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Presenting a live 90-minute webinar with interactive Q&A Trucking Accident Cases and Insurance Coverage Complexities: Guidance for Personal Injury Counsel Minimum Insurance Requirements, Applicable Coverages, Impact of Written Lease

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Presenting a live 90-minute webinar with interactive Q&A

Trucking Accident Cases and Insurance Coverage Complexities: Guidance for Personal Injury Counsel

Minimum Insurance Requirements, Applicable Coverages, Impact of Written Lease Agreements and More Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific WEDNESDAY, JULY 12, 2017

Christine Anto, Partner, SmithAmundsen, Chicago Lew R.C. Bricker, Partner, SmithAmundsen, Chicago Peter Kestner , Attorney, McEwen & Kestner, Inver Grove Heights, Minn.

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Trucking Accident Cases and Insurance Coverage Complexities: Guidance for Personal Injury Counsel

Lew Bricker Christine Anto Pete Kestner SmithAmundsen LLC SmithAmundsen LLC McEwen & Kestner Law Firm Chicago, IL Chicago, IL Inver Grove Heights, MN

lbricker@salawus.com canto@salawus.com pkestner@mcewenlaw.com

July 12, 2017

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Overview

  • Every large commercial vehicle accident is

more than how the accident occurred and an injury.

  • Issues include:
  • Entities involved
  • Contracts
  • Insurance
  • Case Study

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Accident – Case Study

  • Shipper contacts

Broker to broker load

  • f tablets.
  • Broker selects Motor

Carrier and consults with Shipper.

  • Shippers gives specific

directions.

  • Shipper leases trailer.
  • Shipper provides

specific directions.

  • Broker enforces

directions.

  • Carrier places load

with 3rd Party Contract Motor Carrier.

  • 3rd Party Carrier has

Independent Contractor driver.

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Accident Aftermath – Brain Injury

  • Coverages in place:
  • 3rd Party Motor Carrier

has $1M

  • Motor Carrier has $5M

SIR and excess

  • Broker has $1M and

excess

  • Shipper has $10M and

excess

  • IC has $750K
  • Lessor has $3M
  • Indemnity and

additional insurance language:

  • Broker/Shipper
  • Broker/Carrier
  • Carrier/3rd Party Carrier
  • Trailer lessor/Shipper

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Minimum Financial Responsibility for Transporting Property

49 U.S. Code § 31139

(b) GENERAL REQUIREMENT AND MINIMUM AMOUNT. (2) The level of financial responsibility established under paragraph (1) of this subsection shall be at least $750,000

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Triggering the Minimums

49 CFR 387 Gross Vehicle Weight Rating >10,000 lbs

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Exemptions

49 USC 13502

Intrastate commerce ̶ §13504 Private carriers ̶ §13505 Miscellaneous ̶ §13506 Farmers Exempt commodity

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MCS-90 Endorsement

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MCS-90 (Exclusions)

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MCS-90 (No Coverage Limitations)

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MCS-90 (Reimbursement Provisions)

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MCS-90 (Direct Action)

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Intrastate Commerce – TEXAS (43 TAC §218.16(a)

All Others Private or for-hire motor carriers with a gross weight, registered weight

  • r gross weight

rating in excess of 26,000 pounds $500,000

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Form E

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How to Meet the Minimums

  • w to Meet the Minimums

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  • 1. Admitted insurer

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  • 2. Self-insured program

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  • 3. Captive Insurer/Risk Retention

Groups

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Coverage Forms

erage Forms

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BACKGROUND

  • Truckers Coverage Form
  • Introduced in 1970’s
  • Contemplates for-hire motor carriers operating pursuant to rights granted

by a public authority

  • Motor Carrier Coverage Form
  • Introduced in 1993 primarily in response to deregulation of transportation

industry

  • Deregulation permitted motor carriers to engage in leasing arrangements;

wherein, the parties could draw hold harmless agreements assigning or accepting liability for injury or damage

  • Motor Carrier Coverage Form was designed to reflect the policyholder’s

responsibilities under such hold harmless agreements

June 1, 2010 – ISO Announced it Would Withdraw the Truckers Coverage Form

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SIGNIFICANT DIFFERENCES BETWEEN POLICY FORMS

  • Who Is An Insured
  • Permissive users
  • Owners/lessors of hired autos – owner/operators
  • Priority of Coverage (Other Insurance Condition)
  • Primary v. Excess

Biggest Difference:

 Dependence on Terms of Written Lease Agreements

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Motor Carrier Coverage Form

61 Any “auto” 67 Specifically described “auto” 68 Hired “autos” only 71 Non-owned “autos” only

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Insuring Agreement

SECTION II – LIABILITY COVERAGE A. Coverage We will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the

  • wnership, maintenance or use of a

covered “auto.”

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Who is an Insured?

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Who is an Insured?

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Who is an Insured?

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Who is an Insured?

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Who is an Insured?

