Policy Cancellation Misconceptions
Stressful situations arise when running a trucking company, and understanding the insurance requirements adds to that stress. Finding an insurance agent who provides clarity reduces that stress. A good agent may find workarounds if a monthly payment can’t be made, or if you find yourself in a situation where your trucks are not running. In the event that you have no other options and need to cancel your insurance, you need an agent who can guide you through the process.
The FMCSA mandates that all trucking companies carry liability insurance. Most importantly, it factors in differentiating between active and inactive authorities. You must maintain active liability insurance to keep your business running. Even a small lapse in insurance and/or authority could set your business back. The mandates, laws, and requirements make policy cancellations seem complex. An agent who understands these laws help you to avoid the headache of going at it alone. So, what happens if you cancel your policy?
FMCSA Mandate
In order to help secure the general public’s safety the cancellation of a liability policy will result in the policy remaining active for at least 35 days after a cancellation notice or request. According to the Federal Motor Carrier Act of 1980 (section 387.7), financial responsibility falls on the insured through this time. All in all, this mandate helps ensure that all commercially owned and/or operated vehicles are insured.
Form MCS-90
According to Sections 29 and 30, companies must fill out an MCS-90 form. MCS-90 is also known as the Endorsement for Motor Carrier Policies of Insurance for Public Liability. The form proves that the company’s financial responsibility is equal to or greater than that of the minimums set by each state. You obtain financial responsibility in one of three ways: self-insured, surety bond, or standard market insurance.
- Self-Insured - Company takes on the full financial responsibility.
- Surety Bond - A surety bond company promises to pay for the trucking company if they fail to pay.
- Standard Market Insurance - This is when the MCS-90 comes into play.
The FMCSA states, “Cancellation of this endorsement may be affected by the company or the insured by giving (1) thirty-five (35) days notice in writing to the other party (said 35 days notice to commence from the date the notice is mailed, proof of mailing shall be sufficient proof of notice)”. As well as, “(2) if the insured is subject to the FMCSA’s registration requirements under 49 U.S.C. 13901.” If so, they must provide thirty (30) days’ notice to the FMCSA. The notice commences from the date the notice is received by the FMCSA at its office in Washington, DC.
Ways Around the Mandate
Although there is no way around the mandate, on occasion an insurance provider may consider waiving the 35-day notice period. This happens if a trucking company voluntarily revokes its MC/DOT number/authority. Ultimately, your insurance provider (not your agent) makes this decision.
