What Every Motor Carrier Should Know

Federal and state laws mandate that a minimum amount of general limited liability insurance be carried by all commercial motor carriers and/or private motor carriers for hire. The amount of minimum general liability insurance is determined by several factors. Those factors include: interstate vs. intrastate hauling; the gross weight of the equipment or vehicle; and the type of cargo or number of passengers being carried. Although states do have the right to regulate intrastate hauling, almost all have adopted the minimum federal regulations, if not exceeded them.

Federal Motor Carrier Act of 1980

The federal standards were enacted into law by Congress as the Federal Motor Carrier Act of 1980. The purpose of this act was several fold. Congress wanted to deregulate much of the red tape associated with motor carriers and allow more competition in regards to commercial truck shipping. The government also wanted to “limit confusion as to liability arising from accidents.” As such, much of the legislation was dedicated to limited liability insurance and what exactly that insurance covers.

Limited Liability: What the law mandates.

The law states that “all authorized carriers must maintain insurance or other form of surety conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or the death of a person resulting from the negligent operation, maintenance or use of motor vehicles under the carriers license.” 49 U.S.C. 13906; 49 C.F.R. 387.7.

The limited amount of surety required is based on several factors:

• Freight:–$750,000 – $5,000,000, depending on commodities transported; $300,000 for non-hazardous freight moved only in vehicles weighing under 10,001 lbs.
• Passengers:–$5,000,000; $1,500,000 for registrants operating only vehicles with seating capacity of 15 or fewer passengers. –

Part of the federal standards require that all motor carrier insurance policies include a MCS-90 Endorsement. The MCS-90 Endorsement states that the insurer agrees to pay within the limits of liability “regardless of whether or not each motor vehicle is specifically described in the policy… Such insurance… does not apply to injury to or death of insured’s employees.”

What the Limited Liability Insurance does not include.

Sections of the FMCA specifically exclude certain types of damages incurred during some points of operations, like during “bob-tailing” 69.02[1][c], and loading and unloading 69.02[5].

In other words, the limited liability insurance mandated by federal and state statutes does not cover everything. It does protect trucking companies from liability that can occur during normal daily operations, and it will protect your business in the event of litigation. But it does not typically cover all public damages and/or personal injuries, including injury/death of an employee. Limited liability insurance also does not cover any of the company’s financial losses.

Protect your company with additional insurance.

The minimal insurance requirements mandated by state and federal regulations are exactly that: minimal. There are additional motor carrier policies available to help protect your company, cargo and drivers and employees. So regardless if you’re an owner operator or fleet company, driving intrastate or interstate, a responsible motor carrier company should seriously consider adding additional coverage.