The transportation industry in the US is evolving rapidly, with brokerages increasingly central to connecting cargo owners and carriers. Yet, this growth brings its own set of regulatory requirements, liability exposures and insurance considerations that both new and established players must navigate carefully.

What Sets Trucking Companies, Freight Brokers and Freight Forwarders Apart?

The rapid growth of brokerages in the transportation industry highlights the need to clearly distinguish between trucking companies, freight brokers and freight forwarders.

Trucking companies serve as carriers. They take possession of the load, work directly with the shipper to secure it and deliver the cargo from point A to point B. The trucking company owns and operates trucks, assumes responsibility for the goods in transit and provides the physical transportation service.

Freight brokers, also known as transportation brokers, act strictly as intermediaries. They coordinate shipments between shippers and trucking companies and don't own trucks and never take possession of the goods. Their role is to facilitate transportation for a fee, ensuring that loads are matched with reliable carriers.

Freight forwarders share similarities with freight brokers but introduce an important distinction: possession of cargo. Forwarders may operate warehouses where they temporarily hold goods before arranging for another trucking company to transport them. While they also focus on coordination, their role in taking custody of shipments sets them apart from freight brokers.

The Shift From Trucks to Brokerages in a Changing Market

Since the pandemic, excess truck capacity has driven freight rates down, leaving many operators searching for new ways to sustain revenue. One increasingly common strategy is diversification into brokerage operations.

"Post‑COVID, we saw a significant boom in trucking companies starting operations. During the pandemic, trucking companies were the heroes, adding a substantial number of trucks to meet demand. However, as the COVID demand settled down, the market now has excess truck capacity, leading to lower freight rates," observes Eden Hancock, area senior vice president at RPS Transportation.

What Agents Must Know About Brokerage Exposures

For agents, this evolution creates new, avoidable coverage gaps. Brokerage operations introduce exposures that can't be simply added to a trucking policy or a general liability program. Claims tied to brokerage activities may be denied if coverage isn't properly structured.

To help agents guide their clients, Hancock offers the following advice:

  • Ensure brokerage operations are set up as a separate legal entity, different from the trucking company, with separate business names and contact information.
  • Address the specific coverages brokerages require, including contingent cargo, contingent auto liability, errors and omissions, general liability and, if applicable, warehouse legal liability for freight forwarders.
  • Use brokerage liability applications as a tool to map operations and identify exposures.

DOT Authority and Insurance Implications in Transportation

The Department of Transportation (DOT) issues DOT numbers as unique identifiers for companies operating commercial vehicles in the US. The Federal Motor Carrier Safety Administration (FMCSA) requires these numbers for compliance, and they serve multiple purposes: identifying companies in government transactions, assisting law enforcement during roadside inspections and confirming insurance and driver qualifications.

The proper use of DOT authority is a central issue in transportation insurance, particularly as more trucking companies expand into brokerage operations. Brokerages must maintain DOT authority entirely separate from the trucking companies they work with. When those distinctions blur, regulatory confusion increases and so does the risk of unintentionally taking on carrier-level liability.

Truckers' general liability policies may offer a baseline layer of protection, but they don't respond to brokerage-specific exposures. This gap becomes even more important when considering how DOT authority interacts with insurance obligations.

In practice, a single trucking company's DOT number links every vehicle operating under that authority directly to the insurer's financial responsibility. When an insurer submits a federal filing to confirm coverage, the filing automatically triggers the MCS-90 endorsement, which extends protection to any vehicle operating under that DOT number, even if the vehicle was never listed on the policy. As a result, if a company insures 10 trucks but quietly operates an eleventh, the insurer is still obligated to pay claims involving that undisclosed vehicle.

The takeaway is clear: DOT authority must be carefully managed, and insurance policies should accurately reflect how each business truly operates. When trucking, brokerage or forwarding functions overlap under the same DOT number, it exposes both insureds and insurers to unintended liabilities.

Why Do Brokerages Need Contingent Coverage for Added Protection?

As Hancock explains, brokerages and trucking companies face fundamentally different insurance needs.

Trucking companies insure their own operations through primary auto liability, motor truck cargo, physical damage and general liability policies. These policies cover the assets they own and the risks they directly control. Brokerages, by contrast, operate as intermediaries between cargo owners and carriers, relying on trucking companies to maintain adequate insurance.

To work with a brokerage, carriers typically must provide certificates of insurance that meet minimums such as $1 million in auto liability and $100,000 in cargo coverage. The challenge arises when a trucking company's insurance lapses or fails to meet established standards or when a brokerage is found negligent in verifying the carrier's coverage. In those scenarios, contingent insurance becomes essential. It acts as a safety net, allowing brokerages to continue operating confidently in a market where insurance gaps are increasingly common, ensuring that an unexpected coverage failure doesn't result in a significant financial loss.

This case from the RPS Transportation team illustrates why contingent cargo insurance is critical for brokerages:

A broker arranged a load for an auto carrier transporting vehicles when a claim arose during shipment. The carrier's underwriting criteria required acceptable motor vehicle records, specific experience thresholds and, notably, no driver license suspensions over the prior three years. At the time of the loss, however, the driver's license had been suspended within the past year for failing to renew his medical certificate. Because this violated the carrier's underwriting criteria, the cargo insurer denied the claim for non-compliance. Since the trucking company lacked adequate underlying insurance, the brokerage's contingent cargo policy stepped in and paid approximately $65,000 to resolve the claim.

Looking ahead

Hancock anticipates new broker authorities will continue increasing through 2026, as trucking companies continue to look for resilient revenue models. At the same time, elevated insurance costs are expected to keep pressure on trucking companies, prompting many to reassess how they manage their operations and transfer risk.

For agents, this environment positions brokerage risks as a growing area of opportunity and responsibility. The ability to guide clients through authority separation, coverage selection and contingent protection is no longer a "nice to have" — it's essential to stay competitive and avoid preventable liabilities as the market evolves.

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