Claims - May 2016

vehicles, at least when the haul is done under the insured’s permit. Significantly, the MCS-90 endorsement trumps policy provisions specifically limiting coverage to non-owned autos.

There are several important limita-
tions on the applicability of the MCS-90
endorsement. The endorsement only ap-
plies when three requirements are met:
• The underlying policy to which the en-
dorsement is attached does not cover
the accident.

• Other insurance available to the motor carrier is insufficient to meet the federal minimum of $750,000 or nonexistent.

• Once the federally mandated minimum has been met, the endorsement is inapplicable.

Given the potential for cata- strophic trucking accidents, insurers for the trucking in- dustry are certainly aware of legally mandated policy endorsements that can increase their exposure well beyond the policy terms.

Under the Motor Carrier Act of 1980
(MCA), interstate motor carriers must
show proof of financial responsibility to
maintain their operating permits. There-
fore, their liability insurers typically
include an “MCS-90” endorsement on
their policies.
This MCS-90 endorsement is designed
to protect the motoring public by guar-
anteeing a minimum level of compen-
sation for injured claimants (currently

$750,000). However, recent court deci-
sions have ignored the purpose of the en-
dorsement and ordered “stacking” of
multiple endorsements, mandating that
underwriters and claims people work
together to limit an insurer’s exposure.

Other issues have arisen as well.

MCS-90 and similar state rules Under the MCS-90 endorsement, interstate motor carrier insurers are required to pay any final judgment “recovered against the insured for public liability” as a result of the negligent operation of any vehicle — regardless of whether the involved vehicle is covered under the motor carrier’s policy.