12.3 Motor Carrier / Trucking and MCS-90

Motor Carrier Coverage Form

For businesses that haul property or passengers for hire, ISO offers the Motor Carrier Coverage Form (CA 00 20) and the older Truckers Coverage Form (CA 00 12). These resemble the Business Auto Form but add provisions for the trucking industry: coverage for trailers in the insured's possession, Trailer Interchange liability, and rules addressing owner-operators and leased operations under federal regulation.

Why a separate form

Trucking creates exposures the standard BAP handles poorly:

• Tractors and trailers are frequently owned by different parties and swapped (interchanged) at terminals.
• Owner-operators lease their rigs to a motor carrier, blurring who is 'using' the auto.
• Federal law requires registered interstate carriers to guarantee a minimum financial responsibility regardless of policy gaps.

Trailer Interchange Insurance

When carriers swap trailers under an interchange agreement, Trailer Interchange coverage pays for direct physical damage to a trailer in the insured's possession but owned by someone else, while it is being used under that agreement. It is essentially physical damage on a borrowed trailer the insured is contractually responsible for. Comprehensive, specified causes of loss, and collision options apply, each with its own deductible.

The MCS-90 Endorsement

The MCS-90 (Motor Carrier Act Endorsement / Endorsement for Motor Carrier Policies of Insurance for Public Liability) is a federally mandated endorsement attached to the liability policy of interstate for-hire motor carriers subject to the FMCSA. It is NOT ordinary coverage — it is a financial-responsibility guarantee to the public.

How it works

• It obligates the insurer to pay a judgment for public liability (BI, PD, and environmental restoration) arising from negligent operation of ANY motor vehicle, even if the vehicle was not a covered auto and even if the underlying policy would otherwise exclude the loss.
• The insurer pays the injured member of the public first, then has a right of reimbursement from the insured for any amount it would not have owed under the policy terms.
• It does not provide first-party or cargo coverage — strictly public liability protection.

Required minimum limits (FMCSA)

Trap: The MCS-90 fills a gap for the PUBLIC; it never benefits the insured. If a claim is paid only because the MCS-90 forced it, the insurer can recover that payment from the motor carrier.

Owner-Operators and Leased Rigs

When an owner-operator leases a rig to a motor carrier, the federal lease/control rules generally make the carrier responsible for the vehicle's operation while under lease (often called the 'logo liability' or 'placard' rule). The Motor Carrier Form addresses this with definitions of who is an insured when autos are leased to or from others.

Bobtail / non-trucking use: While a tractor runs without a trailer and not under dispatch (e.g., driving home), the carrier's policy excludes it; the owner-operator needs non-trucking-use (bobtail) liability to fill the gap.

Filings and Proof of Financial Responsibility

Interstate for-hire carriers must keep proof of insurance on file with the FMCSA, evidenced by Form BMC-91 or BMC-91X. Intrastate carriers file under their state's analog. When an insurer cancels a policy that carries an MCS-90 or BMC filing, it must give the regulator advance notice (commonly 35 days) before the financial-responsibility guarantee lapses, so the public is never suddenly exposed.

Distinguishing the Three Trucking Coverages

Exam questions frequently force you to separate three look-alike coverages. Keep them straight:

Cargo is NOT auto coverage. A load of produce that spoils because a reefer unit fails, or freight destroyed in an overturn, is paid under Motor Truck Cargo (an inland marine form), never under auto liability (care, custody, control) or auto physical damage (which covers the truck, not its load).

Scheduled vs. Reporting Cargo Forms

Motor truck cargo can be written on a scheduled limit per vehicle or, for larger operations, a reporting form where the carrier periodically reports values and pays premium on actual exposure. A released value or per-pound limitation in the bill of lading can cap what the carrier owes the shipper, which in turn shapes the cargo limit the carrier should buy. Refrigeration breakdown is usually an added peril, not automatic.