Imagine this scenario; as a freight broker, you have secured a great deal for your client, a shipment of high-end electronics headed across the country. Everything seems smooth sailing until disaster strikes. A severe storm derails the train carrying the cargo, leaving it damaged and unusable.

Panic sets in – the shipper’s insurance has limited coverage for this specific type of event, and the carrier’s financial situation is shaky. Suddenly, the responsibility for thousands of dollars in lost or damaged cargo falls squarely on your shoulders.

This is where the concept of contingent cargo insurance comes in, a financial lifeline designed to protect freight brokers like you from unforeseen circumstances and potential financial ruin.

Let’s delve deeper into this specialized insurance and explore its benefits, what is covered, and how it can keep your business afloat even when the seas get rough.

What is Contingent Cargo Insurance?

A motor truck cargo

Contingent cargo insurance isn’t a product for shippers directly, but rather a safety net for freight brokers. It steps in when the primary cargo insurance, typically held by the shipper, fails to cover losses or damages. This can happen for various reasons, such as:

  • Inadequate coverage: The shipper’s insurance might have exclusions or limits that leave certain risks uncovered.
  • Carrier insolvency: If the carrier responsible for the cargo becomes insolvent, their insurance might not be accessible.
  • Policy disputes: Disagreements over the cause of loss or extent of damage can lead to denied claims.

Contingent Cargo Coverage for a Freight Broker

Freight brokers, insurance agent, and other transportation brokers working together.

Freight broker contingent cargo insurance coverage offers protection in these situations where primary cargo insurance may not, typically covering:

Cargo damage

This coverage includes things like collision, fire, weather events, and acts of nature that damage the cargo during transport.


If the cargo is stolen during transportation, contingent cargo insurance can cover the cargo loss.


In cases where the cargo is not delivered due to carrier failure or other unforeseen circumstances, the insurance might reimburse the value of the goods.

Legal defense costs

If the freight broker is held liable for damaged or lost cargo and faces legal action, the insurance can cover legal fees and settlements.

Uncollected freight charges

If the motor carrier becomes insolvent or fails to deliver the cargo, the policy might reimburse the broker for lost freight charges.

Contingency charges

In some cases, carriers might impose additional charges due to unforeseen events. Contingent cargo insurance may cover these charges depending on the policy terms.

Additional coverage (depending on specific policy)

Some policies may include spoilage, delay, and salvage costs.

  • Spoilage coverage covers losses due to the cargo spoiling during transportation due to temperature fluctuations or other factors.
  • Delay coverage policies might cover financial losses incurred due to delays in delivery.
  • Salvage costs coverage might cover the cost of salvaging and repairing the damaged but salvageable cargo.

Do note that contingent cargo insurance does not replace primary cargo insurance. It only triggers when the primary insurance is inadequate or unavailable.

Contingent cargo insurance also does not absolve freight brokers of their legal responsibility. They still need to act with due diligence and comply with all relevant regulations.

Do Freight Brokers Need Contingent Cargo Insurance?

freight broker

While not legally mandated, carrying contingent cargo insurance is a highly recommended specialized insurance for any freight broker for several reasons:

Financial protection

The shipper’s primary insurance might have exclusions or limited coverage, leaving some risks uncovered. Contingent cargo fills those gaps, protecting the freight broker if the cargo faces theft, damage, or non-delivery.

If the carrier goes bankrupt, their insurance might be inaccessible, leaving the freight broker liable for the cargo value. Contingent cargo insurance steps in to prevent a huge financial loss in such situations.

Disagreements over the cause of loss or damage can lead to denied claims from the primary insurer. Contingent cargo offers an alternative source of compensation.

Legal liability and reassurance

Freight brokers have a legal responsibility to act with due care. If lost or damaged cargo occurs due to negligence or breach of contract, contingent cargo insurance can cover legal defense costs and potential settlements.

Demonstrating proactive risk management by carrying contingent cargo insurance reflects positively on the broker’s professionalism and builds trust with shippers.

Business security

Some shippers require proof of contingent cargo insurance before working with a freight broker. Having this coverage gives you an edge in securing valuable contracts.

Where to Get Contingent Cargo Insurance

Contingent cargo insurance protects freight brokers from claims that the motor carrier's insurance won't cover.

Freight brokers, unexpected events during shipping can lead to a cargo claim, leaving you exposed to financial losses and legal battles. While carriers hold primary responsibility, gaps in shipper insurance, carrier insolvency, or policy disputes can shift the burden onto you.

Don’t wait for a claim to impact your business. Get a free insurance quote for contingent cargo insurance today.