Freight brokers and carriers often find themselves in a game of hot potato when determining who will shoulder the cost of lost or damaged cargo. Here’s what’s important to know when navigating the complexities of freight broker liability in cargo claims.
When Are Brokers Liable
Under the Carmack Amendment to the Interstate Commerce Act, a carrier is liable for damage or loss incurred during a shipment of goods, but a broker—who only arranges the transportation—is not liable.
So, in the strictest sense, brokers should not have to pay out cargo claims. But in the evolving transportation industry, it can be hard to tell the difference (legally speaking) between a freight broker and motor carrier. Additionally, the Interstate Commerce Act has expanded the definition of “motor carrier” to be anyone providing motor vehicle transportation for compensation...which could easily encompass brokers.
A determination of liability is often left up to the courts, which results in case-by-case decisions that gradually provide further clarity for brokers, carriers, and shippers. Some recent court decisions reflect just how much the landscape is shifting as to what qualifies as broker liability:
Tips For Brokers To Protect Against Cargo Claims
With so much gray area between broker and carrier liability in cargo claims, it’s critical for brokers to understand their biggest risks and how to insulate against them. Here are some basic tips to keep in mind:
For more information on how to limit broker liability in any situation, contact us.