Due to the deregulation of the trucking industry by the federal government; Congress passed The Federal Motor Carrier Act of 1980. Under this act, the MCS-90 Endorsement was introduced, and it remains a valid form. Each state has minimums set in place pertaining to the financial responsibility of motor carriers that participate in interstate, for hire commerce, according to the Act.
This is Not Insurance
A big misconception of the MCS-90 form pertains to insurance coverage; this is not insurance; it is just financial assurance that in the event of an accident, the financially responsible party will compensate members of the public that are injured in a collision with a commercial motor vehicle. With this filing, motor carriers are not required to obtain coverage for the injury to, or death of, employees throughout the course of their employment.
Who is Liable?
The company of the motor carrier is typically liable for paying the costs associated with the collision accident or death. This means that the company of the driver is liable, but under the MCS-90 form filing, the company will be required to maintain insurance on their own. The issuer of the MCS-90 will not constantly check to see if the motor carrier has up-to-date insurance coverage after the MCS-90 has been filed. This is the responsibility of the carrier. It is also the responsibility of the carrier to pay the costs ordered by the court of law pertaining to a collision accident that was the fault of their driver, including contracted carriers. Again, this amount is determined by the state in which the accident has occurred.
What if the Motor Carrier Does Not Pay?
If the motor carrier does not have insurance, or the funds to pay for a collision accident, the issuer of the MCS-90 will be legally liable to pay the funds to the parties involved in the accident. When issuing the MCS-90 endorsement, the issuer guaranteed that the motor carrier would maintain the coverage types mandated by the law. The issuer also guaranteed that the motor carrier would be able to pay the funds pertaining to the collision costs that the state has set in place. Therefore, when issuing a MCS-90 endorsement, the issuer agreed to stand in the place of the motor carrier, for the public good. However, the issuer of the MCS-90 has the ability to seek full reimbursement from the motor carrier it endorsed.
Financial Assurance and Guarantee
The MCS-90 Endorsement is financial assurance that an at-fault motor carrier can fulfill their financial responsibility to the public; this includes public motor carriers, as well as “for hire” motor carriers. Remember that the motor carrier has the burden of meeting the financial requirements mandated by the state. This includes pollution costs, as well as collision costs. However, when issuing a MCS-90 endorsement, the issuer is assuming two roles: the insurer and the surety.
Even though a MCS-90 endorsement is not insurance, it is a guarantee that the motor carrier will have the minimal levels of insurance or funds as required under the Federal Motor Carrier Safety Act, under 49 CFR 387.09. It is the responsibility of the carrier to maintain coverage for the protection of the public for injury or property damage that occurs as a result of operating a motor vehicle. However, after the MCS-90 is filed, the issuer becomes a surety, and guarantees that the coverage will be maintained.