Driving Settlement Negotiations with the MCS-90 Endorsement

truck driving through valleyDriving Settlement Negotiations with the MCS-90 Endorsement

Originally Published in the February 2023 Issue of The Transportation Lawyer by the Transportation Lawyer’s Association

Defending motor carriers in accident litigation when insurance coverage is nonexistent due to policy exclusions or otherwise poses unique challenges.  Damages arising from both minor and catastrophic accidents can be significant, and absent insurance coverage, injured parties traditionally had limited options for recovery.  Cognizant of public safety concerns associated with motor carrier accidents, Congress enacted the Motor Carrier Act of 1980, and created provisions that require motor carriers engaged in interstate commerce to provide proof of minimum levels of financial responsibility.  The required level of financial responsibility ranges between $750,000.00 and $5,000,000.00 and is determined by the type of carriage the motor carrier engages in and the commodity it transports 1.  The Motor Carrier Act also gave rise to the MCS-90 endorsement (MCS-90) as an accepted method of providing the required proof.   

What the MCS-90 Is and Is Not 

The MCS-90 operates as an attachment to the carrier’s insurance policy and is intended to protect motorists injured by motor carriers without adequate insurance coverage.   The MCS-90 functions as a surety to guarantee payment to injured parties.  Any insurance policy issued to an interstate motor carrier must include the MCS-90, and even when not physically attached to the policy, courts must impute the terms of the MCS-90 into the policy as a matter of law 2.   

 It is crucial to recognize the difference between the MCS-90 and insurance coverage as traditionally provided under a policy.  The MCS-90 is not additional insurance and cannot be stacked 3.  Availability of payment pursuant to the MCS-90 is triggered only in instances where adequate insurance coverage is unavailable.   This may occur when, (1) the underlying insurance policy to which the endorsement is attached does not otherwise provide coverage, and (2) either no other insurer is available to satisfy the judgment against the motor carrier, or the motor carrier’s insurance coverage is insufficient to satisfy the federally-prescribed minimum levels of financial responsibility 4.    

As set forth on the endorsement form, the MCS-90 obligates an insurer to pay any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance, or use of motor vehicles subject to the financial responsibility requirements of the Motor Carrier Act 5.  The insurer’s obligation to make payment exists regardless of whether the motor vehicle involved is specifically described in the policy or whether the loss was otherwise excluded by the terms of the policy 6.   The underlying purpose of the MCS-90 is the protection of the public, not the inadequately insured carrier, and the endorsement contains a provision explicitly providing an insurer with the right to recover from the insured 7.  The “endorsement does not extinguish the debt of the insured; it transfers the right to receive the insured’s debt obligation from the judgment creditor to the insurer.” 8

Despite a denial of insurance coverage based on policy exclusions, and even when denial is proper pursuant to policy language, the insurer remains obligated to pay up to the applicable limits of the MCS-90.  Beyond this obligation to pay, however, the insurer’s obligations are limited.  It is well settled in the courts that because the MCS-90 is not an insurance policy, the insurer has no duty to defend the carrier in an action where it applies. 9  It is also established that the insurer has no duty to settle. 10  

A Recent Example of Settlement Negotiated with the MCS-90

Although the MCS-90 may appear to be the last resort when no insurance coverage exists, if used strategically, it can serve as a valuable tool for negotiating with all involved parties including an injured plaintiff, the insurer, and the motor carrier. 

In a recent case our firm handled, our client’s insurer denied coverage based on the failure to list the vehicle involved in an accident on the insurance policy.  The injured plaintiff advanced a claim for damages above the limits of the MCS-90 coverage applicable to this particular carrier.  Through negotiations at a court-required mediation with plaintiff’s counsel and the insurer, we were able to reach a settlement relieving the carrier from substantial financial liability involving a plaintiff who had approximate annual earnings of $900,000.00 and had recently retired.  Additionally, we were able to negotiate an agreement with the insurer whereby it waived any and all claims and agreed not to recover from the carrier.  To further assist in a resolution, the carrier agreed to indemnify and defend the driver who was also named as a defendant.  Ultimately, the client was only obligated to pay a settlement amount consisting of a fraction of the plaintiff’s initial claim, and we were able to arrange an installment plan for payment.  This enabled the plaintiff to recover for injuries sustained, the client to avoid extreme financial hardship, and all parties, including the insurer, to resolve the matter without additional protracted litigation and costs related thereto.  

