Minimum Financial Responsibility Requirements
The Motor Carrier Act of 1980 requires that a commercial motor vehicle “has in effect the minimum levels of minimum responsibility,” in the form of liability insurance which ranges from $750,000.00 to $5,000,000.00 per accident, depending on the type of commodity being transported. Proof of the required financial responsibility must be maintained at the motor carrier’s place of business. The MCS-90 endorsement is the required proof that the motor carrier is in compliance with the federal regulations. However, “the endorsement is not a warranty by the insurer that the limits shown meet federal minimums; it is the motor carrier’s obligation – not the obligation of the insurer – to determine its required limits of insurance.”
Obligation of Insurer to Pay under MCS-90 Endorsement
Once an insurer issues an MCS-90 endorsement, the insurer becomes obligated to pay according to the terms of the endorsement for public liability that results from any negligent operation, maintenance, or use of any motor vehicle subject to the financial responsibility requirements of the Motor Carrier Act of 1980. The Act defines public liability as “liability for bodily injury, property damage, and environmental restoration.”
The obligation of the insurer to pay is very broad and is not limited by any terms, conditions, or exclusions in the policy of insurance it issues to the motor carrier, to which the MCS-90 endorsement is attached. “For example, whether the motor vehicle is a ‘covered auto’ on the policy is of no consequence – coverage applies to the insured listed on the MCS-90 for all motor vehicles subject to the [Motor Carrier Act of 1980].”
MCS-90 Endorsement Is Not Insurance, but a Suretyship
At its essence, the MCS-90 endorsement is not insurance, but rather a suretyship that guarantees the public there will be some source of funds to pay for a claim that an insured is legally obligated to pay. The MCS-90 “covers all vehicles owned, operated, or maintained by the insured regardless of whether or not each motor vehicle is specifically described in the policy.”
Insurer May be Entitled to Reimbursement from Insured
For the public at-large, the most important aspect of the MCS-90 endorsement is that if a claim would not have been covered under the policy, but for the MCS-90 endorsement provisions (i.e., the insured motor carrier’s vehicle involved in the collision isn’t listed on the insurance policy), the insurer must pay the claim. The insurance provider then has the right to seek reimbursement from the insured.
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Photo by Nancy Gluck.