Duties in the absence of defense or indemnity obligations – A closer look at the MCS-90 endorsement and the inconsistencies in determining when it applies

Federal law obligates all motor carriers participating in the transportation of property in interstate commerce for hire to show proof that they have the financial ability to cover any damage they cause to the public. One way that motor carriers can satisfy this obligation is by choosing to add a MCS-90 endorsement to their trucking liability policies. This endorsement essentially guarantees the public that there will be some source of funds to pay for a loss caused by the motor carrier, even if its policy does not actually provide insurance coverage. Pursuant to the endorsement, the insured, in turn, agrees to reimburse the insurer for any payment it makes as a result of the insured’s breach of the policy or for any payment the carrier would not have been obligated to make under the policy but for the MCS-90.

Courts throughout the country take differing approaches when it comes to determining when the MCS-90 endorsement applies. For example, if a motor carrier’s vehicle causes an accident while not technically engaged in a trip for hire across state lines, some courts have found that such a trip qualifies as intrastate travel that does not implicate the MCS-90 Endorsement. Recently, the United States Supreme Court declined to accept for review a case interpreting the application of the MCS-90 endorsement from the Seventh Circuit, styled Prime Ins. Co. v. Wright, 57 F. 4th 597 (7th Cir. 2023). The Supreme Court’s denial of writ of certiorari leaves intact the Seventh Circuit’s ruling and reasoning in the case, discussed below, which only creates further confusion on when the MCS-90 applies.

Factual and Procedural Background

In Wright, Darnell Wright sustained injuries as a result of a collision with a freightliner truck driven by Riteway Trucking, Inc. (“Riteway”) employee Decardo Humphrey. Humphrey had driven from Illinois to Indiana, where he dropped off freight, and then received orders from Riteway’s dispatcher to pick up another load and drive back to Illinois. At the time of the accident, Humphrey was driving without any freight.

Wright filed suit in state court against Riteway and obtained a $400,000 default judgment in his favor. Prime Insurance Company (“Prime”), as Riteway’s trucking liability insurer, filed a declaratory action in the US District Court for the Northern District of Indiana and obtained a judgment declaring that it had no defense or indemnity obligations under the policy.

Prime then intervened in the state court action, and moved to set aside the default judgment on the basis of the coverage decision. The state court denied Prime’s motion, holding that Prime’s only remaining interest in the underlying lawsuit was its interest in limiting its potential future financial obligations to Wright under the MCS-90 endorsement. Prime then filed a second declaratory judgment action in the US District Court for the Northern District of Indiana, seeking a declaration that the MCS-90 endorsement did not apply. 

The District Court’s Analysis and Holding

In the second declaratory judgment action, the district court analyzed caselaw throughout the country to assist in determining whether the Wright accident implicated the MCS-90 such that Prime would have to pay the default judgment under federal law, regardless of policy coverage. It noted that courts are divided on whether the MCS-90 applies to intrastate accidents (as opposed to interstate accidents), as well as whether it applies to empty trucks. The district court concluded that Humphrey was engaged in interstate commerce at the time of the accident because he was performing pick-ups and deliveries per the instructions of Riteway over state lines. The district court distinguished this case from other cases involving facts where the trip never crossed states lines nor was intended to cross state lines, or where the driver was on a personal trip.

The district court then considered the second factor needed to implicate the MCS-90 – whether Humphrey was engaged in the transportation of property. While Humphrey was not hauling a load at the time of the accident, the district court found that in viewing the totality of the circumstances, Humphrey was engaged in transportation of property. The district court further found that the purpose and policy behind MCS-90 supported its conclusion that the MCS-90 endorsement was applicable and that consequently, Prime had to pay the default judgment, costs and interest under Indiana law.

The Seventh Circuit’s Analysis and Holding

While the Seventh Circuit affirmed the district court’s decision, its reasoning differed. The Court acknowledged there are three different approaches used to determine whether a truck is engaged in interstate commerce, all finding support in decisions throughout the US. The first approach, asserted by Prime, is the trip-specific approach, where the endorsement applies when a truck is hauling freight from one state to another at the moment of collision. The second approach, asserted by Wright, is the “fixed intent” approach, where the endorsement applies when the driver intends to transport the freight across state lines in the near future. The last approach, used by the district court, applies the “totality of the circumstances approach.”

Under the endorsement, “Prime agreed to pay any judgment ‘resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of Sections 29 and 30 of the Motor Carrier Act of 1980.’” The Court noted that laws governing trucking transportation have been recodified since the endorsement’s language was specified by federal regulation, but the parties agreed that the relevant language is now found in 49 U.S.C. § 31139(b)(1). The Court found that the three tests are absent from the text of the Code. The Court found the definition of “transportation” under § 13102(23)(B) helpful because it includes, in relevant part, “services related to that movement, including . . . interchange of . . . property” which indicated hauling freight at the time of the incident is not required. Further, it found that Section 13501 requires either interstate or international transport. Accordingly, “by tracing the vital language” of the Code, rather than applying any of the tests, the Court held the endorsement applied, and Prime must pay the $400,000 judgment plus interest.


With the US Supreme Court’s denial of certiorari, there is now caselaw supporting four different approaches to determine when the MCS-90 endorsement is applicable. Insurers that issued policies with the MCS-90 endorsements should understand that uncertainty will likely surround disputes concerning when the MCS-90 is applicable, and thus, when its financial responsibility obligations will ultimately arise.