Education of all Participants is Key

At the outset, it is imperative to ensure that all participants understand the unique nature, purpose, and application of the MCS-90 endorsement.  The majority of counsel representing plaintiffs injured in motor vehicle accidents do not have extensive knowledge of motor carrier regulations, particularly if their experience is primarily in litigating accidents that do not involve commercial vehicles.  If a plaintiff’s attorney is unfamiliar with motor carrier litigation, they are unlikely to understand the nuances of the application of the MCS-90 and may not even be aware of its availability. 

Confirming that representatives of the insurer, including insurer’s counsel if involved, are thoroughly informed regarding application of the MCS-90 is also of utmost importance.  Although they may have cursory knowledge of the MCS-90, it is foreseeable that they have not encountered instances where it was applied or are unaware of relevant legal precedent and developments. 

The motor carrier client should also be fully apprised of the purpose of the MCS-90 and how it functions in relation to the carrier’s specific circumstances.   It must be impressed upon the carrier that the MCS-90 does not operate as insurance coverage after a denial of policy coverage or absolve the carrier of financial responsibility arising from a plaintiff’s claim. 

Finally, it is critical that counsel defending the motor carrier be proactive in ensuring that the MCS-90 is explained thoroughly to the court presiding over the matter.  This includes comprehensive briefing of not only the general purpose and application of the MCS-90 but citation to definitive legal precedent supporting the carrier’s position.   

Interests and Concerns of Parties

When approaching plaintiff’s counsel to discuss settlement in matters where payment under the MCS-90 is available, it may be worthwhile to advise that it potentially offers the most direct means of recovery.  Additionally, because the MCS-90 only applies when adequate insurance coverage does not exist, it may be the only viable means for recovery.  This is worth noting, especially when a carrier has insufficient financial resources to pay damages, is insolvent, or has ceased business operations, and a plaintiff will experience extreme difficulty collecting a judgment award.  Engaging plaintiff’s counsel in a realistic and straightforward discussion of the amount available based on the MCS-90 can assist in reaching a settlement and assuring plaintiff of certain recovery.   

Although the MCS-90 can provide a plaintiff with a means of recovery, it must be clarified that the MCS-90 does not negate the plaintiff’s burden of establishing liability.   MCS-90, “ . . .provisions were designed to ensure the collectability of a judgment — not to relieve the injured member of the public from the requirement that he or she obtain a final judgment of legal liability against the motor carrier and its insurers as a prerequisite.” 11 

With respect to the insurer, although it has no duty to defend or settle cases where the MCS-90 is triggered, it may be advantageous for it do so.  From the insurer’s perspective, participating in the carrier’s defense can avoid a default judgment, provide certainty of a judgment, and reduce liability where solid, meritorious defenses can be raised.  When faced with the unavoidable obligation to make payment based on the MCS-90 endorsement, a prudent insurer should aim to reduce that amount. 

In instances where the insurer does not provide a defense, the insurer’s participation in settlement negotiations can also serve to reduce potential exposure.  This is likely to be a more attractive option for the insurer when the success of financial recovery from the carrier is questionable or when a settlement can be reached within the applicable limits of the MCS-90.    

A level of confusion and disagreement exists with respect to the application of the reimbursement provisions of the MCS-90 to settlements that do not constitute final judgments.  While there is a dearth of caselaw on this particular issue, the Fifth Circuit has provided guidance, explaining that, “If the insurer must pay a final judgment under the MCS-90, there is no reason why it could not seek a favorable settlement rather than risk litigating to a final judgement that could be more onerous.” 12  On a broader scale, permissible application of the MCS-90 to settlements also comports with the public policy interest in promoting settlement.   

Counsel defending the motor carrier should clarify with the insurer that while there is no duty for the insurer to settle pursuant to the MCS-90, the insurer is not precluded from doing so.  By eliminating any confusion that a final judgment is the only method of resolution in matters involving the MCS-90, counsel can effectively remove that roadblock to negotiating a settlement. 

