Removing a Tractor from your Insurance Policy
Why we can’t just delete a tractor from an insurance policy with 91X Filings:
When you operate under your own authority, there is something called an MCS-90 endorsement which is filed with the federal government. You may not know it, but you have put a lot on the line registering as a motor carrier and purchasing a policy with the MCS-90.
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:
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 insure every vehicle, than the insurance company has no obligation to defend you in a claim. They may settle the claim but not defend you and still attempt to collect the money paid out on your behalf.
Settlements from commercial vehicle accidents are in the 10’s of millions in recent years and the insurance company is doing everything they can to make sure that the insured has coverage. They are forcing you to stay within the guidelines of a business operating under its own authority. Removing a vehicle from an insurance policy will require, a Lease Termination Agreement, Bill of Sale or Salvage Certificate.
I hope this helps you to better understand operations under your own authority. It is a commitment that you made which is very different than being leased on to another company. Operations under your own authority is an all-in proposition and there is no room for error.
David N Smith
KD Smith Insurance