Risky Business
What is the MCS90 and 91X
Hi Everyone, Last week I talked about how ISO has changed the contract of Truck Insurance from the "Trucker Form" to the "Motor Carrier Form" or the "Business Auto Form" to "follow the contract" between the Motor Carrier and the Owner Operator.
There's a lot of confusion about the MCS90 and 91X, what ARE they and do they really pay out for a claim no matter what?
In order to become a For Hire Motor Carrier, with your own "MC number", FMCSA requires that you make a promise to the public that "all vehicles owned and operated" under that MC number are insured with PRIMARY Commercial Auto Liability 24/7. This applies to owned units and also Owner Operator units.
When you purchase a policy, the insurance coverage listed is what pays the claim, but it's the MCS90 "Endorsement" that "Modifies" the policy and MAKES that promise to the public that the claim will be paid. The 91X is simply the Certificate of Liability.
A 35 day notice of cancellation of the policy itself is required by FMCSA should a Motor Carrier decide to go out of business...this gives FMCSA that much time to "revoke" the MC number.
The most important thing to take away today:
The MCS90 is also a promise the MOTOR CARRIER makes to the insurance carrier to HAVE AND MAINTAIN Insurance to pay that promise to the public.
FMCSA doesn't care WHO pays a claim, as long as someone pays. The MCS90 only comes into play when someone is FORCED to pay. IF insurance for the MOTOR CARRIER and OWNER OPERATORS is not correct or not in place, the MCS-90/91X kicks in and pays the claim...just understand what the MOTOR CARRIER has agreed to with the endorsement on that policy:
The (Motor Carrier) Insured agrees to reimburse the (Insurance)company for any payment made by the (Insurance)company on account of any accident, claim, or suit involving a breach of the terms of the policy, and for any payment that the (Insurance) company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement.
It is further understood and agreed that, upon failure of the (Insurance)company to pay any final judgment recovered against the (Motor Carrier) Insured as provided herein, the judgment creditor may maintain an action in any court of competent jurisdiction against the (Motor Carrier) company to compel such payment.
...So essentially, the Motor Carrier is sued, loses and full restitution is required per this agreement...the Motor Carrier must then pay BACK the Insurance Carrier who paid that claim that was the promise to the public.
Next time I'll talk a little about properly restructuring the insurance for the Motor Carrier/Owner Operator relationship under the Motor Carrier or Business Auto Forms.
Shelly Benisch, CIC Commercial Insurance Solutions (CIS)