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OWNERS/LESSORS QUALIFY AS INSUREDS

Covers the owner, employee or driver of the leased power unit ONLY IF:

1.The power unit is leased from the owner

under a written agreement;

2.The lease does NOT require the owner to

hold the Named Insured harmless; and

3.Is being used in the Named Insured’s

business of for-hire trucking.

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OTHER INSURANCE – PRIMARY AND EXCESS LIABILITY PROVISIONS

HIRED/BORROWED FROM NAMED INSURED:

  • Primary if written agreement between named insured (lessor)

and other motor carrier (lessee) DOES require the Named Insured to hold the lessee harmless

  • Excess if written agreement does NOT require the Named

Insured to hold the lessee harmless HIRED/BORROWED TO NAMED INSURED:

  • Primary if written agreement between other motor carrier (lessor)

and Named Insured (lessee) does NOT require the lessor to hold the Named Insured harmless

  • Excess if written agreement DOES require the lessor to hold the

Named Insured harmless

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PRACTICAL CONSIDERATIONS OF MOTOR CARRIER FORM

  • Motor Carrier Policy Will be Excess where Lease Agreements require

Owners/Operators to hold Motor Carrier harmless

  • O/O policy to be primary for both in theory
  • Effect of Anti-Indemnity Statutes
  • Owner/Operators May Not Be Covered Under Motor Carrier’s Policy
  • Does O/O have appropriate primary coverage?
  • Indemnification obligation
  • Defense cooperation issues
  • O/O and its insurer may attempt to push liability onto Motor

Carrier

  • O/O may concede liability—agreed judgment
  • Could alienate O/O’s—may lose good drivers

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Some Issues that Arise (MANY more!)

  • Tender Issues
  • Conflicts
  • Communication
  • Priority of Coverage – SIRs, Exhaustion

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Tender Issues

Early Bird Catches… the Cash!

  • Early assessment of loss
  • Issue identification
  • Liability, damages and coverage
  • Driver v. motor carrier
  • Early review of contracts for risk transfer
  • pportunities
  • Insurance, Contractual Indemnity, UIIA, etc.
  • Notify/tender other parties & parties’ insurers

immediately

  • Don’t forget about excess
  • There’s more than defense…
  • Post-Tender Recovery

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Conflicts

Defense Counsel

  • Who do you represent?
  • Who do you report to?

Copy?

Client

  • Who is kept in the loop?
  • Can you tell everyone

everything?

  • Setting up for settlement

Insurer

  • Whose best interest?
  • Named insured(s) v.

additional insured(s)

  • Multi-Claimant Issues

Conflicts with MC & Drivers Split Defense Files Split Insurance Files – Multiple Claim Reps Direction & Control of Defense Sharing Information with Excess

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Managing Communications

  • Privilege Issues
  • Separate communications?
  • Sizeable deductibles/SIRs
  • Coordination and Control of Defense
  • Requiring approved counsel
  • Dictating strategy
  • Multiple Claimants & Insureds
  • Same insurer for multiple parties

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MCS-90

History

  • Motor Carrier Act of 1980
  • Requires proof of minimum financial responsibility for interstate

transportation with a gross vehicle weight rating of 10,000 or more pounds:

  • For-hire motor carriers transporting nonhazardous property =

$750,000

  • For-hire and private motor carriers of hazardous substances =

$1,000,000

  • For-hire and private motor carriers operating portable tanks, cargo
  • r hopper-type vehicles with capacities in excess of 3,500 gallons =

$5,000,000.

  • Financial responsibility satisfied by insurance policies (MCS-90), surety

bonds (MCS-82), or self-insurance

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MCS-90

  • Most common way to meet financial requirements
  • Intended as “Safety Net”
  • Repeatedly misunderstood and misinterpreted by Courts
  • Common MCS-90 Problems:
  • Do policy terms and conditions apply?
  • Who is the “Insured”?
  • Is a judgment against the “Insured” necessary?
  • Must the “insured” be liable for accident?
  • How does a MCS-90 apply in conjunction with other insurance?
  • The insurer’s right to reimbursement from whom?
  • No duty to defend, but who should control defense?

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MCS-90

  • Liability has been expanded by Courts solely because of MCS-90
  • Case Examples:
  • MCS-90 liability expanded to permissive user of a non-scheduled

auto, who would not otherwise qualify as an “insured” under the insurance policy. John Deere Ins. Co. v. Nueva, 229 F.3d 853 (9th

  • Cir. 2000).
  • Liability under a MCS-90 endorsement was allowed from a second

insurance company that did not otherwise provide coverage even though recovery from another insurance company exceeded the federally mandated minimums. Lynch v. Yob, 768 N.E.2d 1158 (Ohio 2002).

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Trends In Insurance Coverage

  • High SIRs & Deductibles
  • Often controlled by policy language – AI issues, etc.
  • Exhaustion Issues
  • Fronting Agreements
  • Who controls?
  • Mixed Programs
  • Combination self-insured and policies
  • Excess Layer Retentions
  • Corridor Programs
  • Risk Retention Pools
  • Often don’t know in play

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