Georgia Court of Appeals Adopts “Trip Specific” Approach to Determining Coverage Under MCS-90 Endorsement in Trucking Cases

A motor carrier engaged in interstate commerce and subject to Federal Motor Carrier Safety Regulations (FMCSR) must have minimum liability coverage of $750,000. The insurer must provide a MCS-90 endorsement to the liability policy, and that endorsement is supposed to be filed with FMCSA.

In Grange Indemnity Insurance Company v. Burns, 2016 Ga. App. LEXIS 365, decided June 23rd, the Georgia Court of Appeals held that an MCS-90 endorsement attached to a commercial auto policy did not provide additional insurance coverage to the trucking company even though it was registered as an interstate motor carrier.

The trucking company, J. B. Trucking, was insured under a Grange Indemnity commercial auto insurance policy with limits of only $350,000.00. But the policy also contained an MCS-90 endorsement (with minimum coverage of $750,000.00 for nonhazardous materials). The plaintiff was injured as result of their driver’s negligence, resulting in a jury verdict of $3.3 million, but the Court of Appeals limited the plaintiff’s recovery from the insurance proceeds to $350,000, holding that the crash occurred during an intrastate delivery (involving nonhazardous materials), as opposed to during an interstate trip, and therefore the MCS-90 endorsement did not provide coverage.

The Court found that it was undisputed that the truck driver, Franks “was engaged in a trip involving purely intrastate commerce and that he was transporting nonhazardous commodities. Franks picked up a box truck in Monroe, Georgia, and drove the truck to Norcross, Georgia, where he picked up a load of “sales papers” and delivered them to a paper company in Newnan, Georgia. The sales papers were manufactured in Georgia and were destined for end users located in Georgia. While he was on his way from Newnan to Monroe to return the empty box truck, Franks struck the vehicle Burns was driving.”

The plaintiff argued unsuccessfully that once an MCS-90 endorsement is issued to a registered interstate carrier, the endorsement should apply regardless of whether a “specific trip” is intrastate or interstate. Burns argued that a Georgia citizen injured by an interstate motor carrier conducting intrastate commerce of nonhazardous materials at the time of an accident should be given the same amount of protection as a citizen injured by the same truck, owned by the same carrier, and covered by the same insurance policy, but whose cargo may be destined for another state. Burns argued that the MCS-90 endorsement should apply to all J. B. Trucking trips because J. B. Trucking was registered as an “interstate” carrier and J. B. Trucking had on many other occasions been involved in interstate trips.

There is a split of authority on this issue nationwide, as there are other courts which have held that the MCS-90 endorsement will apply to interstate and intrastate accidents (involving nonhazardous materials). Those courts rejected the “trip specific” approach, which focuses on the character of the shipment itself as interstate or intrastate, and instead based their decision on the fact that the FMCSA had jurisdiction over all of the interstate carrier’s trips, regardless of destination. Some courts have also held that based on public policy considerations, the MSC-90 should apply because the endorsement was designed to protect members of the general public injured by interstate carriers, regardless of the carrier’s destination on a particular trip. The public policy underlying the MCS-90 is to provide a safety net to members of the public injured as a result of negligent operation of tractor trailers used in interstate commerce. Its primary purpose is to assure injured members of the public are able to obtain judgments from negligent authorized interstate carriers. See Reliance National Insurance Co. v. Royal Indemnity Co., 2001 U.S. Dist. LEXIS 12901 (S.D.N.Y.) and Heron v. Transportation Casualty Insurance Co., 274 Va. 534 (Va. 2007).

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