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Putting a vehicle back on the road after the winter? Better make that call and add it back onto your policy right away because MCS-90 won’t save you.

May 1, 2018

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Karen Libertiny Ludden

Spring is the time when commercial vehicles are often rotated into or out of service. Combine that with an uptick in business, and commercial carriers often forgot or postpone calling their agents or insurance carriers to add vehicles back on to their commercial policy immediately.  Sometimes the delay is simply caused by the common failure to get around to insurance updates at such a busy time of year. But sometimes the delay is caused by a misunderstanding of how the MCS-90 endorsement applies to interstate haulers. Many trucking companies think that MCS-90 protects them from liability for interstate trucking accidents because they have heard that it applies whether the vehicle is listed on the policy or not.  That is true in one respect, but it is only half the story and, if you are not careful, you will end up at the business end of a lawsuit.

MCS-90 is an endorsement required by the Federal Motor Carrier Safety Regulations (FMCSR), and it attaches to commercial auto policies for interstate haulers.  Many trucking companies think that it is just another form of insurance, but it is not.

For starters, MCS-90 is a surety, not an insurance policy. Although it attaches to a commercial policy as an endorsement supplied by an insurance carrier, a surety does not operate like traditional insurance, it operates as a guarantee. In this context, it is a guarantee that the public will be protected from damage done by interstate motor carriers, whose national business make it difficult to allocate financial responsibility. Thus, it differs from an insurance policy because the protected party is the public, not the policyholder.

There are other important ways it differs from an insurance policy as well.  For example, it does indeed apply to any vehicle that the company named on the policy is operating when it places its placard on the truck or by its interstate licensing, whether it is listed on the policy or not.  It also applies regardless of insurance coverage exclusions that would otherwise defeat coverage, like non-cooperation, intentional acts and notice clauses. This is again because it is intended to protect the public, and it does so by obligating an insurer to pay an injured party, regardless of exclusions in the policy.

This sounds really good, but it might lull you into a false sense of security.  This is because the surety does not require the insurance carrier to defend the lawsuit, just indemnify you for any judgment (i.e. post-trial verdict or judge-entered judgment).  Thus, you technically have the responsibility to defend the lawsuit and incur all the legal expenses (if you do not otherwise have coverage under the policy), and the insurer has the right to sue you to recover that amount.  Again, that is because it is the public that MCS-90 intends to protect, not trucking companies. Some carriers choose to pick up the defense anyway, just to control the outcome better, but there is no guarantee that they will.

This is when the question of whether you added that truck you just pulled out from storage back on to your policy becomes important. If a truck involved in an accident is listed on the policy, and no other exclusions apply because you’ve cooperated, placed your insurance carrier on notice and otherwise complied with the requirements of the policy, you are in a good position.  If there is no coverage for that vehicle because you did not add it, you have a problem.  MCS-90 will protect the public, but it won’t protect you.