The “Endorsement for Motor Carrier Policies of Insurance for Public Liability”—thankfully shortened to “MCS-90”—is something of a mysterious figure in transportation litigation. The MCS-90 has its roots in the minimum insurance requirements set by the Federal Motor Carrier Safety Administration. The minimum levels of insurance range from $750,000 to $5,000,000 depending on what is transported by the carrier. Carriers must maintain their respective minimum insurance in one of three ways: insurance under the MCS-90, a surety bond under MCS-82, or, under special circumstances, self-insured retention.
The MCS-90 requires the insurer to pay any final judgment against an insured resulting from negligence in the operation, maintenance, or use of a motor vehicle. This framework is a direct reflection of the purpose of the MCS-90 which is to protect the public from uncompensated losses by essentially creating coverage where coverage otherwise would not exist.
This purpose has significantly shaped the interpretation and application of the MCS-90.
First, while the MCS-90 is an endorsement to the insurance policy, it need not be attached to the policy. Rather, the Court can impute the terms of the MCS-90 into the policy as a matter of law.
Second, as noted above, the insurer must pay a final judgment resulting from the negligent operation, maintenance, or use of a motor vehicle. However, the motor vehicle at issue does not need to be named or covered by the insurance policy. This application stems from concerns over the use of interchanged, leased, or substitute vehicles, which, whether through inadvertence of the lessor or lessee, were uninsured. Often coverage under the insurance policy is denied due to the failure to list the involved motor vehicle in the insurance policy.
Third, Courts have expanded coverage under the MCS-90 to apply to persons or companies other than the named insured. The Federal Motor Carrier Safety Administration issued regulatory guidance rolling back these decisions. The guidance clarified that, in the MCS-90 language, “insured” means the motor carrier named in the policy of insurance. The MCS-90 is not intended to satisfy judgments against persons or entities other than the insured.
The MCS-90 is not intended to create a windfall to the motor carrier. To that end, the MCS-90 does not require the insurer to defend the motor carrier. However, the MCS-90 also does not negate any duty of the insurer to defend the motor carrier under the terms of the policy. Stated another way, the MCS-90 does not create a duty for the insurer to defend the motor carrier, but the duty may exist under another policy term.
Additionally, the insurer may recover, from the insured, any payments made by the insurer which the insurer “would not have been obligated to make under the provisions of the policy except for the agreement” in the MCS-90. The right to reimbursement extends to both payments made for final judgments and settlements.
In a perfect world, the MCS-90 would remain a mystery. However, it serves as a social safety net protecting the public from uncompensated losses arising from the negligent operation, maintenance, and use of a motor vehicle, as well as providing recourse for insurers to recover payments not otherwise owed. Understanding the origins, purpose, and application of the MCS-90 will equip motor carriers and their insurers to successfully manage uninsured lawsuits.