How Does the MCS-90 Endorsement Relate to an Insurance Policy?Posted on 03/12/18 by Matt Westphalen, Vice President, Product Development & Compliance
Motor carriers commonly request MCS-90 Endorsements from their insurance companies. Let’s explore how the MCS-90 relates to a motor carrier’s insurance policy.
Federal Regulations are the source of a motor carrier’s obligation to obtain a MCS-90. The MCS-90 applies to motor carriers of property who satisfy their financial responsibility requirements prescribed under Title 49 § 387.7 of the Code of Federal Regulations (CFR), using insurance, rather than surety bond or qualified self-insurance. As a point of clarification, the requirements around surety bonds, self-insurance, and passenger carriers are outside the scope of this article.
The MCS-90 is an endorsement to an Auto Liability Policy with variations from the standard ISO Business Auto Coverage Form or Motor Carrier Form (“Coverage Forms”). One way to think about this is to do a quick comparison of the defined terms contained in the MCS-90 versus the defined terms in the Coverage Forms.
Bodily Injury and Property Damage are exactly the same
Accident is similar in both the Coverage Forms and the MCS-90
Motor Vehicle in the MCS-90 and definition of Auto in the Coverage Forms resemble each other
Environmental Restoration and Public Liability are contained in the MCS-90 but are not specifically defined in the Coverage Forms. Relatedly, the definition of Covered Pollution Cost or Expense is the Coverage Forms’ expression the MCS-90 concept of Environmental Restoration.
The reason for the differences is that Coverage Forms provisions are governed by the insurance industry, state insurance department regulatory oversight, and contract law principles and the terms and conditions contained in the MCS-90 are governed by Federal Regulations.
The MCS-90 Endorsement supersedes rather than amends policy language. Further, the MCS-90 is, in effect, an agreement between the insurer and the general public, and provides evidence that the motor carrier named on the MCS-90 has obtained the required liability insurance designed to protect the public from injuries or damages. As such, the MCS-90 overrides any insurance policy provisions or exclusions that would relieve an insurance company from paying for injuries or damages for which the motor carrier is liable. Subsequently, however, the MCS-90 permits insurers to seek reimbursement from a motor carrier for any payments made for injuries or damages, which would not have otherwise been covered under the policy.
Consistent with the exclusions in Coverage Forms, injuries to employees of the Motor Carrier are excluded under the MCS-90 since such coverage will be provided by Workers’ Compensation or Employers Liability insurance.
Further, the Coverage Forms mirror MCS-90 in that they both exclude coverage for damage to property the motor carrier is transporting (cargo) with the expectation that cargo insurance is the best way to provide this coverage.
Finally, insurance companies may cancel a motor carrier’s MCS-90 upon 35-day notice to the motor carrier and 30-day notice to Federal Motor Carrier Safety Administration (if subject to FMCSA registration or authority requirements). This MCS-90 cancelation notification is in addition to the requirements that insurers must follow with respect to the cancellation or non-renewal of the motor carrier’s related insurance policy.
Matt Westphalen is Vice President of Product Development and Compliance at Old Republic Risk Management. He leads the teams responsible for maintaining and developing insurance products and services, workers' compensation rating and premium audits, and loss control services. Matt is also responsible for managing ORRM's regulatory compliance obligations associated with the insurance products and services offered. He is located in our corporate offices in Brookfield, Wisconsin.