MCS90/91X - Protection Might Not Be What Some People Think
Today I thought I'd share some information from Guest Blogger Tommy Ruke, "The King Pin Leading Expert in Truck Insurance". Tommy is essentially the father of truck insurance. He has educated the majority of truck insurance specialists in the country for their (CIC) Certified Insurance Counselor designations through The National Alliance or (TRS) Transportation Risk Specialist designations through (MCIEF) the Motor Carrier Insurance Education Foundation. Tommy also serves as professional advisor to law firms requiring expert testimony regarding truck insurance claims (and has some great stories). This is Tommy's current Blog and White Paper passages written to professional truck insurance agents:
Rob Moseley of Smith Moore Leatherwood and I were doing a program the other day and some of the participants were brokers. In deciding which motor carrier they would arrange to haul a load on their customer's behalf, they said that they "relied" on the federal 91X filing and the MCS90 that must be attached to the policy issued to the motor carrier who was issued the filing.
Their thought is, "After all, it pays even if no coverage" (which is absolutely wrong for protection of the broker and shipper). Shortly thereafter, an agent called and said one of their insureds could not haul a load for a broker because the broker required $1,000,000 and the Licensing & Insurance web page only reflected $750,000.
The broker that relies on the 91X filing and MCS90 attached to the policy with the motor carrier they arranged to haul the load to provide them and their customer's protection and do not understand how these federal mandated financial responsibility requirements react to a claim.
Hopefully, readers of this blog understand the proof of financial responsibility only protects the damaged public if the insured's insurance policy does not pay the claim and leave the motor carrier subject to subrogation.
The proof of financial responsibility does not provide coverage to anyone including the motor carrier who is the insured or any other additional insured.
The broker or shipper should rely on the COI sent to them by the motor carrier's agent.
They do need to be aware that there are some agents that might not properly reflect coverage and sometimes send a COI they make-up, so the broker should take steps to verify the information on the COI.
The bottom line is the COI sent by the agent is better proof of protection to the broker or shipper than relying on the federal website's reflection of the 91X filing.
You all should know that the auto liability policies that are issued to the motor carrier address the customer's required coverage. The policy is primary, the customer is an additional insured, the insurance carrier cannot seek contribution and the insured is allowed to waive subrogation as long as done before the accident. Without any endorsements, these provisions are within the standard ISO Auto Liability policy.
The broker needs to make sure the auto picking up the load is a covered auto in policy so a schedule of covered autos should be reflected on the COI if "Any Auto" is not provided.
When there IS coverage in the policy of the motor carrier that hauled the load, its insurance carrier would address the suit and provide defense to the broker of the load and the customer.
When there is NO coverage and the MCS90/91X comes into the case, the claim is handled a different way. Once coverage is properly denied, which is in most cases because the motor carrier used an auto that was not a covered auto on the policy, the MCS90-91X does NOT obligate the insurance carrier to provide ANY defense and is only triggered when there is a judgement aginst the motor carrier who is named on the MCS90-91X. This is when the insurance carrier would have to pay the judgement.
The problem is that the MCS90/91X would not provide defense for the broker of the load or their customer. They could have to provide their own defense. If the case goes to judgment, the judgement would be against all entities named in the suit. But the MCS90/91X would ONLY obligate the insurance company to address the judgement against the motor carrier and not any others.
Depending on how the case was handled, the broker that arranged the haul and customer would have to defend themselves and in all likelihood pay part if not all of the judgment – Depends on how the judgement was allocated. BOTTOM LINE – The MCS90/91X only protects the public that the motor carrier damaged. There is no obligation for defense, nor does any other judgement get paid EXCEPT the judgement against the motor carrier -- To be clear, not any other entity, driver, broker, arranger or customer.
Shelly here...Tommy and Attorney Rob Mosely were recent speakers at the T.E.A.N.A. conference and addressed some of these issues at that venue. Some of this stuff can be tough to follow...if anyone out there has questions please feel free to contact me at 330.864.1511 or [email protected].
Shelly Benisch, CIC, TRS
Commercial Insurance Solutions (CIS)