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MCS-90 and the Motor Carrier Act of 1980: What You Need to Know

The Basics: What is MCS-90 and the the Motor Carrier Act of 1980?

In an effort to reduce the amount of regulations that applied to motor carriers for hire, Congress passed the Federal Motor Carrier Act of 1980. One of the primary goals of the Act was to increase price competition amongst trucking companies as well as reduce and simplify the growing regulations being placed on motor carriers. Despite its final goal, one of the most beneficial residual effects of the passing of the Act was that it narrowed the standard for proof of financial responsibility amongst trucking companies through the Act’s inclusion of the MCS-90 form. To this day the MCS-90 remains one of the more misunderstood forms in the civil litigation, insurance and motor carrier world. To emphasize the confusion that I aim to clarify in this post, MCS-90 requirements have been continually misapplied by motor carriers, business owners, insurance companies, lawyers and judges alike.

The Federal Motor Carrier Act of 1980 requires by law that each motor carrier participating in for hire commerce, is required to show some form of proof that they have the financial responsibility equal to or greater than the minimums set by each state. This is done through the utilization of the MCS-90. The MCS-90 requirement adds an extra blanket of financial security to not only the drivers that are employed by motor carrier companies, but also to those who share the roadways with motor carriers.

MCS-90 is not Insurance

Before moving forward, in full disclosure, this post is not legal advice, and nothing in this article should be interpreted as legal advice. The MCS-90 is wrongfully believed by many to be a form of insurance required by motor carriers. Like insurance, all for-hire carriers must have an MCS-90. However, the MCS-90 is not insurance in itself, but more of a guarantee that the motor carrier has shown proof of financial responsibility – that the carrier has some source of funds to cover a loss in which the insured is found to be legally liable. The Act requires that motor carriers provide documentation that they have the federal minimum level of financial responsibility to cover any potential liabilities that may arise. The MCS-90 requirement primarily benefits the public by ensuring that motor carriers, if found liable, have the monetary ability to cover any damages that may have been caused by the motor carrier. The MCS-90 makes sense – most motor carriers are trucking companies that employ semi-trucks, busses and other exceptionally large vehicles – the class of vehicles that cause a higher degree of damage when involved in a traffic incident.

The MCS-90 is almost an umbrella policy of proof that a motor carrier has the resources to covert all potential or foreseeable damages of all of the vehicles used by the motor company. The MCS-90 states that it, “covers all vehicles owned, operated, or maintained by the insured regardless of whether or not each motor vehicle is specifically described in the policy.”  But if a claim is paid out under the MCS-90, the insurer may recover its losses by subrogating the claims paid against the motor carrier.  Because the MCS-90 is not insurance in itself, and is a federal requirement, it is not the motor carrier’s insurer’s obligation to determine the motor carrier’s financial responsibility, it is the motor carrier’s obligation.

 When Does the MCS-90 apply?

To whom and to when the MCS-90 requirements apply is one of the most misunderstood aspects of the entire Motor Carrier Act. A motor carrier is defined by the Federal Motor Carrier Safety Administrations (FMCSA) as, “A company which employs large semi-truck and bus drivers.” However, the MCS-90, in some cases, is required not only by bus and semi-truck drivers, but also by any motor vehicle (even private smaller sized trucks) based on the type of cargo that it is carrying. Smaller sized trucks, if carrying hazardous materials will also have to abide by the Act (see below).

  • The MCS-90 applies to both interstate and intrastate commerce.

It is often wrongfully assumed that the MCS-90, because it is part of a federal regulation, only applies to motor carriers involved in interstate commerce. However, the MCS-90, by its own text, indicates that the federal requirements of the Act do not apply to motor vehicles based on the size, classification or if they cross state lines (interstate commerce) to conduct business, but more specifically on what cargo the motor vehicle is carrying. In effect, a smaller privately owned vehicle that makes deliveries of hazardous cargo intrastate will likely be required to verify proof of financial responsibility through the MCS-90. In short, the Act applies more to how dangerous the vehicle is based on multiple factors, mainly, the size of the vehicle or the cargo that it is transporting. The more hazardous the cargo being hauled, the larger the potential damages could be.  If a smaller truck, even if traveling intrastate, is hauling hazardous materials, the MCS-90 will likely be required by the carrier, even though it is intrastate travel.

In AmWINS Group’s article, “5 important things your should know about the MCS-90,” a great example is given, “a petroleum wholesaler that delivers gasoline or diesel fuel to their in-state customers via their own 10,000 gallon tank trailer would be an example of a private carrier operating intrastate. The federal regulations apply to this motor carrier as respects financial responsibility and proof of compliance in the form of the MCS-90 endorsement.” Again, the MCS-90 is just proof that the motor carrier or motor vehicle is in compliance with the federal regulations.

Proving Financial Responsibility

There are a few ways in which a motor carrier can prove financial responsibility as required by the MCS-90. A few of the most frequently used methods are:

  • The motor carrier has the option of insuring itself. To go this route, the self-insured motor carrier would have to show proof that they are financially capable of covering any potential liability or claims that may arise against the motor carrier for its own negligence.
  • The motor carrier can satisfy its proof of financial responsibility through a surety bond. This is basically like having a co-signor (third party) that promises to pay on behalf of the carrier if they fail to pay for any damages that they are found legally liable.
  • The motor carrier can choose to obtain its own private insurance. This is of course the most popular option for motor carriers.

What does it all mean?

This post is not, and should not, be taken as legal advice in any way. This issue is quite complex and often the target of litigants nationwide. One of the biggest topics that was not addressed in this article is how MCS-90 effects a motor carriers insurance and vice versa. I will certainly follow up with a post in the future that goes into more depth and detail as I traverse the seedy underbelly of the in-and-outs of the MCS-90, motor carriers. In conclusion, the MCS-90 is a very complex and confusing endorsement but one that is of significant importance to all motor carriers.

While it may appear to be an insurance certificate, in reality it is more.  It is an endorsement that shows proof of required financial responsibility, and all vehicles operated by for-hire carriers must have an MCS 90.

To see the full MCS-90 form, go here: