I am forwarding this out to help educate brokers, 3PLs, direct shippers and my carrier's customers on a major industry update. This is very serious and applies to what is commonly referred to as the multi carrier model:
In the event of a terrible liability accident… the belief was always that it would be ugly and drawn out but that the MCS 90 would force the carrier insurance policy to pay out to cover a liability accident. Recent court case law has now struck down that false belief and there is potentially NO COVERAGE or PROTECTION for the broker, 3PL and actual shipper. Which then opens up the whole ugly world of NEGLIGENT HIRING exposure.
As Published 8/4/2016 by TEANA (The Expedite Association of North America).
Of the many topics that were covered at the TEANA meeting in Nashville there is a hot topic that the board thought was worth emailing on. For those who attended the meeting you will recall we had Rob Mosley, transportation attorney, do a piece on insurance in conjunction with Tommy Ruke. During the presentation Rob advised of an interesting and very important legal matter. Rob noted that there is case law to support that the
MCS-90, which you will find attached to those auto liability policies that make federal filings, will not respond to a vehicle with less than 10,000 GVW. It will be interesting to see how future case law responds but the precedent seems to have been set with Rob agreeing with the ruling. The lack of the MCS-90 not responding to units less than 10,000 GVW presents a real challenge for Motor Carriers and Brokers in our industry due to the amount of units that are under 10,000 GVW. See information provided by Rob Mosley below on the specific court case mentioned above:
https://www.courtlistener.com/opinion/2540187/canal-indem-v-williams-logging-and-tree-services/
What the above is saying is we can no longer assume that a motor carrier's insurance company will be held responsible to pay a claim on a unit that is not properly insured under the motor carriers authority they are running for. Or more simply put,
even if the motor carrier has a federal filing there is no guarantee that the insurance company will be forced to pay a claim on a unit under 10,000 GVW. Brokers and Motor Carriers need to verify proper coverage is in place for all units and especially for those units under 10,000 GVW.
The Board members continue to look for ways to make TEANA and its members better. If anyone has a topic they would like to see more information on at the next meeting please let a board member know.
Thank you,
TEANA Board of Directors