What is motor carrier insurance? What a motor carrier policy covers

If you haul freight for pay, everyone from FMCSA to the broker on your first load will ask about your motor carrier insurance. The phrase sounds like one policy. It's really a set of coverages a trucking company carries, built around one piece the government requires: liability insurance that your insurer files with FMCSA. Here's what that core policy does, what it leaves out, and what else you'll be asked to carry.

Who counts as a motor carrier

In federal terms, a motor carrier is a business that runs commercial trucks in interstate commerce, either hauling other people's freight for pay (a for-hire carrier) or hauling its own goods (a private carrier). The federal rules start once a truck, or a truck and trailer together, is rated at 10,001 lbs or more. The insurance rules differ between the two. For-hire carriers must carry federal minimum limits and have them filed with FMCSA. Private carriers hauling their own non-hazardous goods don't file, but they still need a commercial auto policy under state law.

The required core: primary auto liability

Primary auto liability pays for injuries and property damage your trucks cause to other people. It's the only coverage FMCSA requires of most for-hire carriers, and it's the one your authority depends on: FMCSA won't activate your MC authority until your insurer electronically files proof of it, on form BMC-91 or BMC-91X. You can't file that form yourself.

The policy also carries the MCS-90 endorsement, a federal guarantee that the public gets paid for a judgment against you even in some cases your policy wouldn't otherwise cover. If the insurer pays under the MCS-90 for something your policy excludes, it can come back to you for the money. The MCS-90 protects the public, not you.

Federal minimum liability limits

These are floors, not recommendations. Most brokers and shippers won't tender a load to a carrier with less than $1,000,000 of liability, so that's the limit most new authorities actually buy.

What a motor carrier policy covers

Most trucking liability is written on a motor carrier coverage form, a policy form built for trucking rather than for a business that happens to own a van. It treats your tractors and trailers as covered autos, can extend coverage to trucks you lease from owner-operators while they run under your authority, and lets you add trucking coverages such as trailer interchange. What it covers exactly depends on which autos the policy is written for. If your policy covers only the trucks listed on it, a newly added truck may not be covered until you report it, so tell your agent before new equipment runs.

What it doesn't cover

• Damage to your own truck and trailer. That's physical damage coverage, a separate part of the policy priced on the equipment's value.
• The freight you're hauling. That's motor truck cargo. FMCSA only requires cargo coverage from household goods movers ($5,000 per truck and $10,000 per occurrence), but most brokers ask for $100,000.
• Driving without a load for the carrier you're leased to. Leased owner-operators need non-trucking liability (or bobtail) for those miles.
• Injuries and damage from your business outside the truck, like at a dock or your yard. That's general liability, which many brokers and warehouses also ask for.
• Injuries to you or your employees. That's workers' compensation for employees, or occupational accident for owner-operators.
• Claims bigger than your limit. Excess or umbrella liability sits on top of your primary policy.

What brokers and shippers check

Before tendering a load, most brokers check your insurance in FMCSA's records and ask your agent for a certificate of insurance. They look for active authority, at least $1,000,000 of auto liability, cargo at their required limit, and often general liability. Intermodal work adds the UIIA's rules: $1,000,000 of auto liability, $1,000,000 of general liability, and trailer interchange at the limits each equipment provider sets.

What it costs

Price depends on your driving experience, your record, your equipment, how far you run and what you haul. As a rough guide, a first-year authority running a semi with $1,000,000 of liability and $100,000 of cargo usually pays $12,000 to $20,000 a year in Illinois or Texas before physical damage, and box trucks usually run $6,000 to $12,000. Chicago-area garaging prices higher than downstate Illinois or most of Texas. Rates usually come down once you have clean history: many carriers re-rate after 12 months, and the standard market opens up around 24 to 36 months.

How to get covered

1. Apply for your USDOT number and MC authority with FMCSA.
2. Get insurance quotes during the vetting period, so coverage is ready the day your authority can go active.
3. Bind the policy and have your insurer file the BMC-91X with FMCSA.
4. File your BOC-3 process agent designation and complete your UCR registration.
5. Send certificates of insurance to brokers and shippers as the loads come in.