ment) pre-date the MCS-90 cases.
Perhaps because of the lack of guid-
ance, the cases are at odds with the lan-
guage and intent of the DMV-67 en-
dorsement. One court found the insurer
owed a duty to defend and settle under
the endorsement. Such a finding con-
tradicts the standard language requiring
the insured to reimburse the insurer for
amounts paid under the endorsement.
Other courts interpreting the DMV-
67 endorsement or its predecessor have
held it can “stack” on top of insurance
that has satisfied the $750,000 minimum.
One case holds that until the endorse-
ment is canceled in accordance with the
statute, it remains in force and applies
even when the underlying policy has
expired and been replaced. Again, these
holdings run counter to the express pur-
pose of the statute, which is to ensure
injured claimants receive the statutorily
What can underwriters
and claims professionals do?
To protect the underwriting intent, un-
derwriters should be mindful the DMV-
67 endorsement remains in effect indefi-
nitely if not canceled. The statute requires
insurers to provide 30 days’ notice to the
DMV. To avoid a situation in which the
endorsement remains in effect although
the policy has terminated, underwriters
should diary a date at least 30 days before
the policy expires to send out the notice
of cancelation of the endorsement. Like-
wise, when cancelling the policy, under-
writers should ensure the endorsement is
canceled as well.
Claims professionals, for their part,
should check whether there is a state or
federal filing for the insured that could
bring the endorsement into play. In ad-
dition, claims professionals should be
mindful of the current differences be-
tween California and federal law.
As stated above, there are some older
California cases holding the DMV-67 en-
dorsement can stack on top of insurance
of $750,000 or more. There is also author-
ity holding that the DMV-67 remains in
effect indefinitely if not canceled. There-
fore, claims professionals should check
whether there other DMV-67 endorse-
ments that were never cancelled and may
still be at play.
In MCS-90 cases, claims professionals
should be aware of clear-cut law holding
the endorsement does not stack on top of
statutorily sufficient insurance.
The law regarding financial responsibility
endorsements is continuing to develop.
There is also substantial confusion re-
garding whether the DMV-67 and MCS-
90 endorsements have any obligation
pre-judgment, or whether an insurer can
be held in bad faith for failing to settle
In resolving these issues, the courts
should interpret the endorsements in a
manner that is faithful to their language
The MCS-90 and its state court coun-
terparts are not “insurance” designed
to protect the insured. They are sure-
ties designed to protect injured third-
party claimants from judgments up to
the statutory minimum. Therefore, they
should have no effect on the relationship
between the insured and the insurer, or
between multiple insurers.
In going beyond the statutory language
to find a duty to defend or “stacking” of
the endorsements on top of statutorily
sufficient coverage, the courts appear to
have done violence to the statutes. It is
only by remaining true to the statutory
language and intent that the courts will
foster the uniformity that the Legislature
intended. In turn, this consistency of de-
cision will benefit insurance underwrit-
ers, insureds, and ultimately the motor-
Alan B. Yuter is a senior partner and
Rachel E. Hobbs is a partner in the Los
Angeles office of Selman Breitman LLP.
The MCS-90 and its state
court counterparts are
not ”insurance” designed
to protect the insured.
They are sureties designed
to protect injured