If you run an interstate authority, you have an MCS-90 endorsement on your liability policy. Most carriers assume it is extra protection for their business.
It is not. It is a financial guarantee to the public, and it can leave you holding the entire bill.
What the MCS-90 actually is
The MCS-90 is not insurance coverage.
It is an endorsement attached to a motor carrier’s liability policy, required under Federal Motor Carrier Safety Administration (FMCSA) regulations, guaranteeing that the carrier meets federal minimum financial responsibility requirements when operating across state lines.
Those federal minimums are:
- $750,000 for most general freight
- $300,000 for non-hazmat vehicles at or under 10,001 pounds
- $1,000,000 for oil
- Up to $5,000,000 for certain hazardous materials
Brokers and shippers commonly require $1,000,000 regardless of the federal floor, which is why most carriers buy above the minimum.
How it works
- It triggers on a denied claim. The MCS-90 applies when a motor carrier is legally liable for an accident, but the policy denies coverage because of an exclusion. An unlisted or excluded driver is the most common example.
- It protects the public, not you. The endorsement obligates the insurer to pay the injured third party regardless of any exclusion, so the public is compensated rather than left without compensation.
- The insurer can bill you for all of it. This is the part carriers miss. Unlike standard insurance, the insurer has the legal right to demand full reimbursement from the motor carrier for every dollar paid out under the MCS-90.
What that looks like in practice
An excluded driver on your policy causes an accident that results in $100,000 in injuries to another motorist.
Because the driver was excluded, your policy denies the claim.
The MCS-90 forces your insurer to pay the injured party $100,000.
Your insurer then comes to you for the full $100,000.
You were never covered. The endorsement ensured the injured party was paid, and, financially, you are in exactly the position you would have been in with no insurance at all — except that you also paid a premium for the year.
How to make sure you never find out
The MCS-90 is a backstop for the public, not a safety net for you. The way to actually benefit from your insurance is to make sure the claim never gets denied in the first place.
- Keep your driver schedule current. Every driver who might operate a unit should be on the policy. Adding a driver takes minutes. A denied claim cannot be undone.
- Know your exclusions, and make sure dispatch knows them too. An exclusion that lives only in the policy file is a problem waiting for a night when someone is short a driver.
- Run MVRs on a schedule. A driver who was acceptable at hire may not be acceptable now. A carrier that has not checked has a coverage problem it does not yet know about.
- Review after every change. New units, new drivers, new authority, a new operating radius — each is a moment when your coverage and your operations can drift apart without anyone noticing.
Review your coverage
Preventing coverage gaps and driver exclusions is what keeps a fleet profitable. It is also considerably cheaper than the alternative.
Contact the Palomar Transportation Team at (800) 489-0105 or email info@palomarins.com to review your fleet’s coverage.
See our trucking package and owner-operator programs, or our additional coverages for the exposures a standard policy leaves open.
