Motor carriers (or “truckers”) are vulnerable to severe and costly auto accidents due to the size of the loads they often carry. These accidents may result in injury or death to occupants of other vehicles or pedestrians, or they may cause significant property damage. Even more ominous is the possibility of environmental damage caused by the release of dangerous substances that are part of the trucker’s cargo. Federal law regulates how these firms must meet their financial obligations for these accidents.
Congress enacted the Motor Carrier Act of 1980 to deregulate the trucking industry. In addition, the law established minimum limits of liability insurance coverage that certain motor carriers must carry. The coverage must apply to claims for bodily injury, property damage and environmental restoration arising from accidents that occur while the carrier’s vehicles are transporting property. The limits required vary by the type of property the carrier transports and whether or not the carrier operates for hire. For-hire carriers of non-hazardous substances must carry limits no less than $750,000; for-hire and private carriers of certain hazardous substances must carry at least $1,000,000, while other carriers must carry at least $5,000,000.
Unfortunately, standard policies for truckers are inadequate to meet these obligations. A trucker’s insurance policy typically does not cover liability arising out of the escape of pollutants that the insured is transporting. The policy will cover the insured’s liability for damage caused by fuel or fluid leaks from a vehicle’s systems and pollution damage arising from some vehicle maintenance, but this limited coverage does not meet a trucker’s obligations under the MCA.
The MCA, in addition to the minimum limit requirements, mandates that truckers have a special endorsement (form MCS-90, Endorsement for Motor Carrier Policies of Insurance for Public Liability) attached to their policies. This endorsement obligates the insurance company to pay for the trucker’s public liability regardless of whether or not the policy describes each motor vehicle and whether or not a regulator permits the trucker to serve that particular route or territory. The form defines “public liability” as including bodily injury, property damage and environmental restoration. “Environmental restoration” means restitution for the loss, damage, or destruction of natural resources arising out of the accidental release of any commodity transported by a motor carrier on the land, atmosphere, watercourse, or body of water. It includes removal costs and the cost of necessary measures to minimize damage to human health, the natural environment, and animals.
The MCS-90 endorsement does not expand the trucker’s policy’s pollution coverage; in fact, it requires the trucker to reimburse the insurance company for payments it makes that the policy would not require if not for the endorsement. To avoid having to make a large reimbursement to the company, the trucker should ask the company to add another special endorsement to the policy. The endorsement, titled Pollution Liability – Broadened Coverage for Covered Autos, reinstates coverage for the insured’s liability for the release of pollutants that the insured is transporting. Coverage does not apply to liability that the trucker assumed under a contract. However, the additional coverage brings the trucker into compliance with the MCA’s requirements and eliminates the possibility that the trucker will have to reimburse the company for losses.
Due to the potential for very large losses from pollutants, the number of insurance companies willing to offer this endorsement is relatively small. Motor carriers subject to the MCA’s requirements should work with insurance agents who have expertise in this area. They will be familiar with the coverage needs of trucking firms and may represent insurance companies that insure truckers.