Most people find a discussion about liability insurance boring. And trucking insurance can be more complicated, more tedious, and duller than even garden variety auto insurance.
However, if you are injured in a collision caused by a trucking company’s driver there are few more important discussions. Some people find themselves in the situation where the motor carrier’s insurance policy does not provide coverage.
However, there may still be funds available to compensate the injured person.
Truck Accident Insurance Requirements
Federal law mandates that a nonhazardous property carrying for-hire interstate motor carrier operating vehicles with a gross vehicle weight rating (GVWR) of 10,001 or more pounds have no less than $750,000 in insurance coverage.
The minimum increases to $5 million when the motor carrier is transporting hazardous materials or the vehicle has a seating capacity of 16 passengers or more. It is generally the case that a property carrying motor carrier will have a $1 million insurance policy available.
Some companies, especially the large ones, will have excess or umbrella policies in addition to the $1 million policy.
In some instances, the trucking company’s insurance policy will not apply because:
- The vehicle was not a scheduled auto on the policy
- The driver was not disclosed to the insurer and included on the policy
- The motor carrier failed to comply with some condition in the insurance policy
Is the injured person out of luck? If there is an MCS-90 endorsement to the policy, the answer is no.
What is an insurance contract endorsement?
An endorsement is an amendment or addition to an existing insurance contract which changes the terms or scope of the original policy. It is almost always a 1-2 page document which is physically attached to the insurance policy.
In trucking, the relevant endorsement is formally known as an Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections 29 and 30 of the Motor Carrier Act of 1980. However, it is commonly referred to as an MCS-90.
What is the purpose of an MCS-90 Endorsement?
When a motor carrier obtains an insurance policy, the insurance company is required to include the MCS-90 endorsement with the policy.
The MCS-90 provides that should a member of the public suffer a bodily injury resulting from negligence in the operation, maintenance or use of the motor carrier’s motor vehicles, the insurer will pay any final judgment against the motor carrier, up to $750,000.
The MCS-90 applies no matter whether the express terms of the insurance policy apply or even when the motor carrier becomes insolvent or bankrupt. When an insurer makes a payment pursuant to the terms of the MCS-90, the insurer is free to pursue the motor carrier for reimbursement.
What’s an example of when an MCS-90 Endorsement would be relevant in a Truck Accident?
As an example, let’s say Sally Citizen is injured when a tractor-trailer rear-ends her vehicle. Sally makes a claim against the trucking company’s insurance company, but the insurer denies the claim since the motor carrier failed to list the tractor (i.e., “schedule” the auto) on the insurance policy.
Sally sues the trucking company but it is insolvent. In most situations, Sally could expect to recover nothing. However, trucking is different because of the MCS-90 endorsement.
If the insurance company will not settle Sally’s claim because of the scheduled auto coverage defense, Sally’s course of action is to nevertheless continue her suit against the now insolvent trucking company and pursue her claim to final judgment.
Once she has obtained a final judgment against the trucking company, she can pursue the insurance company and the insurer will have to pay Sally the amount of the judgment, not to exceed $750,000.
Sally may not be completely compensated (assuming her damages exceed $750,000), but she will have received something.
And that is ultimately the rationale behind MCS-90 coverage – Guaranteeing that there will be some source of funds available to pay for damages made necessary by the negligence of the trucking company and its employees.
