Twenty-eight years after its June 1981 introduction, the MCS-90 endorsement remains a highly misunderstood form. Apparent judicial misapplications of the intended meaning and purpose of the form have added to the confusion.
The MCS-90 was designed to assure that an at-fault "for-hire" or public motor carrier could fulfill its financial responsibility to the public, regardless of the insured's failure to comply with the underlying insurance policy's terms and/or conditions. But it was not designed or intended to extend coverage to non-insureds or create coverage where none existed. Above all, the MCS-90 was not created to and does not currently provide any insurance coverage within the wording of the form - insurance protection is extended only from the policy to which the endorsement is attached. The most current edition of the MCS-90 can easily be obtained on-line (the MCS-90 is the third of four forms in the packet of forms found at this link site).
Attachment of the MCS-90 does nothing more than a guarantee that there will be some source of funds available to pay for bodily injury, property damage or environmental restoration (collectively referred to as "public liability" in the MCS-90) made necessary by the negligence of the insured and its employees. However, this guarantee does not constitute insurance for one crucial reason: the insurance carrier issuing the MCS-90 has the right to recover from the entity named in the endorsement any payment made as a direct consequence of the provisions of the form.
In essence, the MCS-90 is more closely related to a surety bond "guaranteeing" that the insured has and will continuously maintain the coverages types and amounts mandated by law. And if the insured fails to maintain the required insurance coverage, the issuer of the MCS-90 will stand in the insured's place - for the public good. But the issuer of the MCS-90 can and will likely seek full reimbursement from the insured named in the endorsement.
The Motor Carrier Regulatory Reform and Modernization Act, signed into law by President Jimmy Carter on July 1, 1980, and the impetus for the MCS-90, requires motor carriers that transport hazardous materials to maintain "public liability" coverage of either $1 million or $5 million (depending on the material). As evidenced by the MCS-90's inclusion of "environmental restoration" within the definition of "public liability," the endorsement essentially "guarantees" that the motor carrier has pollution liability protection or a source of funds to cover a pollution loss as required by the law.
If, however, the motor carrier fails to maintain the required pollution coverage and there is a pollution loss, the MCS-90 issuing insurer will stand in place of the insured and pay the loss up to the legally required amount. But since the motor carrier failed to comply with the law, the insurer can then recover payment from the motor carrier.
To reiterate, the MCS-90 is not insurance; it is a financial guarantee protecting the public from the financial consequences of a motor carrier's failure to carry the statutorily required insurance protection. Any payment made solely under the provisions of the MCS-90 is recoverable from the defaulting motor carrier.
Remember, the burden to meet the statutory financial requirements placed on motor carriers engaged in interstate commerce is on the motor carrier, not the insurance carrier. When the MCS-90 is endorsed to a business auto policy, the insurance carrier takes on two roles; the first as insurer and the second as surety. These competing requirements and roles coupled with the fact that a few of the "guarantees" provided by the MCS-90 are broader than the coverage provided by the underlying business auto policy (BAP)necessitates that the insurer carefully underwrite and confirm the underlying coverages that are to be maintained by the motor carrier.
Where the MCS-90 is Potentially Broader
Pollution: Pollution losses are essentially excluded in the BAP. There are a few exceptions to the exclusions that do not extend to cover damage caused by materials being hauled. As stated in the above example, the MCS-90's definition of "public liability" includes environmental restoration - a pollution coverage. Since the insurance carrier issuing the MCS-90 has "guaranteed" that the motor carrier can pay for a pollution loss, it is incumbent upon the underwriter (and agent) to verify the necessary coverage.
Scheduled / Unscheduled Autos: Business auto policies written on a "scheduled vehicle" basis can also be expanded by the attached MCS-90. The endorsement states that it covers all vehicles owned, operated or maintained by the insured "regardless of whether or not each motor vehicle is specifically described in the policy…." If the insured with a symbol "7" or "46" forgets to list or add a vehicle to the BAP, the insurer is normally not required to provide coverage for a loss. However, the MCS-90 negates this policy provision and requires the insurer to pay the loss. Since the insurer is acting as a surety in such a case, they may be able to recover from the insured.
