wants to ensure that claims are resolved timely, as opposed to denying claims and possibly losing customers.

There are several methods brokers can utilize to prevent and limit their liability from such claims, which include:

  • Verify the motor carriers’ authority and perform due diligence in selecting motor carriers;
  • Verify the motor carriers have adequate insurance to cover the cargo;
  • Have a strong Broker-Carrier Agreement with motor carriers, especially with regard to liability, indemnification, and insurance obligations;
  • Confirm the value of the cargo with the shipper to ensure that high-value or high-security loads are adequately insured; and
  • Confirm instructions regarding any special needs such as team drivers, tarping, etc.