From the motor carrier client’s perspective, the MCS-90 endorsement may not appear at first glance to be an advantageous option.   While the MCS-90 may substantially or fully satisfy a plaintiff’s judgment, the client may still face significant financial liability.  If the plaintiff’s judgment exceeds the available limits of the MCS-90 endorsement, the client can be liable for repayment of the excess amount in addition to repayment to the insurer by virtue of the insurer’s statutory right to recover amounts it paid under the MCS-90.  

In such circumstances, working with the insurer to negotiate a settlement that potentially reduces the insurer’s financial exposure can also provide the opportunity to reach an agreement limiting or foregoing the insured’s right to recover from the client.   In the interest of resolving a matter, the insurer may be amenable to such an agreement, especially if it will be difficult or impossible to recoup any payments made under the MCS-90 due to the carrier’s tenuous financial position.   

Another consideration in representation of the carrier exists if the driver of the involved vehicle is named as a defendant.  Counsel must emphasize that the MCS-90 only requires the insurer to satisfy judgments against the carrier and does not apply to judgments entered against the driver as the carrier’s employee. 13  

To avoid a conflict by representing both the interests of the carrier and the driver, counsel can attempt to negotiate an agreement where the carrier indemnifies the driver and assumes the driver’s defense.  By agreeing to indemnify and defend the driver, the carrier assumes all responsibility; however, the carrier also avoids another layer of litigation directly with the driver, which foreseeably will arise once the driver realizes that required insurance coverage was not in place.    

Familiarity with the purpose, requirements, and application of the MCS-90 is essential when tasked with the defense of a motor carrier lacking adequate insurance coverage.   By gaining a comprehensive understanding of the MCS-90 and ensuring all interested participants are thoroughly informed of its availability and application, a transportation practitioner will create an effective avenue to facilitate resolutions in the face of litigation.

The Lynch Law Group Transportation and Litigation Practice Groups

Frank Botta is a Partner and Chair of both the Transportation and Litigation Practice Groups. He is an active member of the Transportation Lawyers Association, where he served as the organization’s President (2017 – 2018) and currently serves on the Executive Committee.

For assistance understanding MCS-90 and what it means for you, contact at fbotta@lynchlaw-group.com or by phone at 724-776-8000.

Elizabeth Lodovico is an Associate in the Litigation Practice Group.  She brings a passion for client satisfaction and an innovative business sense to her practice, ensuring excellent results for her clients.



1 49 C.F.R. § 387.303
2 Transport Indem. Co. v. Carolina Cas. Ins. Co., 652 P.2d 134, 145 (Ariz. 1982); Cagle v. Wesco Ins. Co., Civil Action No. 2:21-CV-52-RWS, 2021 U.S. Dist. LEXIS 253756, at *10 (N.D. Ga. Dec. 6, 2021).
3 Carolina Cas. v. Yeates, 584 F.3d 868, 886 (10th Cir. 2009).
4 Yeates at 878.
5 Id. at 887.
6 Wesco Ins. Co. v. M.O.S. Express, No. 2:21-00374-KD-N, 2021 U.S. Dist. LEXIS 238743, at *6 (S.D. Ala. Dec. 13, 2021).
7 Yeates, at 878.
8 Travelers v. Western Am. Specialized Transp. Servs., Inc., 409 F.3d, 256 260 (5th Cir. 2005).
9 Harco Nat’l Ins. Co. v. Bobac Trucking, 107 F.3d 733, 736 (9th Cir. 1997).
10 Progressive Commercial Cas. Ins. Co. v. Xpress Transport Logistics, LLC, No. H:21-2683, 2022 WL 103555 (S.D. Tex. 2022).
11 Yeates at 875.
12 T.H.E. Ins. Co. v. Larsen Intermodal Servs., 242 F.3d 667,676 (5th Cir. 2001).
13 Ooida Risk Reten. Group, Inc. v. Williams, 579 F.3d 469, 478 (5th Cir. 2009) (citing FMCSA, Regulatory Guidance for Forms Used To Establish Minimum Levels of Financial Responsibility of Motor Carriers, 70 FR 58065-01 (Oct. 5, 2005)).


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