Drivers: The MCS-90 does not stipulate that individuals driving any vehicle or towing any trailer subject to the Motor Carrier Act have to be listed on the policy, qualify as an "insured" or even be considered "permitted users." In fact, the MCS-90 doesn't even address drivers, which has lead to unique court rulings.
Cancellation: Thirty-five days notice of cancellation is required by the endorsement, even for non-payment of premium. If the insured motor carrier is subject to Federal Motor Carrier Safety Administration registration, the FMCSA must get 30 days notice before the cancellation is effective. The catch is, the 30 days does not begin to toll until the FMCSA receives the cancellation notice in its WashingtonDC office. This is much longer than the standard notice of cancellation for non-payment of premium (between 10 and 15 days based on state law); so the insurance carrier may be "on the hook" longer than required by the underlying BAP.
Court Decisions Can Alter the MCS-90's Intent and Purpose
John Deere Insurance Company v. Nueva (found on OpenJurist.org) expanded the MCS-90 definition of "insured" to include an entity that was not even a party (a "stranger") to the underlying BAP. The Ninth Circuit Court ruled that "insured" status under the MCS-90 extended to include an entity that had use of the named insured's trailer after it had been sold.
John Deere's insured (Baljit Singh Sahota DBA Sahota Trucking) sold a trailer to Gurmukh Garcha DBA Blue Star Transportation. Before title on the trailer was transferred, it was involved in an at-fault accident caused by Blue Star; but even though Sahota no longer had possession of the trailer and was not a party to its use (contractual or otherwise), the court ruled that the provisions of the MCS-90 extended coverage to the trailer since the title had not passed. The purchaser became an "insured" on the policy per the court. In 2002, the Supreme Court issued an opinion that the Ninth Circuit's findings were incorrect, but at this point, the ruling stands as issued in 2000.
Deere v. Nueva is only one example of how courts can substantially alter the purpose and intent of the MCS-90. Some court rulings serve to cement the intended use of the endorsement. A recent Tenth District Court of Appeals case reversed and vacated 20 years of bad precedent in that district created by its 1989 finding in Empire Fire & Marine Ins. Co. v. Guaranty National Ins. Co.
Carolina Casualty Insurance Company v. Yeates saw the Tenth District court in California join the majority opinion in stating that the MCS-90 does not create coverage in an underlying BAP where no coverage existed. In fact, the court laid out two tests that must be satisfied before the MCS-90 can be called upon to respond to a loss:
the underlying [auto] insurance policy to which the endorsement is attached does not provide coverage for the motor carrier's accident; and
the motor carrier's insurance coverage is either not sufficient to satisfy the federally prescribed minimum levels of financial responsibility or is non-existent.
The intent of the MCS-90 appears rather self-evident on its surface; it is not insurance, simply a safety net for innocent parties injured by the negligence of others.
Federal Law Bans Hand-Held Cell Phone Use by Drivers of Buses and Large Trucks While Driving
A final rule banning commercial motor vehicle drivers from using handheld cell phones while driving on interstates went into effect Jan. 3.
The final rule prohibits commercial drivers from using a hand-held mobile telephone while operating a commercial truck or bus. Drivers who violate the restriction will face federal civil penalties of up to $2,750 for each offense and disqualification from operating a commercial motor vehicle for multiple offenses. Additionally, states will suspend a driver’s license (CDL) after two or more serious traffic violations. Commercial truck and bus companies that allow their drivers to use hand-held cell phones while driving will face a maximum penalty of $11,000. Approximately four million commercial drivers are by this final rule.
Independent Insurance Agents of Oklahoma February 7, 2012
24 Crucial Things to Know About Running Natural Gas Trucks
Posted: Oct 4, 2013 05:27 PM | Last Updated: Oct 5, 2013 02:39 PM
TORONTO — Attendees on day one of Canada's first Natural Gas Vehicle Conference scored some clutch advice from two of Canada's most well-known fleets.
