...
Protecting your company by maintaining suitable types and levels of insurance is sound business practice. For some motor carriers, however, not all insurance coverage is optional.
Scope
The federal government has mandated that certain carriers must have insurance in place to protect the public before they are granted the authority to operate. This coverage is commonly known as “public liability and property damage (PL and PD) insurance.”
The regulations in Part 387 specify which carriers must have public liability and property damage coverage, and the minimum amount required. You are subject to these financial responsibility requirements if you are:
- An interstate for-hire carrier or freight forwarder transporting non-hazardous property in vehicles with a GVWR of 10,001 lb. or more as required in 387.9(1).
- An interstate for-hire carrier of passengers according to 387.33.
- An interstate or intrastate for-hire or private transporter or freight forwarder of specified hazardous materials with vehicles having a GVWR of 10,001 lbs. or more as defined in 387.9(2), (3).
- An interstate for-hire or private carrier or freight forwarder of specified hazardous materials with vehicles having a GVWR of less than 10,000 lbs. as defined in 387.9(4).
Regulatory citations
- 49 CFR 387 — Minimum Levels of Financial Responsibility for Motor Carriers
Key definitions
- Process agent: A process agent is a representative upon whom court papers may be served in any proceeding brought against a for-hire carrier, forwarder or broker.
Summary of requirements
The regulations in Part 387 specify which carriers must have public liability and property damage coverage, and the minimum amount required. You are subject to these financial responsibility requirements if you are:
- An interstate for-hire carrier or freight forwarder transporting non-hazardous property in vehicles with a GVWR of 10,001 lb. or more as required in 387.9(1).
- An interstate for-hire carrier of passengers according to 387.33.
- An interstate or intrastate for-hire or private transporter or freight forwarder of specified hazardous materials with vehicles having a GVWR of 10,001 lbs. or more as defined in 387.9(2), (3).
- An interstate for-hire or private carrier or freight forwarder of specified hazardous materials with vehicles having a GVWR of less than 10,000 lbs. as defined in 387.9(4).
PL and PD insurance must be active or the carrier risks suspension or revocation of operating authority as well as fines or other enforcement action.
For-hire carriers must file proof of the required coverage with the FMCSA before operating authority will be granted.
Proof of insurance. All for-hire and private carriers required to have and maintain PL/PD insurance under Part 387 must retain proof of public liability and property damage at their principal place of business. Property and hazardous materials carriers must have either an MCS-90 or MCS-82 issued by the insurance carrier; passenger carriers must have an MCS-90B or MCS-82B.
Cargo insurance. The FMCSA also requires household goods carriers and freight forwarders of household goods to have cargo insurance.
- Section 387.303(c). $5,000 for loss or damage to property carried on one vehicle, and $10,000 for the aggregate loss or damage to property occurring at any one time or place.
Broker surety bond or trust fund. To obtain broker authority, a $75,000 surety bond or trust fund must be in effect as required by 49 CFR 387.307.
- Evidence of a surety bond must be filed using the FMCSA’s prescribed Form BMC-84.
- Evidence of a trust fund with a financial institution must be filed on Form BMC 85.
Process agent designation — BOC-3. When applying for authority, applicants must submit Form BOC-3, “Designation of Legal Process Agents” listing an agent for each state in which operations will be conducted. A “blanket designation” may be used to meet this requirement, rather than contracting with an agent in each state individually.