Striking a Balance: Motor Carriers, Insurers, and the Innocent Motoring Public


By: Mallory Ball

Some courts are striking a balance where innocent third parties are injured from the negligence of motor carriers by finding coverage despite the terms and conditions of the insurance policy.  For example, some insurance policies restrict the geographical limits for which coverage is provided.  Specifically, a limitation of use endorsement would provide that insurance applies only while the respective vehicles are operated within 50 miles from the garage location shown on the policy.  Other policies provide coverage for only certain vehicles, like only those autos you lease, hire, rent, or borrow, not including from any of your employees, or autos you do not own, lease, hire, rent or borrow that are used in connection with your business, including autos owned by your employees.
In cases where the geographical limitation was the reason for disclaiming coverage, courts voided the limitation as against public policy.  In one case, the insurer issued a basic automobile policy, instead of a motor carrier policy, with a 50-mile limitation for coverage to the motor carrier insured.  The court determined that because the insured identified as a motor carrier on its application for insurance, the insurer knew of should have known the insured was a motor carrier, and thus, the insurer assumed responsibility to indemnify the motoring public for injuries sustained by the motor carrier’s negligence.  On the other hand, where an insurer issued a motor carrier policy with a 50-mile limitation to a motor carrier, the court held that where the insurer executes the necessary documents to allow a carrier to obtain a certificate to operate as a motor carrier, the insurer is not allowed to deny coverage.
Likewise, some courts look for all ways a vehicle not listed on the policy may meet the policy’s definition of a covered auto in situations where the motoring public was injured by a motor carrier.  For example, at least one court found that the independent owner-operator of a leased tractor-trailer was both an independent contractor of the motor carrier and an employee of the motor carrier in order to find alternative means of coverage for the vehicle not listed on the motor carrier’s insurance policy.  There, the court was motivated by not allowing the motor carrier to escape liability for hiring an uninsured independent trucker.  Other courts are similarly motivated by protecting the innocent motoring public by rejecting arguments that Federal Motor Carrier Safety Administration’s (FMCSA) regulations require strict compliance when determining whether a valid lease agreement exists between a motor carrier and an independent owner-operator.  Those jurisdictions reason that strict compliance would allow the motor carrier to easily escape liability.
While some courts are not willing to find coverage under an insurance policy issued to a motor carrier where the policy’s terms and conditions exclude coverage, they strike a balance by finding coverage under the MCS-90 endorsement.  Where an insurance policy is issued to an interstate motor carrier, the MCS-90 endorsement is attached to the policy in order to show the motor carrier has met its financial responsibility under the FMCSA’s regulations.  The MCS-90 endorsement provides, in pertinent part, “[t]he insurer agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of the Motor Carrier Act regardless of whether or not each motor vehicle is specifically described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere.”  The MCS-90 endorsement also allows an insurer to recoup any money paid under the endorsement from the insured.
In cases where the MCS-90 endorsement is not triggered, some courts apply a “safety net” to the MCS-90 endorsement in order to trigger coverage where (1) the underlying insurance policy to which the endorsement is attached does not otherwise provide coverage, and (2) either no other insurer of the motor carrier is 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.
Some states have endorsements similar to the MCS-90 that attach to policies issued to intrastate motor carriers.  In at least one case, the endorsement only covered vehicles listed on the policy.  However, the court found coverage under the endorsement for a vehicle not listed on the policy in order to balance fairness to the parties by satisfying public policy, such that the motoring public was compensated for injuries, while also having the insurer pay no more than the liability coverage it agreed to provide the motor carrier under the endorsement.
While not all courts are willing to find coverage under policies that otherwise exclude coverage for injuries arising out of the negligence of motor carriers, for the courts that do find coverage despite the terms and conditions of the policies, there are ways to address the courts’ construction.  It is also important for insurers to know their insureds so that they can anticipate such coverage and otherwise bargain for it.
If you have questions or would like more information, please contact Mallory Ball at