Broker Insurance After Montgomery: Contingent Auto, E&O, and the Coverage Gap You May Not Know You Have

Montgomery v. Caribe Transport II did not just change how negligent-selection cases are litigated — it changed what they are worth. Cases that used to be dismissed on federal preemption now proceed to discovery, trial, and the possibility of a catastrophic-injury verdict. The uncomfortable question every brokerage should be asking is whether its insurance program would actually respond to that verdict.

For many brokerages, the honest answer is "not fully." This article explains how broker coverage works, where the gap typically sits, and the specific questions to take to your insurance broker now — not after a claim.

This is general information, not insurance or legal advice. Coverage turns entirely on your specific policy language; review it with your insurance broker and counsel.

The coverage a brokerage typically carries

Most freight brokers carry some combination of the following. The names matter less than what each is actually designed to do — and not do.

Contingent cargo

Responds when the carrier's cargo coverage fails to pay for a covered freight loss. It protects against cargo claims. It is not designed to respond to bodily-injury claims arising from a crash.

Contingent auto liability

This is the coverage most directly relevant after Montgomery, and the most misunderstood. Contingent auto liability is intended to respond when the broker is drawn into a bodily-injury or property-damage claim arising from the transportation, and the carrier's auto liability is unavailable or exhausted. Critical caveats:

• Limits are often modest relative to a catastrophic-injury verdict.
• Policy terms frequently contain conditions, exclusions, and trigger language that can be contested precisely when you need the coverage most.
• It is often written as a relatively low-cost add-on that was never sized for the post-Montgomery exposure.

General liability

Covers premises and operations exposures. It is generally not the policy that responds to a negligent-carrier-selection bodily-injury claim, and brokers who assume "we have GL, we're covered" are frequently mistaken.

Broker errors & omissions (E&O) / professional liability

Covers economic loss from professional mistakes (e.g., a freight-handling or service error). Standard E&O often excludes bodily injury, which is exactly the loss a negligent-selection crash claim involves. Whether your E&O responds at all depends heavily on wording.

Excess / umbrella liability

Sits above the underlying policies and is what actually stands between a brokerage and an existential verdict — but only if the underlying policy it sits over is the right one and is triggered. Many brokerages either do not carry meaningful excess limits or carry an umbrella that does not extend over the relevant contingent auto coverage.

Where the gap usually sits

Put those pieces together and a common pattern emerges: a brokerage is well covered for cargo claims and ordinary business liability, thinly covered for contingent auto, and not covered at all for a catastrophic bodily-injury negligent-selection verdict — because the policy that would respond has a low limit, contested triggers, or no umbrella above it.

Before Montgomery, this gap was largely theoretical for many brokers: preemption ended the cases. The gap is no longer theoretical. The cases now proceed, and "nuclear" verdicts in trucking-related bodily-injury litigation are a known phenomenon. A program built for a world where these claims got dismissed is not a program built for the world we are in.

The questions to take to your insurance broker now

Do not wait for a renewal cycle, and do not accept "you're covered" without specifics. Get answers in writing to the following:

• Which specific policy responds to a negligent-carrier-selection bodily-injury claim — by name and form number? If no one can name it, that is your answer.
• What is the limit on that policy, and how does it compare to catastrophic-injury verdicts in our operating states?
• What are the trigger conditions and key exclusions on our contingent auto liability? Specifically, what does the carrier's coverage have to do or fail to do before ours responds?
• Does our umbrella/excess sit above that policy? Confirm the schedule of underlying insurance, not just that an umbrella exists.
• Does our E&O exclude bodily injury? Almost always yes — confirm it and stop treating E&O as crash coverage.
• Are defense costs inside or outside the limits? Litigating these cases through discovery and trial is expensive; defense-inside-limits erodes the money available for a judgment.
• What will the underwriter want to see at renewal? Increasingly: a documented carrier vetting process. A weak process is now an underwriting and pricing problem, not just a legal one.

Underwriting is going to change — get ahead of it

Expect the insurance market to respond to Montgomery the way it responds to any step-change in exposure: re-rating, tighter terms, and risk-based differentiation. The brokerages that will fare best are the ones that can show underwriters a disciplined, documented selection and monitoring process — the same process that defends them in court. A brokerage that can demonstrate consistent vetting, point-in-time documentation, and ongoing monitoring is a materially better risk than one that cannot, and underwriters will increasingly price that difference.

This is the throughline of the post-Montgomery environment: the documented process that defends you legally is the same one that makes you insurable on reasonable terms. See how to build a defensible vetting file and what reasonable care actually means.

The bottom line

The most dangerous position after Montgomery is assuming you are covered without confirming which policy responds, at what limit, and whether anything sits above it. Map your program against a catastrophic negligent-selection claim specifically, close the gap deliberately, and treat your vetting documentation as both a legal defense and an underwriting asset. The verdict scenario these cases now enable is exactly the one most brokerage insurance programs were never built to absorb.

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This article is for informational purposes only and is not legal or insurance advice. Coverage depends entirely on your specific policy terms; review your program with your insurance broker and qualified counsel.