This article is a companion piece to this video
What happens when an exclusion in your commercial auto policy looks like it will prevent recovery of subrogation damages? In this episode of On Subrogation: MCS-90 Federal Motor Carrier Act of 1980, Rathbone Group attorney and experienced subrogation litigator Jason Sullivan discusses how this legislation plays into the field of insurance law.
MCS-90, part of the Federal Motor Carrier Act of 1980, requires all commercial carriers involved in interstate commerce to show proof of financial responsibility in one of three ways:
- Self-insurance certification
- Surety bond
- Traditional insurance coverage
If you are managing a subrogation claim that involves an automotive insurance carrier, you may be able to satisfy the judgment with an MCS-90 endorsement. In his discussion on MCS-90, Jason focuses on traditional insurance coverage from the perspective of policies that include an MCS-90 rider.
An MCS-90 rider is not an insurance policy but a contingency clause. MCS-90 riders ensure that even if there is an exclusion under the policy in a given subrogation claim, the insurance carrier will still pay for the damages caused by the commercial carrier. Simply put, MCS-90 promises that whatever the damages, no matter whose fault it is, the claim will get paid out.
MCS-90 minimums are:
- $750000 for non-hazardous material
- $1000000 for hazardous material
- $5000000 for portable containers over 3500 gallons
This acts as a public safety measure to ensure that an accident caused by a commercial carrier that caused an accident will get paid out to the victims.
How Does MCS-90 Apply to Your Subrogation Claim?
If you have a subrogation claim like this come across your desk, the first thing to do is reach out to the other carrier to see if they have an MCS-90 rider on their policy. If they refuse to cooperate and you cannot determine whether there is an MCS-90 rider, you can file a lawsuit and receive a judgment that will force MCS-90 coverage.
Besides overriding any policy exclusions, MCS-90 has implications for both sides of a subrogation dispute. For instance, you may have this coverage, and then your insured causes an accident with negligent/tortious actions. You will not be able to avoid paying the damages under MCS-90, but you do then retain the right to pursue subrogation recovery against your insured.
On the other hand, if you are an injured party by a commercial vehicle, look to MCS-90 coverage to recover damages. Additionally, if an exclusion did apply under the policy, insurance carriers who are forced to pay under the MCS-90 rider can then pursue the commercial carrier for reimbursement.
Looking for more informational resources on subrogation topics and the nuances of insurance law? Visit Rathbone Group’s Education Page for links to our YouTube channel and podcast library, where you can find a complete archive of our On Subrogation series. Have a topic or question in mind we haven’t yet covered? Reach out at video@rathbonegroup.com or podcast@rathbonegroup.com to see your suggestion discussed on a future episode.