In back-to-back presentations, Bison's VP, Western Operations Trevor Fridfinnson and Robert Transport's Engineering Manager Yves Maurais, gave back to the Canadian truckers by sharing — quite openly — their challenges with implementing natural gas tractors into their respective operations.
It was, without a doubt, a refreshingly honest and sobering account of the challenges early-adopter fleets have been facing with natural gas.
Both fleets have experienced their share of hard lessons — hard lessons that, if you're about to start running natural gas powered trucks, you'll experience too.
But maybe, thanks to Bison and Robert, you can avoid a few of them.
Eyes Wide Open
1. Know that this will be a resource draw, said Fridfinnson. "It takes a lot of time, energy and money to make this a reality. From a technical side of things, anybody here in this room that has run trucks for the last number of years has been a part of the technology changes meant to increase environmental efficiency of our tractors. Sometime the effects are not as desired — you might have lost fuel economy, you might have increased downtime — we had to consider all that and be satisfied we could deal with those."
This Fuel is a Different Animal
2. "Handling this fuel is different than diesel," said Fridfinnson off the top. "It needs to be actively managed. When you talk liquefied natural gas, it needs to be maintained at temperature. With diesel you can plug it into a tank and you use it when you use it — natural gas is a different animal."
3. There are two types of LNG, explained Maurais. "There is cold and warm LNG. Warm LNG is basically LNG that is maintained at its saturation point — the point where it turns from liquid to vapor. That's what you're going to find in the smaller LNG engines, like the Cummins 8.9L and the bus and city trucks. They don't need a pump to get it out — it just turns to vapor by itself. You have to remember that the natural gas engine always uses vapor. When you use cold LNG, it's always in liquid form; it's pumped out of the tank, warmed up, and turned to vapor. So, depending on what kind of spec you use in your LNG engine, you're using either cold or warm LNG. If you use cold LNG into a warm LNG system, you might have some problems. So make sure you know the difference between both systems."
4. Bison expected a fuel degradation of 10 percent when going from diesel to a first generation natural gas truck. "Right now, today, we're tracking just around 5 miles per gallon on the LNG tractor, and we're around 6 miles per gallon on our comparative diesel. So we've got a difference there we still haven't been able to make up — about 17 to 18 percent."
5. By taking a closer look at the fuel side of the equation, they're improving that number: "LNG has to be actively managed — when you fuel, how long it sits in the tank, what kind of pressure is in the tank — all those things are being metered and monitored and we're seeing incremental gains to close that gap.
6. Bison originally forecasted a fuel range of 550 miles for their LNG fueled LCVs, "but realistically we're around 450."
7. "We're figuring out that the break-in period for these engines is a lot longer than diesel engines," Maurais shared. "It can be up to 200,000 km before we get optimal fuel consumption."
Spec'ing Heads Up
8. When you're spec'ing, "what you have to remember is that the [Westport 15L] GX engine is based on the 2007Cummins ISX engine — not the 2010 or 2012 engine so when you want to do a comparison you want to do it to the same type of engine — that's very important," said Maurais.
Bison went with model 386 Peterbilt's and Westport's 15L GX. In general, there are some particular nuances with natural gas trucks, Fridfinnson cautioned.
But the big nuance?
9. "You need more tank space. We had to extend our wheelbase and when you do that, you get a bigger trailer gap and that affects the aerodynamic — a heads up for anybody spec'ing these trucks."
Maurais said that "In our specs, we found out it's nearly impossible to get the truck shorter than a 220-inch wheelbase with LNG trucks if you want to use the 120 US gallons tanks, so it makes for a very long truck."
10. Watch your weight, too, Maurais stressed. They went overweight by U.S. regs on the steer axle when they first got started.
11. Robert had electrical issues, as well. Methane detectors drained power, and they had to bring in more batteries. (Creatively, they added solar panels to the roof to power those detectors, A/C systems, microwaves, and computers.)
