INSURANCE COVERAGE ISSUES, LIABILITY AND REGULATION
FROM THE PLAINTIFF’S PERSPECITVE
By: Joel T. Faxon and Michael A. Stratton
Stratton Faxon, New Haven, Connecticut
Motor carrier policies of insurance consist of state law controlled and federal law
mandated provisions. The basic business or commercial auto policy is governed by state
insurance law but the policy also contains mandated federal law provisions when the
carrier is shown to be an interstate motor carrier or is involved in the carriage of hazardous
materials that have the appropriate nexus with interstate commerce. The federal
provisions supplement the state law provisions of an insurance policy as a matter of
law.1 This chapter will address the significance of the motor carrier’s insurance coverage,
including the all important federal insurance considerations, regulations and endorsements
that effect the scope of the coverage involved in bodily injury, property damage and
environmental contamination claims.
Initially, when a crash involving a commercial vehicle is involved, the plaintiff’s
attorney must investigate the claim as he would any other claim, identifying the potential
tortfeasors and defendants. Considerations should be given to the coverage applicable to
the commercial truck, the uninsured or underinsured motorist coverage maintained by the
plaintiff or any other persons in the plaintiff’s household as well as any potential
coverage provided by the plaintiff’s employer in the event that the plaintiff is injured in
the course of his or her employment – including workers’ compensation coverage, if
Barbarula v. Canal Ins. Co., 353 F.Supp.2d 246, 252 (D.Conn. 2004)
(federally required endorsements are made part of the motor carrier’s insurance
policy as a matter of law).
appropriate. There should also be immediate communication with the motor carrier in
order to preserve all evidence that can be utilized in the prosecution of the case. The
readout from the vehicle data recorder “black box” contained in the tractor should be
requested so that changes in speed, braking, engine RPM, use of the jake brake and other
information can be collected.
The investigation of the claim should include all DOT filings by the defendant
motor carrier as well as obtaining the accident history of the motor carrier which is
available on the Federal Motor Carrier Administration (“FMCA”) website.2 The FMCA
was established in connection with the passage of the Motor Carrier Safety Improvement
Act of 19993 which was established to implement “programs to achieve continuous
safety improvements in the U.s. Highway system, intermodal connections and motor
The FMCA website provides a plethora of statistical information and safety
records on motor carriers that can be used to investigate all possible claims including
driver error, logbook violations, excess hours of service, vehicle safety deficiencies and the
like. In addition, the website contains information on Registration and Licensing, Rules &
Regulations, Safety & Security, Cross Border NAFTA rule, Facts, Research &
Technology and the general scope of the FMCA.
Once the preliminary investigation is complete and the medical condition of the
plaintiff is ascertained, attention must be turned to the available insurance and the
interaction of the state and federal law on the issues of coverage.
Under standard state mandatory insurance statutes automobile insurance policies
must provide minimum levels of coverage. For example, in Connecticut, as in many
states, the minimum coverage is $20,000. per claim/$40,000. aggregate.5 Given the
catastrophic injuries that can be inflicted in a trucking related accident however,6 the
federal government mandates that interstate motor carriers or those carriers moving
hazardous materials cannot operate unless they maintain federally mandated minimum
levels of insurance.7 The federal regulations applicable to interstate motor carriers
substantially increase the standard minimum state limits from between $750,000. and
$5,000,000. depending on the nature of the cargo hauled by the motor carrier.8 These
increased limits were the product of the evolutions of federal regulation of interstate
In 1954, Congress enacted 49 U.S.C. § 10927, to provide protection for the public
by ensuring that trucks engaged in interstate commerce maintained independent financial
responsibility by carrying proper insurance coverage.9 Pursuant to the statute, the
See Conn. Gen. Stat. § 14-112.
See Yale Daily News (January 11, 2005) (Sam Kahn - Staff Reporter)
(four Yale students killed and five injured in two vehicle accident involving a
jackknifed tractor trailer).
49 C.F.R. § 387.7.
49 C.F.R. § 387.9.
See Reliance Ins. Co. v. Royal Indemnity, No. 99 Civ. 10220(NRB),
2001 U.S. Dist. LEXIS 12901, at *13-14, 22, 28-29 (S.D.N.Y. Aug. 24, 2001).
Interstate Commerce Commission (“ICC”) promulgated regulations imposing financial
responsibility requirements on motor carriers. The financial responsibility requirement
covered matters such as the type of insurance, limits of insurance, and a series of
mandatory forms with which motor carriers were required to conform.10
The ICC regulations also mandated that a certified motor carrier insurance policy
contain an Endorsement for Motor Carrier Policies of Insurance for Automobile Bodily
Injury and Property Damage. This special endorsement was commonly referred to as the
BMC 90 Endorsement.11 In addition to the BMC 90 ICC regulations, motor vehicles with
a gross weight of 10,000 pounds or greater were also subject to the Department of
Transportation’s (“DOT”) regulatory jurisdiction.12 Like its ICC counterpart, the DOT
regulations prohibited a motor carrier from transporting property unless it had met certain
financial responsibility requirements.13
Pursuant to Section 30 of the Federal Motor Carrier Act of 1980 (“FMCA”), the
DOT established regulations creating a minimum level of insurance for vehicles over
10,000 pounds. 14 The purpose of the FMCA, and the regulations promulgated
pursuant thereto, especially the MCS-90 endorsment, were designed to stem the
unregulated use of vehicles in interstate commerce, which threatened public
safety.15 Under the FMCA and DOT regulations, insurance policies were required to
See 49 C.F.R. § 1043.1(a)(1).
49 C.F.R. § 1043.7(a)(3).
See 49 C.F.R. § 387.3(c)(1).
49 C.F.R. §§ 387.7 & 387.9.
See 49 C.F.R. § 387.9(1).
Barbarula v. Canal Ins. Co., 353 F.Supp.2d 246, 252 (D.Conn. 2004).
have an MCS-90 endorsement providing coverage for “public liability”.16 The MCS-90
endorsement was designed to satisfy the ICC and the DOT regulations simultaneously,
obviating the need for obtaining the BMC 90 Endorsement once the MCS-90
Endorsement had been acquired.17 "A motor carrier of property has a duty under
federal law to guaranty its financial responsibility for injuries to the public.
Purchasing coverage under an MCS-90 endorsement is one way for a carrier to
fulfill this duty.”18
Under the FMCA, sections 29 and 30, Public Law No 96-296, 94
Stat. 793, July 1, 1980, commercial motor carriers engaged in interstate
commerce were required to register with the DOT and comply with
minimum financial responsibility requirements established by the DOT.
The DOT next required a specific form which "must be included in any
insurance policy to satisfy the registration and financial responsibility
requirements." 49 C.F.R. §§ 387.7(a) & 387.9. The form devised by the
DOT was the MCS-90 endorsement. Such endorsement is usually
referred to as an "ICC endorsement" because its form was adopted
verbatim from the DOT MCS-90, and was prescribed under statutes
delegating some of the DOT enforcement provisions to the ICC. The
endorsement, however, is entitled "Endorsement for Motor Carrier Policies
of Insurance for Public Liability Under Sections 29 and 30 of the Motor
Carrier Act of 1980." As noted above, this Act required DOT compliance,
later delegated to the ICC, which adopted the MCS-90 verbatim, as
created and mandated by the DOT. The ICC's authority to regulate motor
carriers was transferred to the Surface Transportation Board ("STB"), a
division of the DOT, effective January, 1996. See 49 U.S.C. § 13501, et
seq. The original DOT/ICC regulations, including the requirement of the
MCS-90, remained in effect until new regulations were promulgated, which
regulations were not yet promulgated at the time of this accident; thus, the
MCS-90 remained subject to the DOT jurisdiction.19
49 C.F.R. § 387.15.
See Empire Fire and Marine v. Liberty Mutual Insurance Company, 699
A.2d 482, 491 (Md. App. 1997) (describing the historical background and surveys
the regulatory history).
Barbarula v. Canal Ins. Co., 353 F.Supp.2d 246, 253 (D.Conn. 2004).
Id. at 254.
As stated in the Barbarula decision, the regulatory history shows that motor
carriers of property were historically regulated both by the Interstate Commerce
Commission and the DOT. As such, the ICC and the DOT had concurrent regulatory
jurisdiction over vehicles weighing 10,000 pounds or more. This dynamic changed on
January 1, 1996 when the ICC ceased operations. The ICC Termination Act of 1995
(“Termination Act”) abolished the ICC and established the STB within the Department
of Transportation.20 Under the Termination Act, the ICC ceased existence on January 1,
Even though the ICC was terminated, all of its rules and regulations remained in
place. Section 204 of the Termination Act is the “savings provision” mandating that:
all orders, determinations, rules and regulations: (1) that have been issued, made,
granted, or allowed to become effective by the Interstate Commerce Commission
… in the performance of any function that is transferred by the [Termination]
Act or amendments made by this [Termination] Act; and (2) that are in effect on
the effective date of the transfer… shall continue in effect, according to their terms
until modified, terminated, superseded, set aside, or revoked in accordance with
law by the Board, any authorized official, a court of competent jurisdiction, or
operation of law.
Section 205 of the Act states that any reference to the ICC in federal statutes,
rules, or regulations is now deemed to refer to the STB. Public notice was given in the
Federal Register,21 on March 25, 1996, that the Termination Act preserved all effective
ICC regulations, rules, and decisions until the Secretary of the STB finds modification of
these documents warranted, thereby preserving the status quo in the interim.
P.L. 104-88, 109 Stat. 803, December, 29 1995; see 49 U.S.C. §
61 Fed. Reg. 14372 (March 28, 1996); 61 Fed. Reg. 43816 (April 1,
Following the Termination Act of 1995, the "DOT's financial responsibility and
insurance regulations mandating the use of the form MCS-90 endorsement are in effect
and cover all motor carriers with a GVWR of 10,000 pounds or more."22 Thus, it was
common knowledge in the industry and publicly reported that the ICC did not simply
vanish but rather the savings provision kept in place all of the ICC rules and regulations
so that uniformity and insurance protections would remain in place.
Further, the DOT and Federal Highway Administration (“FHWA”) commented
on the Termination Act and its effect in a document entitled "Advance Notice of
Proposed Rulemaking". In that publication, the DOT and FHWA recount the history of
congressional action and federal regulation with regard to mandatory insurance provisions:
"As a result of the Act, Congress terminated the ICC and transferred to the FHWA the
functions concerning the ICC's remaining licensing and financial responsibility
requirements. But the Act converted the former operating authority/permit system of
the ICC into a registration/licensing system and essentially adopted the parameters of the
ICC's then current insurance filing and monitoring system into this registration system . . .
. The savings provisions in Section 204 of the Act preserved all effective ICC
regulations, rules and decisions until the Secretary finds modification of these documents
warranted, thereby preserving the status quo for the interim. The FHWA gave public
notice of the continued effectiveness of these ICC documents in 61 F.R. 14372 (April 1,
1996)." Thus, when the ICC became extinct, the STB and the FHWA commenced
Nissenberg, The Law of Commercial Trucking at 733 (Lexis Law
administration of the minimum financial responsibility requirements applicable to motor
The limits of liability under the Motor Carrier Act of 1980 vary depending
on the nature of the cargo being hauled by the trucker. For-hire motor carriers
engaged in interstate or foreign commerce haulage of non-hazardous goods with
a gross vehicle weight in excess of 10,000 pounds must provide insurance of at
least $750,000 for public liability for bodily injury, property damages or
environmental damages.23 For-hire and Private carriers engaged in interstate,
intrastate or foreign carriage of hazardous substances, as defined in 49 CFR
171.8, must insure for a minimum of $5,000,000. for public liability.24 Interstate
or intrastate bulk haulers of oil must insure for a minimum of $1,000,000.25
These increased limits provide substantially greater benefits to a victim of a
trucker’s negligence but the limits have not been raised since 1985,26 thus, given
the changes within the last 20 years, raising the minimum limits to reflect inflation
and the increase in the scope of liability should be considered.
The MCS-90 endorsement is required to be attached to any liability policy issued
on behalf of for-hire motor carriers operating motor vehicles transporting property in
interstate commerce.27 49 U.S.C. § 13102(12), defines a for hire motor carrier as
an entity providing trucking services for compensation. The text of the MCS-90
See 49 C.F.R. § 387.9.
See 49 C.F.R. §§ 387.3 & 387.7.
must be given a liberal, remedial construction.28 “The MCS-90 endorsement
provides broader coverage than the insurance policy to which it is attached and .
. . is interpreted under federal, not state, law.”29 Further, the courts must apply
“the literal language of the endorsement and the underlying policy to determine
The MCS-90 provides coverage for “public liability” under circumstances
where the underlying policy is inapplicable. Examples of the inapplicability
include circumstances where the tortfeasor/driver was not a listed person on the
insurance policy or that the vehicle being operated by the motor carrier was not
listed on the policy of insurance.31 “Public liability” includes personal injury,
death, property damage or environmental restoration – including pollution
damage sustained by a member of the public. Many insurance policies contain
pollution exclusions, however, the MCS-90 requires coverage for these damages
even if the insurance policy to which the endorsement attaches specifically
excludes this coverage.32
When the MCS-90 endorsement is the basis for coverage, federal law
compels the insurer to make payment while permitting direct action against the
motor carrier for reimbursement of the monies paid.33 The MCS-90 does not,
See Pierre v. Providence Washington Ins. Co., 784 N.E.2d 52, 55 (N.Y.
2002) (“remedial legislation” that must be “interpreted broadly”).
Barbarula v. Canal Ins. Co., 353 F.Supp.2d 246, 252 (D.Conn. 2004).
Id. at 57 (citing Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc.,
930 F.2d 258 (2d Cir. 1991)
See, e.g., Lynch v. Yob, 95 Ohio St. 3d. 441, 768 N.E.2d. 1158 (Ohio
49 C.F.R. § 387.15, illus. I.
49 C.F.R. § 387.5.
however, obligate the insurer to provide a defense to the motor carrier if
coverage under the policy is invalidated.34 It is obviously in the insurer’s best
interest to provide a defense in order to minimize its exposure under the MCS-90
since the insurer is ultimately responsible for paying the judgment. For example,
the New York Court of Appeals ruled in Pierre v. Providence Washington Ins.
Co.,35 that the MCS-90 endorsement obligated the insurer to satisfy a default
judgment entered against the motor carrier who did not appear and defend a
personal injury case. Thus, the insurer should take seriously and defend any
claim that could arguably be within the MCS-90 endorsement since liability for
the underlying judgment as well as bad faith exposure could result.
Similarly, the MCS-90 will require payment to the injured victim where the
judgment is entered against the tortfeasor who is an authorized operator of the
vehicle even if the defendant in the suit is not the insured motor carrier.36 Thus,
the endorsement has been broadly interpreted to apply virtually any time there is
a policy of insurance with the proper endorsement that could be construed to
apply to the accident in question.
Accordingly, if the MCS-90 is in force, it creates liability under the policy
on behalf of the insurance company to the injured victim; and only that portion of
the policy which would defeat the injured victim’s claim is construed as being
Id.; Harco v. Bobac Trucking, Inc., 107 F.3d 733 (9th Cir. 1997).
784 N.E.2d 52, 55 (N.Y. 2002).
John Deere Ins. Co. v. Neuva, 229 F.3d 853 (9th Cir. 2000), cert.
denied, 534 U.S. 1127 (2002); Adams v. Royal Indemnity Co., 99 F.3d 964 (10th
eliminated from the policy.37 Thus, under the literal language of the MCS-90, the
terms of the policy remain in “full force and effect” until effectively cancelled.38
The endorsement is “an amendment to the insurance policy” and therefore the
MCS-90 is not a stand-alone document, but consistent with state law principles
that an endorsement is an addition to the policy and supersedes any inconsistent
provisions, it is integrated into the underlying policy of insurance.39
The mandatory insurance regulations “makes clear that the MCS-90
endorsement operates to protect the public but does not alter the relationship
between the insured and the insurer as otherwise provided in the policy.”40
Thus, the terms of the policy remain in effect unless and until the MSC-90
endorsement is effectively cancelled according to the terms mandated by the
Federal Motor Carrier Act.
“[C]ancellation of a policy with an MSC-90 endorsement requires the
insurer to provide 30 days notice, commencing on receipt of the notice by the
agency, to the Interstate Commerce Commission (ICC) [or its successor federal
agency] if the insured is subject to its jurisdiction.”41 Moreover, to properly cancel
See T.H.E. Insurance Co. v. Larsen Intermodal Services, 242 F.3d 667,
673 (5th Cir. 2001) (the endorsement “read[s] out only those clauses in the policy
that would limit the ability of a third party victim to recover for his loss.”); Liberty
Mutual Ins. Co. v. States, 940 F.2d 1179 (8th Cir. 1991)..
49 C.F.R. § 387.15; T.H.E. Ins. Co., 242 F.3d at 673; Barbarula, 353
F.Supp.2d at 255-56.
See 49 C.F.R. § 387, et seq.; Diemling, et al., The MCS-90 Book, at 54
(2004) (“the endorsement is not stand alone and should not be viewed
independent of the policy to which it is attached.”).
Canal Ins. Co. v. Distribution Services, 320 F.3d 488, 493 (4th Cir.
Howard v. Guarantee National Insurance Co., 989 P.2d 896, 899 (N.M.
Ct. App. 1999) (citing 49 C.F.R. § 387.15, illus. I).
the endorsement the insurance carrier must give 35 days notice to the insured
motor carrier.42 Unless the insurer complies to the letter with the cancellation
provisions the endorsement and policy are not cancelled and the insurer is liable
to the injured victim – even if the insurer complies with the less generous
cancellation provisions within the body of the policy.43
Another important consideration in determining whether the MCS-90
endorsement is required or activated is whether the motor carrier was engaged in
interstate commerce. Even if the particular trip on which the crash occurs is
intrastate in nature the MCS-90 coverage may still be mandated if the carrier is
engaged in interstate commerce even though the trip in question would not
The Second Circuit has ruled that the MCS-90 endorsement even applies
to protect injured victims in vicarious liability situations to policies covering leased
trailers when the lessor/insured is not the tortfeasor/operator of the power unit.45
In Integral Ins. Co., the owner-operator did not have an ICC license to convey
49 C.F.R. § 387.15, illus. I.
See Barbarula, 353 F.Supp.2d at 254-56; The MCS-90 Book, supra, at
See Progressive Casualty Co. v. M. Hoover, 809 A.2d 353 (Pa. 2002)
(while it was argued that the vehicle was driven solely in intrastate commerce
factual issues regarding the practices of the motor carrier required application of
the MCS-90 endorsement); see also Reliance Ins. Co. v. Royal Indemnity, No. 99
Civ. 10220(NRB), 2001 U.S. Dist. LEXIS 12901, at *13-14, 22, 28-29 (S.D.N.Y.
Aug. 24, 2001) (the provisions of law apply whether or not the unscrupulous
motor carrier is registered with the ICC since “the Interstate Commerce Act is a
highly remedial statute and its terms are broadly comprehensive enough to bring
within them all of those who, no matter what form they use, are in substance
engaged in the business of transportation of property on the public highways for
See Integral Insurance Co. v. Lawrence Fulbright Trucking, Inc., 930
F.2d 258 (2d Cir. 1991).
cargo interstate. The agent did have a license. To circumvent ICC rules, the
owner-operator leased the tractor to the agent but the trailer lessor maintained
title, license and registration. The lessor of the trailer maintained coverage on his
other vehicles but the trailer was not scheduled. The policy contained a MCS-90
endorsement and the Second Circuit held that since there was a valid MCS-90
endorsement on the vehicle, the insurer must respond even though the insured
was not a torfeasor and was only liable by virtue of his ownership of the trailer.
This case certainly exemplifies the breadth of coverage provided by the MCS-90
endorsement. The MCS-90 endorsement has been applied almost universally to
provide “public liability” on the part of the insurer to victims of motor carrier
Vicarious liability on the part of the motor carrier exists by virtue of federal
regulation for “logo liability”.46 “Logo liability” is a species of vicarious liability by
which a motor carrier is liable as a matter of law for injuries caused by a leased
truck's negligence, where that truck bears the motor carrier's ICC logo. It was at
Congress' specific direction that the ICC promulgated its regulations governing
leasing arrangement known as owner/operator agreements where ICC, now STB
“authorized carriers”47 have long leased the equipment and services of
independent owner-operators not regulated by the ICC. However, in the past,
unscrupulous ICC-licensed carriers would lease unlicensed vehicles in an effort
Reliance Ins. Co. v. Royal Indemnity, No. 99 Civ. 10220(NRB), 2001
U.S. Dist. LEXIS 12901, at *22 (S.D.N.Y. Aug. 24, 2001).
