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The audio portion of the conference may be accessed via the telephone or by using your computer's
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have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.
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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FOR LIVE EVENT ONLY
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 [email protected] [email protected] [email protected]
July 12, 2017
Overview
• Every large commercial vehicle accident is more than how the accident occurred and an injury.
• Issues include:
• Entities involved
• Contracts
• Insurance
• Case Study
6
Accident – Case Study
• Shipper contacts Broker to broker load of 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.
7
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
8
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
9
Triggering the Minimums
49 CFR 387
Gross Vehicle Weight Rating
>10,000 lbs
10
Exemptions
49 USC 13502 Intrastate commerce ̶ §13504
Private carriers ̶ §13505
Miscellaneous ̶ §13506
Farmers
Exempt commodity
11
MCS-90 Endorsement
12
MCS-90 (Exclusions)
13
MCS-90 (No Coverage Limitations)
14
MCS-90 (Reimbursement Provisions)
15
MCS-90 (Direct Action)
16
Intrastate Commerce – TEXAS (43 TAC §218.16(a)
All Others
Private or for-hire
motor carriers with
a gross weight,
registered weight
or gross weight
rating in excess of
26,000 pounds
$500,000
17
Form E
18
How to Meet the Minimums
ow to Meet the Minimums
19
1. Admitted insurer
20
2. Self-insured program
21
3. Captive Insurer/Risk Retention Groups
22
Coverage Forms
erage Forms
23
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
24
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
25
Motor Carrier Coverage Form
61 Any “auto”
67 Specifically described
“auto”
68 Hired “autos” only
71 Non-owned “autos” only
26
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
ownership, maintenance or use of a
covered “auto.”
27
Who is an Insured?
28
Who is an Insured?
29
Who is an Insured?
30
Who is an Insured?
31
Who is an Insured?
32
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.
33
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
34
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
35
Some Issues that Arise (MANY more!)
Tender Issues
Conflicts
Communication
Priority of Coverage – SIRs, Exhaustion
36
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 opportunities 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
37
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
38
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
39
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 or 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
40
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?
41
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).
42
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
43