Trucking insurance — MCS-90 endorsements
Liability insurance is required for motor carriers in order to assure independent financial means to pay for injuries to members of the public arising out of trucking operations. Travelers Ins. Co. V. Transport Ins. Co., 787 F.2d 1133, 1139 (7th Cir. 1986). The minimum levels of liability insurance coverage required for interstate motor carriers depend upon what they carry: $750,000 for vehicles over 10,000 pounds carrying non-hazardous freight, and $1,000,000 for those hauling hazardous materials and oil. Minimum limits of $5,000,000 are required for any interstate for hire or private carrier operating portable tanks, cargo or hopper type vehicles with capacity over 3,500 water gallons, and for motor carriers of passengers. 49 U.S.C.A. § 10927. Federal insurance requirements exempt intrastate carriers operating within a single state, vehicles hauling certain commodities, vehicles of agricultural cooperatives, trucking operations limited to hauling for a parent corporation, school buses, taxis, commuter vehicles, and vehicles chartered by schools. 49 U.S.C.A. § 13501(o)(instrastate); 49 U.S.C.A. § 13506(a)(5), (b)(commodities, corporate family); 49 C.F.R. § 387.27(b)(schools, taxis, commuters).
For motor carriers subject to federal regulation, insurers must cause insurance policies to be endorsed for public liability. The most common form of such endorsement is the MCS-90, which amends the insurance policy to fill coverage gaps and to assure compliance with the Motor Carrier Act and FMCSR. It remains in effect continuously until replaced or cancelled according to special cancellation requirements independent of the policy’s cancellation requirements. It is considered public information, and registered motor carriers must keep it available to the public for inspection. 49 C.F.R. § 387.7(e); 49 C.F.R. § 387.29; 49 C.F.R. § 387.7(b)(1); 49 C.F.R. § 387.31(b)(1). While the FMCSA has exclusive jurisdiction over interstate motor carriers and is the primary repository for financial responsibility filings, the carriers file proof of insurance in their base registration state, which upon approval issues a registration receipt that authorizes operation in all jurisdictions under a federal permit. 49 C.F.R. § 1023 and 1162. Mexican trucking companies operating in the U.S. must comply. 49 C.F.R. § 350(a)(8).
The MCS-90 is not insurance coverage per se, but operates as a suretyship for the benefit of the public resting on top of the motor carrier’s liability policy. See, e.g., Canal Ins. Co. v. Carolina Cas. Ins. Co., 59 F.3d 281, 283 (1st Cir. 1995); John Deere Ins. Co. v. Truckin’ U.S.A., 122 F.3d 270, 274 (5th Cir. 1997). It does not create in the insurer a duty to defend, but only a duty to member of the public pay any judgment against the motor carrier resulting from negligence in operation, maintenance or use of motor vehicles even if not specifically listed on the policy. See, e.g., Canal Ins. Co. v. First Gen. Ins. Co., 889 F.2d 604, 614 (5th Cir. 1989); Industrial Indem. Co. v. Truax Trucklines, Inc., 45 F.3d 986, 991 (5th Cir. 1995); National Am. Ins. Co. v. Century state Carriers, Inc., 785 F.Supp. 793, 795 (N.D. Ind. 1992).
The MCS-90 covering the owner of a tractor or trailer also covers permissive users, including vicarious “logo liability,” so that the judgment need not be against the named insured. See, e.g., John Deere Ins. Co. v. Nueva, 229 F.3d 853, 856 (9th Cir. 2000); Integral Ins. Co. v. Lawrence Fulbright Trucking, 930 F.2d 258 (2d Cir. 1991); Reliance Nat’l Ins. Co. v. Lewis, 2001 U.S. Dist Lexis 12901 (Aug. 24, 2001) (need to find official or westlaw citation); Lynch v. Yob, 768 N.E.2d 1158 (Ohio 2002); Pierre v. Provident Washington Ins. Co., 730 N.Y.S. 2d 550 (N.Y. App. Div. 2001); But see, Tamara B. Goorevitz, et al, “Coverage Expansion in Tractor Trailer Insurance?,” 47:2 For The Defense 40 (Feb. 2005).
It overrides policy exclusions that would otherwise defeat coverage, including non-cooperation and notice clauses, Campbell v. Bartlett, 975 F.2d 1569, 1580-81 (10th Cir. 1992), and presumably including exclusions for intentional acts, intoxication, etc. Richard M. Mosher, “Liability Endorsements and Financial Responsibility,” 47:2 For The Defense 45, 49 (Feb. 2005).
Courts are in conflict as to whether the MCS-90 does or does not apply when the motor carrier’s particular trip was not subject to federal jurisdiction at the time of the accident, e.g., an intrastate shipment. Royal Indemnity Co. v. Jacobsen, 863 F. Supp. 1537, 1542 (D. Utah 1994)(MCS-90 applied to intrastate trip hauling exempt commodities); contra, General Security Ins. Co. v. Barrentine, 829 So.2d 980, 983 (Fla. 1st Dist. 2002(not applicable to intrastate trip); Branson v. MGA Ins. Co., Inc., 673 So. 2d 89, 92 (Fla. 5th Dist 1996); Standard Ins. Co. v. McKissack, 153 S.W.2d 997 (Tex. Civ. App. 1941).
However, the MCS-90 endorsement specifically provides that the coverage applies “whether … such negligence occurs on any route or territory to be served by the insured or elsewhere,” so it is rational for a court to hold that the endorsement applies whether or not federal regulations actually require it at the time of the accident. Fawley Motor Lines v. Cavalier Poultry Corp., 235 F.2d 416, 418 (4th Cir. 1956). The MCS-90 endorsement limit applies on a per-accident rather than per-person basis. Hamm v. Canal Ins. Co., 10 F. Supp. 2d 539 (M.D.N.C. 1998).
Priority of coverage between the carrier issuing the MSC-90 endorsement and other insurance policies is determined by the excess and other insurance clauses of the respective policies. See, e.g., Empire Fire & Marine Ins. Co. v. J. Transport, Inc., 880 F.2d 1291, 1295 (11th Cir. 1989).; Carolina Cas. Ins. Co. v. Underwriters Ins. Co., 569 F.2d 304 (5th Cir. 1978). If an insurer pays a claim under the MCS-90 endorsement that it would not otherwise have been required to pay under the terms of the insurance policy, it has a right of reimbursement against the insured motor carrier for the claim paid but not for cost of defending the underlying claim against the motor carrier. See, e.g., Harco Nat. Ins. Co. v. Babac Trucking, Inc., 107 F.3d 733 (9th Cir. 1997); T.H.E. Ins. Co. v. Larsen Intermodal Services, 242 F.3d 667 (5th Cir. 2001).
The Shigley Law Firm represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a “SuperLawyer” in Atlanta Magazine and one of the “Legal Elite” in Georgia Trend Magazine. He is a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks).