Risky Business
All my Owner Operators are insured because I have an MC number
Hi Everyone,
Small Motor Carriers continue to grow with the help of Independent Contractors (Owner Operators), which is wonderful. But there appears to be confusion on what it means to have an MC number regarding the 91X and MCS90.
An MC number gives the Motor Carrier the rights to operate as a For Hire Trucker. The corresponding BMC90 or 91X is the Certificate of Insurance that is the "Promise to the Public" of protection up to $750,000. The MCS90 is the "Filing" that the insurance company electronically sends to FMCSA.
The 91X/MCS90 is essentially a Surety Bond where the insurance company agrees to pay any final judgment recovered against the Motor Carrier for Public Liability resulting from negligence in the operation, maintenance or use of motor vehicles REGARDLESS of whether or not each Motor Vehicle is specifically described in the policy.
...This sounds great, so EVERYONE is insured regardless of whether they're on the Motor Carrier policy! Free Insurance!
No, I'm afraid it's not that simple.
The ghist of the lengthy paragraph below is that if the contracted Owner Operator's Insurance does not pay the full amount first, AND the Motor Carrier has not listed the Owner Operator on the Motor Carrier policy, then the Insurance Company will indeed keep it's promise to the public and pay the claim on that Motor Carrier's 91X/MCS90, but IT WILL THEN GO BACK AND SUE THE MOTOR CARRIER FOR THAT MONEY THEY PAID OUT.
...See below if you want the legal verbage on the forms:
"The Insured (Motor Carrier) agrees to reimburse the insurance company for any payment made by the company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in the endorsement...It is further understood and agreed that, upon failure of the company to pay any final judgment recovered against the insured as provided herein, the judgment creditor may maintain an action in any court of competent jurisdiction against the company to compel such payment."
So if the Motor Carrier has promised on his certs:
$1 Million Primary Commercial Auto Liability
$100,000 Broad Form Cargo
...then the Owner Operators also need:
$1 Million Primary Commercial Auto Liability
$100,000 Broad Form Cargo
Motor Carrier listed as Additional Insured
When this structure is not strictly followed, where the Owner Operator carries LESS insurance... then there is a gap.
The larger Motor Carrier who may broker a load to a smaller Motor Carrier need have no worries...turn in the claim...The 91X/MCS90 kicks in, the claim is paid on the smaller Motor Carrier's policy per their promise to FMCSA....and the larger Motor Carrier goes on their merry way.
...But the smaller Motor Carrier is essentially wiped out. They will be sued up one side and down the other for issuing certs that promised $1 Million/$100K ON ALL THEIR LOADS. Most importantly the INSURANCE COMPANY will sue the smaller Motor Carrier to recover their losses.
If the answer is, "Well then I'll set up again under another MC number," then think again, the new CSA2010 will make this almost impossible...the smaller Motor Carrier is out of business for good.
The simplist concept is this, If the Insurance Company has not collected premium for an exposure on an entity they insure, and they are forced to pay out on that exposure, they will come back and sue that entity to recover their losses.
Like most new opportunities, the New Independent Contractor Insurance Structure requires education. If anyone needs help in understanding or restructuring, please contact me...I'm here as your advocate in our Expediting Community.
Shelly Benisch, CIC w/ CIS [email protected] www.MyCISagent.com
330.864.1511