11.5 Truckers and Motor Carrier Coverage Forms
The Truckers Coverage Form and the Motor Carrier Coverage Form are designed to address the specialized automobile liability and physical damage exposures faced by common carriers and contract carriers engaged in transporting people or property.
A common carrier is an individual or business that transports people or property for compensation. The passengers or property being transported are members of, or belong to, the general public. For example, a trucking company that transports goods for multiple customers may operate as a common carrier. Depending on the nature of its operations, a common carrier may be insured under either the Truckers Coverage Form or the Motor Carrier Coverage Form.
A contract carrier is an individual or business that transports people or property for compensation under agreements with specific customers. Unlike a common carrier, a contract carrier does not offer transportation services to the general public. For example, a trucking company hired exclusively to transport goods for a particular business operates as a contract carrier. A contract carrier may decline to transport people or property unless a contractual agreement is in place. Contract carriers are insured under the Motor Carrier Coverage Form.
Truckers Coverage Form
The Truckers Coverage Form is based on the Business Auto Coverage Form and is specifically designed for truckers—individuals or businesses engaged in transporting property for compensation.
The Truckers Coverage Form is organized into six sections, each addressing a specific part of the policy:
- Section I – Covered Autos: Identifies the autos that qualify for coverage.
- Section II – Liability Coverage: Provides coverage for legal liability arising from the ownership, maintenance, or use of covered autos.
- Section III – Trailer Interchange Coverage: Covers damage to nonowned trailers in the insured’s possession under a written trailer interchange agreement.
- Section IV – Physical Damage Coverage: Provides coverage for direct and accidental loss to covered autos.
- Section V – Truckers Conditions: Explains the policy conditions, duties, and requirements that apply to the insured and the insurer.
- Section VI – Definitions: Defines important terms used throughout the coverage form.
Section I – Covered Autos
This section is similar to Section I of the Business Auto Coverage Form. The covered auto designation symbols generally identify the same categories of autos, although the Truckers Coverage Form uses different symbol numbers and includes certain exceptions and additional classifications.
| Symbol | Description |
|---|---|
| Symbol 43 | Owned Commercial Autos Only. Whereas symbol 3 on a Business Auto policy would cover private passenger autos, which are not covered by a Truckers Coverage Form, symbol 43 on the Truckers form covers trucks, tractors, and trailers the insured owns. |
| Symbol 48 | Trailers In Your Possession Under A Written Trailer Or Equipment Interchange Agreement, which covers non-owned trailers in the insured’s possession under a written agreement. |
| Symbol 49 | Your Trailers In The Possession Of Anyone Else Under A Written Trailer Interchange Agreement, which covers the insured’s owned trailers in the possession of others under a written agreement. |
Section III – Trailer Interchange Coverage
A written Trailer Interchange Agreement is an agreement under which the insured assumes responsibility for loss or damage to a nonowned trailer, including its equipment, while the trailer is in the insured’s possession. Section III provides physical damage coverage for this exposure. Similar to the coverage options available under the Business Auto Coverage Form, Trailer Interchange Coverage may be written to include collision, comprehensive, or specified causes of loss coverage.
Trailer Interchange Coverage does not cover loss-of-use expenses resulting from damage to a nonowned trailer.
Section V – Truckers Conditions
The conditions in the Truckers Coverage Form are generally consistent with those found in other Commercial Auto coverage forms. However, the Other Insurance condition contains provisions that reflect the unique operations of trucking businesses. Liability coverage is primary for a covered auto that the insured hires or borrows and uses exclusively in the insured’s trucking business. Trailer Interchange Coverage is also provided on a primary basis. In contrast, when another business hires or borrows a covered auto owned by the insured, the insured’s liability coverage applies as excess insurance over any other collectible insurance.
Except for these specific provisions, the Truckers Coverage Form applies as primary insurance for covered autos owned by the insured and as excess insurance for covered autos the insured does not own.
