MCS 90 is a form of insurance that every big rig on the road is required to have.
Insurance companies will work alongside motor carriers to ensure that vehicles in a fleet are properly endorsed.
What Is MCS 90?
MCS 90 is an endorsement that is required for certain regulated motor carriers. The endorsement is part of a liability policy and works on a reimbursement basis. Understanding the reasoning for this endorsement is essential for all motor carriers.
MCS 90 Example
Let’s assume that vehicles in a motor carrier’s fleet haul natural gas. The vehicle may have coverage for the truck itself, but what happens if the tanker flips over and the natural gas spills all along the interstate?
This is a scenario where MCS 90 insurance would be invaluable.
Cleanup costs would be the responsibility of the truck owner and may be a massive expense. If the natural gas spilled into waterways or a protected area, the Environmental Protection Agency (EPA) would demand a high-level cleanup and all costs to be paid by the trucking company and/or driver.
The MCS 90 endorsement is a guarantee, from the insurance provider, that restitution will be paid for damage to government or public land. Technically, this isn’t an insurance at all, but rather, a stipulation that says “the insurance company will make sure that damages are paid.”
The insurer will often front the cost of the cleanup, but the motor carrier will be responsible for reimbursing the insurer if they pay money for the cleanup. Motor carriers can also decide to cover all of the costs, negating the insurance company paying for the cleanup.
It’s important to note that liability limits do not apply in this case.
For example, if you had $1 million in liability coverage and the cost to cleanup was $1.5 million, you may assume that the first million dollars would be covered by the insurer. In the event that the MCS 90 endorsement is required, you’re responsible for 100% of the costs.
The insurer may pay the costs upfront, but you’ll be required to pay back the $1.5 million.
In effect, while the endorsement is a part of your liability insurance, it is not actually an insurance policy. The endorsement shifts the liability to the insurer so that the government is sure someone will pay for damages, but the insurer will demand immediate payment for all of the expenses incurred.
Is MCS 90 Insurance Required?
Endorsement may or may not be required, depending on a few main factors:
Does the motor carrier self-insure? In this case, there would be no requirement that an endorsement be held. Instead, to self-insure, the company must provide proof that they will be able to fully cover the costs of an accident. A surety bond may be required as well, depending on the requirements of the FMCSA.
Interstate commerce, which requires a federal filing, will require the motor carrier’s insurance company to provide proof of endorsement.
For-hire or private carriers that transport hazardous materials that haul over 3,500 gallons will be required for an MCS 90 endorsement.
Hazardous materials are a main concern and one of the key reasons for endorsement. Due to the nature of the materials being hauled, significant damage and liability exists. The level of liability that is offered depends on the items that you’re transporting.
Endorsements may also be incorrect or expired. There are times when an endorsement expires, leaving motor carriers with a massive risk of liability. The Department of Transportation may take action against you if you don’t have an endorsement when you should, and hefty fines and penalties may also be assessed.
Working with insurance companies or a company that works on your behalf to obtain adequate coverage is the best way to ensure that you have a valid endorsement.
When was the MCS 90 Endorsement Put Into Law?
The FMCSA notes that the endorsement was put into place in 1980. In fact, the endorsement can be found specially in the Motor Carrier Act of 1980 under Sections 29 and 30. Insurance companies should provide you with an endorsement once they learn what types of goods you’ll be hauling.
Endorsement is the most common method of proving financial responsibility for truck accident damages.
It’s important to know that in the majority of cases, the insurer will not provide any coverage for legal fees if a MCS 90 endorsement is the reason for the lawsuit. Perhaps the town is suing for damages. In this case, the trucking company would be required to cover all of the legal costs involved.
Issues With State Laws
Insurers are not in the business of paying out everything a trucking company pays for in their policy. Your policy’s cost will have this endorsement figured into it. When an accident does occur and you’re to blame, the insurer will look at state laws to get out of honoring the endorsement.
The verbiage in your policy will come into question, but the biggest concern will be how the state courts interpret the law and enforce it. Lawyers are often called in if there’s a question of whether or not the accident is covered by the endorsement.
For over 40 years, insurance companies have been offering MCS 90 endorsements that allow trucking companies to haul hazardous materials. While the endorsement is beneficial for all parties, insurers will charge a premium for it because a trucking company can claim bankruptcy and never repay the insurer.