Insuring truckers—Don’t depend on the business auto policy

Insurance for trucking risks can be extremely confusing to insurance agents unless they are prepared and knowledgeable about the coverage.  In addition to general knowledge about the risk, insurance professionals must know the underwriting guidelines and compliance issues that are critical to motor carriers.  

Commercial auto policies differ

Many commercial auto insurance products used by nonspecialists can become errors-and-omissions claims quickly for those who do not understand the impact that federal and state regulations have on trucking accounts. Insurance companies must make federal and/or state filings to the regulators that promise financial responsibility, and payment of claims for bodily injury, property damage and environmental restoration defined under the Federal Motor Carrier Act of 1980.

When a claim or loss occurs

Often, insurance agents and insurance providers need to determine the answer to three basic questions if a claim or loss occurs:

1. Is the person or entity seeking coverage an insured?
2. Is the vehicle a covered auto?
3. Is the loss or claim excluded in the insurance policy?

In addition to answering these questions, insurance professionals who handle trucking accounts have to match the exposures created by regulations to insure their clients are compliant.

The Motor Carrier Form

In 1993, ISO developed the Motor Carrier Form (CA 00 20 11 20), which was last revised in 2020—and is used by many insurers today. Many transportation professionals have dubbed it “the form of the future for transportation risks,” because, according to the form, a motor carrier is a person or organization that provides transportation by auto in the furtherance of a commercial enterprise.

The Who Is Insured provision in this form is designed to be compliant with some of the regulations that affect truckers. Additional endorsements may be necessary, as well.

In order to be a covered auto, numerical symbols must be used individually or in combinations. The Motor Carrier Form has additional symbols available that may be used for specific coverage, as well as endorsements available to modify the symbols.

Reduce E&O exposures

E&O exposures can be reduced by understanding the exclusions and endorsements available to change policy coverage. Many of the endorsements used by insurers are proprietary—including ISO—and they need to be understood, reviewed carefully and explained to the insured.  

One of the major headaches is the attachment of the MCS90 endorsement which is a financial responsibility requirement of the Motor Carrier Act of 1980. It is a blanket endorsement that applies to the motor carrier as defined by the legislation. It contains no broadening of coverage, and it contains a cancellation notification clause indicating that the policy cannot be canceled without 35 days’ notice. The reimbursement rights given back to the insurer need to be understood and documented by the agent for E&O purposes. There are many documented court cases that apply specifically to the MCS90 endorsement.

Another area of coverage for motor carriers includes the sections of coverage found under physical damage and trailer interchange. The use of proper symbols is crucial to activate coverage, and endorsements may be necessary to amend some of the coverage, as well as exclusions found in the unendorsed form.

Underwriting

Insurance professionals must gather all available underwriting information to forward to the insurer. The questions on an application are only part of the process. In the past, many relied on loss runs, the application and motor vehicle reports. This is no longer the case. Information gathered by the Federal Motor Carrier Safety Administration is public knowledge and can be accessed by anyone with an internet connection.  The Department of Transportation gathers and makes available data that is useful in the underwriting process, too.  And, other websites and even smart phone apps are available to knowledgeable insurance professionals, which allow them to do a more thorough job of underwriting the trucking risk.

These are just some of the areas affecting insurance professionals and their transportation clients. In addition to this coverage, truckers need other forms of coverage (e.g., general liability, cargo, commercial property, cyber, employment practices liability, and bonds).

You can learn more

Understanding the trucking risk is an important step in the process of insuring profitable accounts that will grow along with the agent and create new opportunities for the agency and insurer. To learn more about insuring truckers, register for Insuring Truckers, which takes place Tuesday, Aug. 24, 2021, 9 a.m.-1 p.m., with Bettye Hutchison, CRM, CIC, CPCU, ARM, CPIA, AAI, TRIP. This class has been approved for continuing-education credits in Connecticut, New Hampshire, New Jersey and New York. To sign up for this webinar, access your state’s PIA education schedule.