Motor Carrier Financial Responsibility

Key points

• The Motor Carrier Act of 1980 established federal financial responsibility rules enforced by the FMCSA, requiring motor carriers to demonstrate the ability to pay public liability claims, which include bodily injury, property damage, and environmental restoration.
• Federal minimums include $750,000 for covered for-hire carriers hauling nonhazardous property in interstate or foreign commerce in vehicles with a GVWR of at least 10,001 pounds; $1,000,000 for covered carriers hauling specified oil or hazardous cargo in vehicles of that size; and $5,000,000 for specified high-risk cargo, some of which triggers that limit regardless of whether it is shipped in bulk. Covered passenger carriers use the MCS-90B and have minimums based on seating capacity.
• The MCS-90 is a surety-like public-protection endorsement attached to a motor carrier liability policy, which may be written on an ISO Business Auto Coverage Form or Motor Carrier Coverage Form; it is not a standalone policy.
• The MCS-90 obligates an insurer to pay an applicable final judgment for public liability arising from vehicle operation, maintenance, or use, even if the vehicle is not listed, an exclusion applies, or the insured breached a policy condition.
• The MCS-90 excludes employees' injuries in the course of employment, damage to the carrier's own vehicles, and property transported as cargo regardless of who owns it; the insurer can seek reimbursement from the insured for a payment it owed only because of the endorsement.
• Form BMC-91 or BMC-91X is an insurance filing made with the FMCSA; cancellation of the MCS-90 requires 35 days' written notice to the other policy party and, for a carrier subject to FMCSA registration requirements, 30 days' notice measured from the FMCSA's receipt.