What You Need to Know About MCS-90 Endorsement
Written by: Duane L Cochenour, Esq.
In 1980, Congress passed the Federal Motor Carrier Act, an Act that was intended to increase price competition, and reduce and simplify regulations on carriers.
One of the most enduring benefits of the Act was a provision for the MCS-90 Endorsement (“MCS-90”) which required proof of financial responsibility of motor carriers.
Although the form is only two pages long, MCS-90 is one of the most misunderstood and misinterpreted forms in civil litigation. Its meaning and application has been frequently misapplied by motor carriers, business owners, insurers, lawyers, juries, and judges in courts across the country.
MCS-90 is not insurance, but all motor carriers must have this document attached to their liability policy. It provides an extra layer of checks and balances for adequate financial coverage for drivers, motor carriers, and other vehicles on the road. Think of it more like a secondary proof of insurance or confirmation of financial responsibility that the motor carrier has available insurance coverages that are equal to or greater than the federally mandated minimum levels of insurance set by each state.
The requirement applies to both interstate and intrastate trucking and financial coverage can be established through an insurance policy or self-insurance if the motor carrier can show that it meets federal requirements.
The minimum liability requirements, depending on the goods being transported and the size of the vehicle, include:
- Non-hazardous cargo — $750,000
- Oil, hazardous waste, and other hazardous materials — $1,000,000
- Portable tanks and hoppers over 3,500 gallons — $5,000,000
Coverage defenses, deductibles and self-insured retentions are not applicable, and the MCS-90 does not apply to injured employees. Further, if a claim is paid out under the MCS-90, the insurer can try to recover its losses by subrogating the claim against the trucking company.
Here are some key issues to consider when obtaining an MCS-90 endorsement:
- Does it involve interstate travel, what is the specific trip, and what is the character of the carrier?
- Who does it apply to? (most court decisions say that the endorsement applies to any insured, and FMCSA has clarified that it is the named insured or motor carrier)
- What if there is other insurance on another vehicle in the accident, or if the plaintiff is uninsured?
- Are punitive damages covered? (it depends on whether it is covered under the policy endorsement it is attached to)
Having a better understanding of the MCS-90 endorsement, when and how it applies, and the proper interpretation will help motor carriers and insurers present a stronger defense and take a more strategic approach to resolving claims that arise.