An "authorized carrier" is "[a] person or persons authorized to engage
in the transportation of property as a common or contract carrier under the
provisions of 49 U.S.C. 10921, 10922, 10923, 10928, 10931, or 10932." 49
C.F.R. § 1057.2(a).
to avoid safety regulations governing drivers and equipment,48 causing confusion
about liability for accidents caused by these vehicles.49. In response, Congress
amended the Interstate Commerce Act to permit the ICC to prescribe regulations
broadly governing ICC authorized carriers' use of leased equipment.50
In response to Congress' mandate, the ICC promulgated regulations
requiring that every trucking lease entered into by an ICC-licensed carrier contain
a provision stating that the authorized carrier maintain “exclusive possession,
control, and use of the equipment for the duration of the lease,” and “assume
complete responsibility for the operation of the equipment for the duration of the
lease.”51 In light of this language, courts have ruled that “the statute and
regulatory pattern clearly eliminates the independent contractor concept from
such lease arrangements and . . . any language to the contrary in the lease
agreement would be violative of the spirit and letter of the federal regulations and
Authority holds that 49 C.F.R. § 376.12(c) creates a carrier's liability for a
American Trucking Ass'ns v. United States, 344 U.S. 298, 304-05
(1953); Empire Fire & Marine Ins. Co. v. Guaranty Nat'l Ins. Co., 868 F.2d 357,
362 (10th Cir. 1989).
Mellon Nat'l Bank & Trust Co. v. Sophie Lines, Inc., 289 F.2d 473, 477
(3d Cir. 1961).
See 49 U.S.C. § 304(e) (1956), revised, 49 U.S.C. § 11107; see also 49
U.S.C. § 10927; see generally Prestige Cas. Co. v. Michigan Mut. Ins. Co., 99
F.3d 1340, 1342-43 (6th Cir. 1996); Alford v. Major, 470 F.2d 132, 135 (7th Cir.
1972) (“the intent (of the regulations) was to make sure that licensed carriers
would be responsible in fact, as well as in law, for the maintenance of leased
equipment and the supervision of borrowed drivers.”).
49 C.F.R. § 376.12(c).
Proctor v. Colonial Refrigerated Transp., Inc., 494 F.2d 89, 92 (4th Cir.
leased truck's negligence as a matter of law.53 This logo liability applies
regardless of whether the accident occurred while the trucker was engaged
within the scope of business with the carrier, or even whether the carrier was
aware of the trip.54 Thus, the presence of a motor carrier’s logo on a truck at the
time of an accident makes the carrier vicariously liable as a matter of law for the
negligence of the owner/operator. The acquiescence or lack thereof by the
motor carrier in the particular trip is of no moment.55
Thus, the carrier has liability regardless of whether the operator is within
the scope of his duties or on a personal trip when injury is inflicted. Therefore it
is important that the exact identity of the motor carrier (or the name on the logo)
be confirmed so as to insure that proper defendants have been identified.
See, e.g., Planet Ins. Co. v. Transport Indemnity Co., 823 F.2d 285,
288 (9th Cir. 1987); Johnson v. S.O.S. Transport, Inc., 926 F.2d 516, 521 (6th
Cir. 1991); Rodriguez v. Ager, 705 F.2d 1229, 1237 (10th Cir. 1983); Grinnell
Mut. Reinsurance Co. v. Empire Fire & Marine Ins. Co., 722 F.2d 1400, 1404 (8th
Cir. 1983), cert. denied, 466 U.S. 951 (1984); Simmons v. King, 478 F.2d 857,
867 (5th Cir. 1973).
Carolina Cas. Ins. Co. v. Insurance Co. of North America, 595 F.2d 128
(3rd Cir. 1979); Cosmopolitan Mutual Insurance Company v. White, 336 F.Supp.
92, 99 (D.Del.1972); Rediehs Express, Inc. v. Maple, 491 N.E.2d 1006 (Ind. Ct.
of App. 1986); Kreider Truck Serv. Inc. v. Augustine, 394 N.E.2d 1179 (Ill. 1979).
Reliance Ins. Co. v. Royal Indemnity, No. 99 Civ. 10220(NRB), 2001
U.S. Dist. LEXIS 12901, at *25 (S.D.N.Y. Aug. 24, 2001).