Motor Carrier Coverage Form
Carrier Regulations
The trucking industry was once subject to extensive federal and state regulation. Government authorities imposed complex rules governing the rates motor carriers could charge and controlled which carriers were permitted to enter the transportation market. This regulatory system began to change with the passage of the Motor Carrier Act of 1980. The Act deregulated interstate trucking, restricted rate bureaus from interfering with a motor carrier’s right to establish its own rates, and encouraged states to adopt similar regulatory reforms.
Because motor carriers may be responsible for transporting passengers or valuable cargo, federal law requires them to demonstrate financial responsibility. The Motor Carrier Act of 1980 authorizes the Department of Transportation (DOT) to establish and enforce these financial requirements. A motor carrier generally satisfies the requirement by maintaining an insurance policy with the prescribed minimum liability limits or by posting a qualifying surety bond. Although either method may be permitted, purchasing an insurance policy is the most common way for motor carriers to demonstrate financial responsibility.
Insurance policies issued to certain regulated motor carriers must include the Endorsement for Motor Carrier Policies of Insurance for Public Liability (Form MCS–90). The endorsement serves as evidence that the motor carrier satisfies applicable federal financial responsibility requirements administered by the Federal Motor Carrier Safety Administration (FMCSA). Form MCS–90 identifies the following information:
- The names of the motor carrier and the insurer
- The policy number and effective dates
- Whether the policy provides primary or excess insurance
- The liability limits provided by the policy
The required liability limit applies on a per-accident basis. Minimum limits range from $750,000 to $5 million, depending on the type and quantity of property or hazardous materials the motor carrier transports:
| Type of Merchandise | Scheduled Limit |
|---|---|
| Nonhazardous property | $750,000 |
| Oil and hazardous waste, materials, or substances | $1,000,000 |
| Large amounts of hazardous substances transported in cargo tanks, portable tanks, or hopper-type vehicles | $5,000,000 |
The MCS–90 endorsement may be cancelled by either the insurer or the insured. The party initiating the cancellation must provide at least 35 days’ written notice to the other party. When the insured initiates the cancellation, the insured must also provide the Federal Motor Carrier Safety Administration (FMCSA) with at least 30 days’ notice.
Coverage Form
A motor carrier is an individual or organization that provides transportation services as part of a commercial enterprise. The carrier may transport passengers or property, including property it owns or property belonging to others that it transports for compensation. The Motor Carrier Coverage Form is a variation of the traditional Truckers Coverage Form. It is designed to address the broader exposures faced by businesses that transport passengers, property owned by others for hire, or their own property. The form also provides greater flexibility in arranging coverage because the scope of coverage and the parties qualifying as insureds may be determined by written agreements between the motor carrier and its customers, rather than solely by government classifications or regulations.
Unlike the Truckers Coverage Form, the Motor Carrier Coverage Form uses separate covered auto designation symbols for private passenger autos and commercial autos. This distinction allows the policy to identify more precisely which categories of vehicles are insured.
The Motor Carrier Coverage Form is organized into six sections, each addressing a specific component of the policy:
- Section I – Covered Autos: Identifies the categories of autos eligible for coverage by using covered auto designation symbols.
- Section II – Covered Autos Liability Coverage: Provides liability coverage for bodily injury or property damage arising from the ownership, maintenance, or use of covered autos.
- Section III – Trailer Interchange Coverage: Provides physical damage coverage for nonowned trailers in the insured’s possession under a written trailer interchange agreement.
- Section IV – Physical Damage Coverage: Covers direct and accidental loss to insured autos, subject to the selected coverage options and applicable deductibles.
- Section V – Motor Carrier Conditions: Explains the duties, rights, and policy conditions that apply to the insured and the insurer.
- Section VI – Definitions: Defines important terms used throughout the Motor Carrier Coverage Form.
Note
The Truckers Coverage Form and the Motor Carrier Coverage Form provide coverage for the insured’s automobile liability exposures. They do not insure the cargo or other property being transported in the covered autos. Coverage for transported property must be obtained through a separate insurance policy or coverage form.