P&CNationalhard
An interstate motor carrier's auto liability policy includes an MCS-90 endorsement. The carrier knowingly transports hazardous materials in a vehicle it did not disclose to its insurer, causing a public-injury accident. The auto policy excludes undisclosed vehicles. What is the insurer's MCS-90 obligation and recourse?
AThe insurer has no obligation to anyone at all, because the undisclosed-vehicle policy exclusion fully controls this loss
BThe insurer must pay the injured public up to the MCS-90 limit and has no right of reimbursement against the carrier
The insurer must pay the injured public up to the MCS-90 limit, then may seek reimbursement from the carrier
DThe insurer must pay the injured public, and the federal government then reimburses the insurer for that outlay
Why this is the answer
The MCS-90 is a federally mandated endorsement attached to motor carrier auto liability policies to satisfy FMCSA financial-responsibility minimums (49 CFR §387). It functions like a surety undertaking — the insurer must pay any final judgment to the injured public up to MCS-90 limits regardless of policy exclusions or breach by the insured. But the carrier signs a reimbursement covenant: any payment the insurer would not owe under the policy itself, the carrier must repay. See FMCSA MCS-90 endorsement, 49 CFR §387.15.
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