Personal injury lawyers must often navigate complex and confusing insurance policies that might be available to compensate their injured clients. Insurance policy types may include general liability, professional liability, medical payment, health insurance, and in a recent truck accident case decided by the Indiana Court of Appeals, an MCS-90 Endorsement. An MCS-90 is known to truck-accident attorneys as a federally-mandated endorsement to an insurance policy that ensures federally-regulated motor carriers will meet their public financial responsibility obligation in the event of a breach of the terms of the policy by the insured motor carrier. This has been described by at least one court as “suretyship by the insurance carrier to protect the public.”
In Prime Insurance Co. v. Wright, a motorist injured in a truck accident filed a state-court lawsuit against multiple defendants, including the at-fault truck driver and multiple trucking companies. One of the insured trucking companies, Riteway Trucking, Inc., did not cooperate with Prime Insurance and did not appear or present any defense. Choosing not to defend Riteway, Prime also filed a separate federal court declaratory judgment action seeking a declaration that it had no duty to defend or indemnify Riteway or any of the defendants. The injured motorist then moved for default judgment against Riteway and other defendants on both liability and damages. Prime was next granted permission to intervene in the state-court lawsuit. The state court then entered a default judgment in favor of the injured motorist against the trucking companies, including Riteway, in the amount of $400,000. Prime filed an answer and sought to set aside the default judgment and to obtain discovery in the state-court action. The state court denied the motion to engage in discovery but stayed the state court action pending the federal court action.
The federal court entered an order that Prime did not owe any duty to defend or indemnify Riteway, because Riteway had failed to meet its obligations under its insurance policy with the insurance carrier. However, the insurance policy also contained an MCS-90 Endorsement, which was separate from and in addition to the liability policy issued to Riteway. Under Federal law, motor carriers must maintain proof of financial responsibility, and an MCS-90 Endorsement is in effect a guarantee by an insurance company to protect the public where a federal motor carrier is responsible for an accident causing personal injury to a member of the public. The federal court ordered that Riteway would be liable for any payments the insurance carrier made under the MCS-90 Endorsement under the policy.