SPECIFICALLY SPEAKING | TRANSPORTATION
Surety Agreement or Insurance?
MCS-90 Endorsement to a Trucking Policy
By Patricia O. alvarez, Heather Drew Maher and Marc J. Yellin
The Motor Carrier Act of 1980, mandates that for a motor carrier to btain interstate author- itytooperate, thecarrier
must comply with federal regulations,
maintain minimum levels of financial
responsibility, and its insurers must
provide certificates of insurance to the
appropriate authorities.
Trucking policies must contain an
MCS-90 Endorsement, which is a surety agreement attached to the policy.
The MCS-90 Endorsement serves
to protect the public in the event the
trucking policy does not provide coverage by ensuring that a motor carrier has
independent financial responsibility to
pay for losses sustained by a member
of the public arising out of its operations, thus enabling the collectability of
a judgment against the motor carrier.
The MCS-90 Endorsement must be
in the form prescribed by the Federal
Motor Carrier Safety Administration
(FMCSA). Language key to the analysis
of the MCS-90 Endorsement is found
at 49 C.F.R. § 387.15.
The MCS-90 Endorsement does not
provide insurance coverage and does
not extend coverage under the policy in favor of the insured. The purpose of the MCS-90 Endorsement
is to protect the public, not to create
a windfall to the insured. The MCS-
90 Endorsement does not relieve the
motor carrier or its liability insurers
(assuming the respective insurance
policies extend to the accident at issue)
of their duty to satisfy an injured party’s judgment against the carrier.
Trigger Point
The Endorsement’s application is triggered when the policy to which it is
attached does not provide coverage,
and either there is no other insurance available to satisfy the judgment
against the motor carrier or the motor
carrier’s insurance coverage is insufficient to satisfy the federally-prescribed
minimum levels of financial responsibility. Courts have also held that if the
carrier’s other insurance coverage is
sufficient to satisfy the federally man-
The purpose of the
MCS-90 Endorsement
is to protect the public,
not to create a windfall
to the insured.
dated minimums applicable for the
MCS-90, the Endorsement is not triggered and does not apply.
Who Is the Insured?
The MCS-90 Endorsement refers only
to the insured and does not mention
motor carrier. While the Endorsement
does not define “insured,” the term is
defined in Part 387 as “the motor carrier named in the policy of insurance,
surety bond, endorsement, or notice
of cancellation, and also the fiduciary
of such motor carrier.”
Right of Reimbursement
The MCS-90 Endorsement recognizes
an insurer’s right of reimbursement:
“The insured agrees to reimburse the
company … for any payment that the
company would not have been obli-
gated to make under the provisions
of the policy except for the agreement
contained in this endorsement.” It
further states that, “all terms, condi-
tions, and limitations in the policy to
which the endorsement is attached
shall remain in full force and effect as
binding between the insured and the
company [insurer].” 49 C.F.R. § 387.15
(Illustration I).
Duty to Defend
Federal courts consistently hold that
the MCS-90 Endorsement does not
create a duty to defend claims not
covered by the policy but only by
the endorsement. If there is a duty to
defend, it must come from the insurance policy itself, rather than the
endorsement. The MCS-90 endorsement relates only to a duty to indemnify, and not to a duty to defend.
Interstate Transportation Only
The MCS-90 Endorsement only applies
to interstate transportation by entities
receiving payment to haul others’ property. When a motor carrier’s operations
are limited to intrastate hauling, the state
in which it operates usually requires
compliance with its minimum financial
responsibility requirements and specific
state statutes must be examined. There is
a different set of laws and endorsements,
such as Form E and Form F, applicable
to intrastate transportation.
Patricia O. Alvarez is a partner with the
Alvarez Law Firm in Laredo and San
Antonio. Heather Drew Maher, CLMP, is Vice
President of Risk Management and Litigation
Counsel with Borden Dairy Company. Marc J.
Yellin is a partner with Deutsch, Kerrigan &
Stiles, L.L.P. in New Orleans.
