Congress passed the Motor Carrier Act of 1980 (MCA) with the intention of overhauling "outdated and archaic regulatory mechanisms, while retaining the pluses of an industry that has worked by simply conducting itself under the ‘rules of the game.’ " Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868 (10th Cir. 2009) citing H.R. Rep. No. 96-1069, at 2.

After the passage of the MCA, however, legislators feared that the reduction of regulatory barriers for interstate motor carriers would result in increased safety concerns. One concern the MCA set out to address was abuse by motor carriers who borrowed or leased vehicles to avoid financial responsibility for accidents which occurred during the interstate transportation of goods.

In response, the MCA and other subsequent regulations promulgated by the Federal Motor Carrier Safety Administration (FMCSA) require interstate motor carriers to either maintain insurance or another form of surety "conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or death of any person resulting from the negligent operation, maintenance, or use of motor vehicles under the carrier’s permit." Carolina Cas. Ins. Co., supra. In particular, the MCA requires that a motor carrier may operate only if it is registered to do so and is willing to comply with certain "minimum financial responsibility guidelines". A carrier can establish proof of financial responsibility by one of three ways: (1) an MCS-90 endorsement, (2) a surety bond, or (3) self insurance.

As opposed to a surety bond or self-insurance, the MCS-90 endorsement states that the insurer agrees to pay, "within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to financial responsibility requirements of sections 29 and 30 of the Motor Carrier Act of 1980 regardless of whether or not each motor vehicle is described in the policy and whether or not such negligence occurs on any route or in any territory authorized to be served by the insured or elsewhere. . ."

The Courts vary in their interpretation and application of the MCS-90 endorsement and its interplay with the liability insurance policy. We will discuss these different interpretations in a subsequent post.

The full text of Carolina Cas. Ins. Co. v. Yeates, can be found at 584 F.3d 868 (10th Cir. 2009).