Anticipating Cost Per Mile
Bison tapped their LNG project onto their LCVs that run in between Calgary and Edmonton. "We took a look at that and said that's a prime opportunity for us — how can we convert that and be able to anchor our natural gas solution?
12. Fridfinnson said that an LCV truck tracks around 3-4 cents per mile in maintenance cost in the first year of its operation. "These trucks, right now, have put us double that — around 7-8 cents per mile."
13. Some of that added cost was anticipated, he said. They didn't convert their shop to maintain the LNG tractors, "so we knew there was an outside factor, and the service intervals on today's natural gas trucks are more complex than diesels so that's not a fair comparison." They knew that going in, he said. "But there was some downtime related to the fact that they are gas trucks — fuel sensors, fuel gauges, and software related to those pieces not being right — and some are related to the fact that it’s a truck trying to make a bunch of pinpoints work together."
Bison's LNG tractors have been put through their paces; next month, they'll hit the one million mile mark.
14. Which is the point with these trucks: work 'em. "The more your LNG truck is on the road, the more it will save you money," Maurais pointed out. "So try to get them going as much as possible. If you want to give them double-shifts, LNG trucks are perfect for that, especially if you're running a daily operation or local deliveries — run a few shifts and you're going to save a lot of fuel."
Return On Investment?
15. Not yet. Bison had originally targeted two years to make up the incremental cost for a natural gas tractor. "We wanted to be aggressive about it," Fridfinnson said. But given what they've experienced so far, that isn't going to happen. Where it ends up remains to be seen but suffice it to say, it's become an extended timeframe."
And as to any further commitment and investment in LNG, well, Bison isn't shopping for the proverbial wedding ring just yet.
16. Still, they are dedicated to making it work. But, warned Fridfinnson, "Everyone looks at the commodity of natural gas — its 30 percent cheaper, 50 percent cheaper; commodity prices are one thing but how that translates into an operating and working model and returns at the early stage are much, much different."
Drivers: An Extremely Fantastically Important Component
17. Both Fridfinnson and Maurais stressed the importance of keeping their drivers in the LNG loop. If you don't, the whole project can die on the vine, Fridfinnson said.
18. "Have some individuals at the driver level that are experts in what this is, how it works, how it plays out at the business," advised Fridfinnson. "And have those guys participate in the breaking-in of the trucks, and in the ride-alongs before the driver is assigned a truck."
19. Bison held forums to create a dialogue with drivers on natural gas. "It's important to understand the basic presumption that's out there in the workforce." Presumptions like: harder and longer to fill, has less power, and that they run out of fuel unexpectedly.
"How we dealt with that is that one of the members of the driver advisory board — one of the mentors that had had been driving the truck for three months and coaching others — took over and related his personal experience."
That driver told the others that it was safe, that their were methane detectors in the truck, "has more power than my diesel truck and the difference is probably ten minutes in fuelling when it comes down to it, and it runs quieter."
20. Also, if you give them a bigger engine that runs quieter, plus add in the fuel range aspect, Bison's drivers needed some training on how to use that power effectively.
21. Train your technicians and train your people at the operatins level, Maurais said. You don't want your ops people sending these trucks all over the place to pick up your loads. "They need to know that LNG trucks are different than diesel trucks."
Work Closely with OEMs and Suppliers
22. Much of Bison's component issues has improved over time, Fridfinnison said. "I will give props to our suppliers for their attentiveness and partnership in making sure we're not in here on our own trying to deal with these things."
Maurais seconded him: "Work with your OEMs and the dealership. We've had — I won't say how many — but many issues, especially on the quality side of the trucks. We basically ran prototype trucks for two years and our downtime is at 20 percent with these trucks.
23. "You should expect that downtime."
24. "But I'll put onus on the people here and those in our industry," Fridfinnson said at the end of his presentation, "if we don't participate in it and create a market and a need for it, we can't expect a whole lot of development coming from the equipment manufacturers and fuel suppliers — there's got to be a collective push that moves this thing."
This article appears courtesy of Today’s Trucking Magazine.
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