MCS-90:
What is it? What is it used for?

To elucidate the purpose and significance of the MCS-90 form, it is essential to comprehend the regulatory framework that necessitates its use.

The imperative for an MCS-90 endorsement primarily stems from the Federal Motor Carrier Act of 1980. This legislation mandates that every motor carrier engaged in interstate, for-hire commerce must demonstrate evidence of financial responsibility equivalent to or exceeding the minimum requirements set by individual states. These carriers can satisfy this financial responsibility requirement through one of three methods.

1. Self-Insurance: A motor carrier may opt to self-insure its operations. By doing so, the carrier affirms that it possesses the financial capacity to cover all liabilities arising from its negligence and is legally obligated to meet such obligations.
2. Surety Bond: Alternatively, a motor carrier can furnish proof of financial responsibility by obtaining a surety bond. A surety bond is a commitment by one party (the issuer) to cover the financial obligations of another party (the bond recipient) in the event of non-payment.
3. Standard Market Insurance: The motor carrier may choose to secure insurance through the standard insurance market. When this option is selected, the MCS-90 endorsement becomes relevant.

The MCS-90 endorsement essentially serves as an assurance that there will be a source of funds available to cover losses for which the insured is legally liable. This assurance primarily benefits the public, assuring them that there will be no adverse financial repercussions in cases where a motor carrier lacks the mandated minimum coverage. The MCS-90 explicitly states that it “covers all vehicles owned, operated, or maintained by the insured, regardless of whether each motor vehicle is individually specified in the policy.” However, if a claim is paid out under the MCS-90, the insurance company may seek reimbursement for its expenses by pursuing claims against the motor carrier. Consequently, it underscores the importance of meticulously listing all equipment on a scheduled unit policy.

In summary, the MCS-90 endorsement is a complex and somewhat perplexing component of motor carriers’ operations. While it does not provide insurance itself, it plays a crucial role in a motor carrier’s risk management portfolio and serves as a vital tool for safeguarding both motor carriers and insurers from potential financial repercussions.