Someone recently asked me: “Why we cannot just delete a truck from an insurance policy?”
My answer to that question is: When you operate under your own authority, there is something called an MCS-90 which is filed with the federal government. You may not know it, but you have put a lot on the line with the MCS-90. Here is the MCS-90 endorsement for your review.
Below is a very loose interpretation of the MCS-90. This is not intended to be considered the whole explanation and is for information purposes only:
MC federal filings means that an MCS-90 endorsement is filed with the Federal Government. When you operate under your own authority you are basically stating to the federal government that you promise to purchase all the policy’s necessary to cover all potential trucking exposures to protect the public. If you did not purchase all the policies, or a claim exceeds your policy limits, you will ultimately pay for damages out of your own pocket. On the other side of the equation is the insurance company. They have made the promise to the government that no matter what happens, any judgements to the public made against you will be paid whether you have the coverage or not, and you authorize them to collect the money back from you. As a failsafe for the MCS-90 the Commercial auto policy is written with a clause that states that it is mandatory for every commercial vehicle your business owns, to be listed on the policy. If it is found that they do not provide coverage for every vehicle, the insurance company has no obligation to defend you in a claim. They may settle the claim but not defend you and will attempt to collect the money paid out on your behalf.
In recent years, the settlements from commercial vehicle accidents are in the 10’s of millions and the insurance companies are doing everything they can to make sure that your company has the proper coverage. This is one of the many reasons why it cost so much to operate under your own authority.
Here is a copy of the MCS-90 endorsement with some of the wording highlighted to help you understand what all of this means.
It is a commitment that you make which is very different than being leased on to another company or operating in one state with just a DOT. An MC is an “all in” or do not operate proposition.
Also note, that with a CDL & MC you are held to a much higher standard for both operators and your fleet of trucks.
David N. Smith
KD Smith Insurance