What exactly did the Supreme Court decide in Montgomery v. Caribe Transport II?

The Court ruled unanimously (9-0) that freight brokers can be sued for negligent carrier selection under state tort law. This eliminated the Federal Aviation Administration Authorization (FAAAA) preemption defense that had previously shielded brokers from such liability for decades.

Why is the $75,000 surety bond inadequate for protecting brokers?

The surety bond requirement exists solely to protect shippers and carriers from broker non-payment. It does not cover tort liability, personal injury judgments, or negligent hiring claims. With median nuclear verdicts now reaching $36 million, the bond covers less than 0.3% of typical catastrophic judgment exposure.

What insurance coverage should brokers carry to mitigate this new liability?

Brokers should carry contingent auto liability insurance and contingent cargo coverage. Contingent auto liability specifically responds to negligent-hiring claims arising from a broker's carrier selection, and represents the primary policy type that would protect against Montgomery-type liability.

How much have trucking verdicts increased in recent years?

According to American Transportation Research Institute (ATRI) analysis, the average trucking verdict between 2020-2023 was $27.5 million. Median nuclear verdicts (awards exceeding $10 million) reached $36 million in 2022—approximately 50% higher than 2013 levels. Thermonuclear verdicts exceeding $100 million have grown exponentially.

Which geographic markets pose the greatest litigation risk for brokers?

California, Georgia, and Florida have the highest median awards. Texas and Louisiana are identified as nuclear verdict hotspots. Specific jurisdictions are designated as "judicial hellholes" by the American Tort Reform Association due to plaintiff-friendly procedural rules and aggressive plaintiff tactics. State court verdicts average 44% higher than federal court outcomes for cases over $1 million.

Risk & Disruption

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Freight Brokers Face $36M+ Liability Gap After Supreme Court Ruling

May 14, 2026

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Freight brokers now face unlimited liability after the Supreme Court eliminated decades-old protections in Montgomery v. Caribe Transport II, despite federal requirements mandating only a $75,000 surety bond with no liability coverage. Trucking tort filings have grown 3.7% annually since 2014, while median nuclear verdicts jumped 50% between 2013 and 2022, reaching $36 million. Verdicts exceeding $50 million increased 6.4 percentage points during this period. California, Florida, Georgia, Texas, and Louisiana show median awards of $3.6 million—44% higher than federal court outcomes.

#freight-broker-liability

#supreme-court-ruling

#insurance-gap

#montgomery-caribe-transport

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What This Means for Your Supply Chain

Simulation Suggestion

immediate

What if a broker faces a $50M negligent selection claim with no liability insurance?

Simulate the financial impact on a mid-sized freight broker (annual revenue $20M) when a catastrophic crash verdict results in a $50M judgment after the broker's $75K surety bond is exhausted. Model the broker's solvency, insurance requirements, and operational viability under various liability insurance policy limits ($1M, $5M, $10M).

Run this scenario

Simulation Suggestion

this month

What if insurance carriers raise contingent auto liability premiums by 300%?

Model the cost impact on broker margins and pricing when insurance carriers increase contingent auto liability premiums significantly in response to the Supreme Court ruling. Simulate how brokers with existing coverage absorb premium increases, and how pricing pressure cascades to shippers and carriers.

Run this scenario

Simulation Suggestion

strategic

What if state court venue rules remain unchanged—how does forum shopping affect broker litigation costs?

Simulate the cumulative litigation cost burden on brokers when catastrophic crash cases remain in plaintiff-friendly state courts rather than federal venues. Model the median legal and settlement costs in high-risk jurisdictions (California, Texas, Florida) versus federal court, and the financial impact of managing concurrent multi-state litigation.

Run this scenario

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