Supreme Court ruling exposes freight brokers to negligent carrier selection lawsuits

The U.S. Supreme Court unanimously ruled on May 14, 2026, that freight brokers can be sued in state court for negligent carrier selection, weakening a federal preemption defense the brokerage industry has relied on for decades. The decision in Montgomery v. Caribe Transport II highlights a major insurance gap: Freight brokers are federally required to carry only a $75,000 surety bond, which covers payment defaults to carriers and shippers but not bodily injury, wrongful death or tort judgments. There is no federal requirement for broker liability insurance. The ruling comes as trucking litigation costs rise. The American Transportation Research Institute said the median “nuclear verdict” in trucking cases reached $36 million in 2022, while the average trucking verdict from 2020 to 2023 was $27.5 million. Motor carriers must carry at least $750,000 in liability coverage, a threshold set in 1980, but brokers face no equivalent requirement. The decision could increase demand for contingent auto liability coverage and revive pressure on Congress or regulators to impose broker insurance minimums.