A carrier can show a seven-figure liability number on its certificate and still leave your freight unprotected. The number is real. Find out why it just isn’t covering the thing you’re worried about.
The Federal Floor Hasn’t Moved in Decades
For-hire motor carriers in interstate commerce must carry federally required liability insurance. For general freight, the minimum is $750,000. For oil, it is $1,000,000. For certain hazardous materials, it is $5,000,000. Those figures are floors, not recommendations, and the general freight number has been in place since 1985.
FMCSA itself has noted that a general freight carrier would have needed about $2.19 million in coverage in today’s dollars to match the protection the $750,000 minimum provided when it was set. Proposals to raise the minimum have been introduced in Congress, so the federal number could change. Until then, the minimum a carrier must legally carry is well below what most brokers and shippers actually require.
Cargo insurance is a different story. Federal rules do not generally require it for most carriers, but the market does. Virtually every broker and direct shipper requires carriers to carry cargo coverage before tendering loads, commonly around $100,000, and higher for high-value freight.
Two Coverages, Two Different Jobs
Some shippers conflate the two main coverages, and that confusion is where the exposure starts.
BIPD liability protects other people. Bodily Injury and Property Damage coverage pays when the carrier’s driver injures someone or damages property that isn’t the freight, such as another vehicle, a building, or a person. It is the coverage that satisfies the federal liability requirement, and it is what keeps the carrier in business after an accident. It does not pay for your load.
Cargo coverage protects the freight. Cargo insurance pays when the goods you shipped are lost, stolen, or damaged in transit. It is the only coverage that reimburses you for the product itself. If a carrier’s cargo limit is $100,000 and your load is worth $250,000, the carrier’s policy leaves $150,000 of your loss uncovered, and a $1 million BIPD policy does nothing to close that gap.
The practical test is simple: compare the cargo limit to the value of the load you are actually tendering, not to the broker’s standard minimum. High-value electronics, pharmaceuticals, and consumer goods routinely exceed standard cargo limits.
Umbrella and Excess Policies: How They Count, and Where They Fail
Umbrella and excess policies sit above a carrier’s primary liability coverage and extend the total limit once the underlying policy is exhausted. For a carrier that needs to meet a high liability threshold, combining a primary policy with an umbrella is often the practical route.
Those policies need the same scrutiny as the primary. An umbrella is only as good as the underlying policy it attaches to, so the primary limits, the carrier named on each policy, and the policy periods all have to line up. A carrier can present a $1 million total figure that is really a low primary limit with a layered umbrella on a different entity’s policy. Umbrella and excess coverage also generally does not respond to cargo loss, which is why a high liability total tells you nothing about freight protection.
USD and CAD Minimums Are Not Interchangeable
Cross-border freight adds a layer that many shippers miss. Our qualification procedure sets different thresholds by currency. For BIPD, the requirement is $1,000,000 USD or $1,500,000 CAD. For cargo, it is $100,000 USD or $150,000 CAD. The Canadian figures are set higher, so a carrier that qualifies on U.S. dollar limits may fall short on a Canadian-denominated policy even if the headline number looks similar.
The practical lesson is to confirm the currency on the policy, not just the amount. A certificate that shows a number without a currency designation should prompt a question, and a carrier moving freight across the border should be able to show limits in the currency the lane requires.
Where Shippers Get Exposed
Most insurance gaps are not hidden in fine print. They are visible if someone checks the right things. The most common exposures are these.
Certificates instead of filings. A certificate of insurance is a document a carrier can produce on its own. The insurer’s filing with FMCSA is what makes coverage count. Federally, a carrier’s authority is not active until proof of insurance is on file. Verify the filing in FMCSA records rather than accepting the certificate as proof.
Named insured mismatches. The company named on the policy should match the carrier holding the MC number. When they differ, the policy may be borrowed from a different entity, which is a known fraud pattern, particularly with cloned identifiers and stolen certificates.
Lapses and pending cancellations. Coverage can end on short notice. A policy that shows as pending cancellation should block booking until it is resolved, because a load tendered during a lapse may have no coverage behind it at all.
Cargo exclusions and deductibles. Cargo policies often carry deductibles, and some exclude or limit theft, unattended vehicles, or specific commodities. Ask for the policy endorsements, not just the declarations page, and confirm that the exclusions match the freight you plan to ship.
Broker-side gaps. If your freight moves through a broker, the broker is not subject to a federal liability insurance requirement. Some brokers carry contingent auto liability or contingent cargo coverage, but not all do. Ask your broker what coverage they carry and what it responds to.
What to Request Before You Tender
Start by verifying the carrier’s insurance filing in FMCSA records and confirming that the named insured matches the MC holder. Next, compare the cargo limit to the value of the freight, and confirm the currency for cross-border loads. For any carrier relying on an umbrella or excess policy, request the underlying primary limits and confirm that the policies are with the same entity for the same period. Finally, request the cargo policy endorsements so you know what is excluded before a claim is filed rather than after.
These steps take minutes when the carrier is legitimate and expose problems quickly when it is not.
Our Standard
Supply Chain Solutions requires carriers to meet the minimums in our qualification procedure: $1,000,000 USD or $1,500,000 CAD in BIPD coverage, and $100,000 USD or $150,000 CAD in cargo coverage. Those are minimums, not guarantees. For higher-value freight, the cargo limit should be set against the load value, and the policy details should be reviewed before the load is released.
If your provider cannot tell you what their carriers’ cargo limits are, what currency those limits are written in, or whether the insurance is filed in the carrier’s own name, ask the question before the next shipment moves.
Learn how to implement a comprehensive approach to carrier vetting. Check out our Carrier Vetting Checklist.
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