The 4 Contracts Every Trucker Deals With
Broker-Carrier Agreement
What it is: Master agreement between you and a freight broker. Sets the rules for all loads you haul through them.
When you sign: Before hauling your first load for a broker. Usually one-time.
Key concern: Insurance requirements, payment terms, indemnification clauses
Rate Confirmation
What it is: Per-load contract specifying rate, pickup/delivery, and terms for a specific load.
When you sign: Before every load. This IS the load contract.
Key concern: Exact rate, detention, lumper responsibility, deadhead pay
Shipper-Carrier Agreement
What it is: Direct contract with a shipper (bypassing brokers). Higher rates, more obligations.
When you sign: When working directly with manufacturers, distributors, or retailers.
Key concern: Volume commitments, insurance minimums, cargo liability limits
Lease Agreement
What it is: Agreement to lease-on to a carrier, using your truck under their authority.
When you sign: When operating under another carrier’s MC number.
Key concern: Revenue split, insurance responsibility, equipment obligations, exit terms
Contract Clauses That Cost You Money
Most truckers never read past the rate. These clauses determine what happens when things go wrong — and things always go wrong eventually.
Indemnification / Hold Harmless
High Risk
What it says: “Carrier agrees to indemnify, defend, and hold harmless Broker/Shipper from any and all claims…”
What it means: You’re accepting financial responsibility for things that may not be your fault. If a shipper’s bad packaging causes damage, YOU pay.
Negotiate: Add “arising from Carrier’s negligence” to limit your liability to things you actually caused.
Additional Insured Requirement
Medium Risk
What it says: “Carrier shall name Broker/Shipper as additional insured on all policies.”
What it means: The broker/shipper gets coverage under YOUR insurance policy. This is standard but check if it includes primary/non-contributory language — that means YOUR insurance pays first, even for their negligence.
Negotiate: Accept “additional insured” but push back on “primary and non-contributory.” Your insurer may charge extra for this.
Cargo Liability Limits
High Risk
What it says: “Carrier’s cargo liability shall not be less than $250,000 per occurrence.”
What it means: If you’re hauling freight worth more than your cargo insurance limit, you’re personally on the hook for the difference.
Negotiate: Never sign for more cargo liability than your policy covers. If they want $250K and you carry $100K, either increase your coverage or decline.
Payment Terms
Medium Risk
What it says: “Payment within 30/45/60 days of receipt of complete documentation.”
What it means: “Complete documentation” is the trap. Missing one piece of paper resets the clock. Some brokers use this to delay indefinitely.
Negotiate: Define exactly what “complete documentation” means. Add: “Payment within 30 days of delivery, regardless of documentation disputes.”
Non-Compete / Non-Solicitation
High Risk
What it says: “Carrier shall not directly solicit or haul freight for Broker’s customers for 12-24 months.”
What it means: If you find out the shipper pays $5,000 and the broker pays you $3,000, you can’t go direct. Some courts enforce these; some don’t.
Negotiate: Limit to 6 months max. Or refuse — you’re an independent contractor, not an employee.
Forced Arbitration
Medium Risk
What it says: “All disputes shall be resolved through binding arbitration in [broker’s city/state].”
What it means: If they owe you $5,000 and arbitration must happen in New York (and you’re in Texas), the cost of fighting exceeds what you’re owed.
Negotiate: Request arbitration in YOUR jurisdiction, or mutual agreement on location. Or reject forced arbitration entirely.
Insurance Requirements in Contracts
Every contract specifies insurance minimums. Here’s what’s standard vs what’s excessive.
Coverage Type Standard Requirement Excessive (push back)
Auto liability $1,000,000 $2,000,000+ (unless hazmat)
Cargo insurance $100,000 $250,000+ (unless high-value freight)
General liability $1,000,000 $5,000,000+ (excessive for small carriers)
Workers comp Statutory limits Required for owner-operators (you may be exempt)
Umbrella/excess $1,000,000 $5,000,000+ (most small carriers can’t afford this)
Before signing: Send the contract’s insurance requirements to your insurance agent. They’ll tell you if your current coverage meets the requirements, what it would cost to add, and whether the requirements are reasonable. Don’t guess — a gap in coverage at claim time is devastating.
Lease-On Agreements: Special Considerations
Leasing on to a carrier (operating under their authority) is a unique contract with unique risks.
Must-Have Terms
- Clear revenue split (percentage or per-mile rate)
- Who pays for insurance (carrier deducts or you carry your own)
- Fuel surcharge — how it’s calculated and passed through
- Settlement frequency (weekly is standard)
- Exit terms — how much notice, any penalties
- Who pays for permits, ELD, drug testing
Red Flags
- Revenue split below 70% to you (industry standard is 75-88%)
- Insurance deductions that exceed independent policy costs
- “Administrative fees” that aren’t clearly defined
- Penalties for refusing loads (forced dispatch by another name)
- Equipment requirements that force you to buy from the carrier
- 30+ day exit notice with financial penalties
Federal requirement (49 CFR 376): The lease agreement MUST be in writing, specify the compensation, describe the equipment, explain what happens with permits and insurance, and allow you to examine all charge-back documents. If a carrier won’t give you a written lease, they’re violating federal law.
Before You Sign Any Contract
1
Read the entire document. Yes, all of it. The worst clauses are always on page 7.
2
Highlight anything you don’t understand. If you can’t explain a clause in plain English, don’t sign it.
3
Send insurance requirements to your agent. Verify you’re covered before committing.
4
Calculate the total financial exposure. What’s the most you could owe if everything goes wrong?
5
Ask “what happens if I want to leave?” Exit terms are the most important terms in any contract.
6
Keep a signed copy. If you can’t produce the contract later, the other party’s version becomes the truth.
Frequently Asked Questions
Do I need a lawyer to review trucking contracts?
For one-time rate confirmations on standard loads, no — just know what to look for (this guide covers it). For master broker-carrier agreements, shipper contracts, or lease-on agreements that commit you for months or years, a transportation attorney ($200-$500 for a contract review) can save you thousands. OOIDA offers contract review as a member benefit.
Can I negotiate broker contracts?
Absolutely. Most brokers send a standard template and expect you to sign without reading. But everything is negotiable. Especially: indemnification scope, payment terms, non-compete duration, and arbitration location. Smaller brokers are more willing to negotiate. Large brokers (TQL, CH Robinson) may have less flexibility but will make exceptions for good carriers.
What if I already signed a bad contract?
Check the term and exit clauses. Most broker-carrier agreements are terminable with 30-day written notice. If there’s no termination clause, send written notice that you’re terminating — in many states, indefinite contracts are voidable at will. For lease-purchase or lease-on agreements with penalties, consult a transportation attorney before walking away. Sometimes paying the penalty is cheaper than staying in a bad deal.
Should I sign contracts that require higher insurance than I carry?
Never. Signing a contract that requires $250,000 cargo coverage when you carry $100,000 creates a coverage gap. If a claim exceeds your actual coverage, YOU pay the difference out of pocket — AND you may have committed fraud by signing that you meet requirements you don’t. Always verify with your agent first, and either increase coverage or negotiate lower requirements.