FEDERAL MOTOR CARRIER SAFETY ADMINISTRATION (FMCSA) MOTOR CARRIER REQUIREMENTS AND ENDORSEMENTS

(October 2022)

INTRODUCTION

Individuals and businesses that operate trucks and buses that transport cargo or passengers are heavily regulated. Some of these regulations have a direct impact on liability insurance because of financial responsibility requirements. The Department of Transportation (DOT), Federal Motor Carrier Safety Administration (FMCSA), headquartered in Washington, D.C, issues these regulations. Liability coverage or surety bonds may be used to satisfy financial responsibility requirements.

Note: State requirements apply in addition to federal requirements. This analysis is directed to only federal requirements.

FEDERAL REGULATIONS

The Motor Carrier Act Of 1980 regulates motor carriers that transport property. The Bus Regulatory Reform Act Of 1982 regulates motor carriers that transport passengers. Both have been revised and amended since being introduced, and a complete description of the rules and regulations of each are available on the DOT Website.

Motor carriers subject to the regulations include the following:

• Individuals and businesses for hire that transport property across state lines or to foreign countries on trucks having a Gross Vehicle Weight (GVW) that exceeds 10,000 pounds
• Trucks that transport hazardous material anywhere, regardless of GVW
• Any motor vehicle for hire that transports passengers across state lines or to foreign countries. However, the regulations do not apply to buses used for school transport, taxicabs transporting fewer than seven passengers, vehicles transporting 16 or fewer passengers on a single daily route to and from work or buses used for school extracurricular activities.

Motor Carrier Act Insurance Requirements

MCS–90, Endorsement for Motor Carrier Policies of Insurance for Public Liability under Sections 29 and 30 of the Motor Carrier Act of 1980 must be attached to the applicable commercial auto coverage. The federal government developed it and does not allow it to be modified. Because it is not specific to a particular coverage form or policy, it can also be added to any commercial auto liability or umbrella liability coverage form or policy.

Related Court Case: Motor Carrier’s MCS-90 Endorsement’s Interstate Coverage Applied to Intrastate Trip

There are four classifications of financial responsibility depending on the commodity being transported and the type of carriage.

• Transportation of non-hazardous property by vehicles for hire with GVW that exceeds 10,000 pounds in interstate or foreign commerce requires a $750,000 minimum limit of insurance.
• All carriers that transport hazardous substances using cargo tanks or portable tanks, or hopper-type vehicles with a capacity that exceeds 3,500 water gallons, Class A or Class B explosives in bulk, poison gas, liquefied compressed gas or compressed gas, or that transport highway route-controlled quantity radioactive materials require a $5,000,000 minimum limit of insurance.

Related Court Case: Motor Carrier Safety Act Provided an Implied Cause of Action Against Truck Owner

• All carriers in interstate or foreign commerce in any quantity, or in intrastate commerce in bulk, that transport oil, hazardous waste, hazardous materials, and hazardous substances not specifically mentioned in class 2 or class 4 in vehicles with GVW that exceeds 10,000 pounds requires a $1,000,000 minimum limit of insurance.
• All for-hire and private vehicles with a GVW of less than 10,000 pounds in interstate or foreign commerce that transport any quantity of Class A or B explosives, any quantity of poison gas, or highway route-controlled quantity radioactive materials require a $5,000,000 minimum limit of insurance.

Bus Regulatory Reform Act Insurance Requirements

The Bus Reform Act Of 1982 mandates minimum liability limits of insurance for certain vehicles used for public transportation of people. The limit required depends on the passenger capacity of the transporting vehicle. MCS–90B, Endorsement For Motor Carrier Policies Of Insurance For Public Liability Under Section 18 Of The Bus Regulatory Reform Act Of 1982 must be attached to the applicable commercial auto coverage form or policy covering vehicles for hire that transport passengers. In addition to the four classifications of financial responsibility depending on the commodity being transported and the type of carriage indicated on MCS–90, the following limits also apply:

• Any vehicle that seats 15 or fewer passengers requires a $1,500,000 minimum limit of insurance.
• Any vehicle that seats 16 or more passengers requires a $5,000,000 minimum limit of insurance.

Main Features of Endorsements MCS–90 and MCS–90B

Both endorsements amend the coverage form or policy to comply with the federal regulations that apply. They are identical except for the section on limits for vehicles that transport passengers and can be reviewed as one. They are very broad and apply to all of the named insured's owned vehicles, whether listed or not. They obligate the insurance company to pay losses that the coverage form normally excludes, but they also obligate the named insured to reimburse the company for such payments made. The key element is protecting innocent third parties. The injured party is made financially whole after a loss, and the named insured, and the insurance company works out the details.

Both insure against bodily injury and property damage, but injuries to employees and damage to cargo are excluded. Both may provide coverage on a primary or excess basis. If the coverage is primary, there is a maximum per-accident limit. If the coverage is excess, both the maximum limit and the underlying limit that must be exceeded before coverage is triggered are indicated. The named insured must have a combination of primary and excess limits that meets or exceeds the required minimums.

Example: Ernie's Explosives Express purchases primary coverage from the ABC Insurance Company and excess coverage from the XYZ Insurance Company. Each company's policy has MCS–90 attached to it. ABC's coverage form states, "This insurance is primary, and the company shall not be liable for amounts in excess of $1,000,000 for each accident." XYZ's coverage form states, "This insurance is excess, and the company shall not be liable for amounts in excess of $4,000,000 in excess of the underlying limit of $1,000,000 for each accident."

This endorsement can only be cancelled by providing 35 days notice of cancellation to both the named insured and the federal government.

Compliance Notification

An individual or business subject to either Act must notify the government that it complies with the financial responsibility requirement that applies to its situation. BMC 91 or BMC 91X–Certificate of Insurance must be issued and filed with:

Federal Motor Carrier Safety Administration (FMCSA)
Office of Registration and Safety Information (MC-RS)
1200 New Jersey Avenue SE W63-105
Washington, DC 20590

Note: BMC 91 or BMC 91X are continuous and do not expire. If a policy is cancelled, BMC 35–Notice of Cancellation Motor Carrier Policies of Insurance (under 49 U.S.C. 13906) must be filed at least 30 days prior to the cancellation or nonrenewal.

An insurance company that fails to cancel the certificates creates a substantial, ongoing exposure in the form of a lawsuit filed many years after it thought its obligation to provide coverage ended.