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The FMCSA Expectations on Truckers’ “Financial Responsibility”

The FMCSA takes its role as regulator and enforcer of financial responsibility by commercial motor carriers very seriously. In the world according to FMCSA, “financial responsibility” means having tons of the right truck insurance coverage for the commercial carrier’s particular business so that the American public is protected from injury (and even fatalities), property damage and environmental damage caused by commercial motor vehicles (CMVs). Basically, it’s all about the trucking company’s liability in the event it is responsible for an accident causing injury and/or death or property damage and for causing any damage to public property or the environment.

In one of their Power Point presentations, the FMCSA defines “financial responsibility” as “Having insurance policies or surety bonds sufficient to satisfy the minimum public liability requirements.” In addition, FMCSA decides what those trucking minimum public liability requirements are. They vary according to the kind and amount of cargo carried, the size and weight of the CMV and trailers in question, and the rating and classification of the company by FMCSA.

It defines public liability as “liability for bodily injury, property damage and environmental restoration.” In the case of damage to the environment or public property, the FMCSA requires “Environmental restoration [which] means restitution for the loss, damage, or destruction of natural resources arising out of an accidental discharge of toxic or other environmentally harmful materials or liquids.” The “proof” of financial responsibility, which are the properly filled out and signed FMCSA forms with the insurance policies attached to it, must be kept 1) at the trucking company’s place of business and 2) in each CMV the company owns, leases or operates.

The FMCSA has a zero tolerance and take-no-prisoners attitude toward non-compliances. No insurance is a big no-no, no excuses. Any company caught without the proper proof in the proper places is subject to an $11,000 fine, and if the violation is a continuing one, each day the company is in violation it will be assessed another $11,000 penalty and possibly other fines and penalties. Any CMV attempting to enter the US  without the proper forms and documentation of the truck insurance policy in its possession will be denied entry into the US. The regulations do provide for penalties that fall short of putting a company out of business, provided the violations are not knowingly repeated and egregious. The minimum levels of insurance according to the nature of a trucking company’s equipment and the nature of its business are available at FMCSA Insurance Requirements.

TAGS: commercial motor carriers, truck insurance, truck insurance coverage, truck insurance policy, trucking minimum public liabiltiy requirements

Operating Authority and Truck Insurance Requirements

The types of a company’s operating authority dictate its commercial insurance requirements and financial responsibilities to the public. Generally speaking, according to the FMCSA, “Companies that operate as “for hire” trucking carriers (for a fee or other compensation) that transport passengers or federally regulated commodities, or arrange for their transport, in interstate commerce are also required to have interstate operating authority.” FMCSA regulated operating authority that it grants to trucking companies often go by the acronyms of the various kinds of operating authorities such as an “MC,” “FF,” or “MX” number, all depending on the type of authority that the FMCSA  grants. Unlike the requirements for obtaining the USDOT Number, a trucking company may need to obtain more than one or two operating authorities to comply with Federal regulations for the trucking company’s self-described business operations. The types of operating authority dictate the kinds of different operations a company may engage in, the cargo it can lawfully carry and the actual geographic areas in which it can conduct its business.

All of these stipulations and regulations also dictate the level and kinds of commercial insurance coverage and the legally mandated financial responsibilities a company must assume (and be financially competent to assume).

While most trucking companies have to have operating authority, a few are not required by law to have operating authority. These include private carriers, carriers that only transport exempt cargo (meaning cargo that is not federally regulated), or trucking companies that operate only within a federally denominated “commercial zone” that is exempt from FMCSA interstate authority rules. The FMCSA  says, “A commercial zone is, for example, a geographic territory that includes multiple states bordering on a major metropolitan city, such as Virginia/Maryland/Washington, DC.”

Once a trucking company has handled the “paperwork” and filing for DOT Numbers and Operating Authority, the next step involves complying with insurance regulations specific to the details of the kinds of operating authority and the nature of his particular trucking business. These regulations are revealed on the forms specific to them which the trucking company owner must fill out. They are endorsement forms legally stating and proving that the trucking company has the correct public liability insurance for his various classifications. These forms can be viewed at (click here) FMCSA Insurance Related Forms.

In addition to these forms, the FMCSA requires all trucking companies to meet the individual state truck insurance requirements for each state in which it operates.  Thirty-eight states have reciprocity agreements of one kind or another, though nearly all have differing insurance requirements. The FMCSA conveniently supplies the phone numbers and addresses for all of the states’ trucking and highway regulating authorities.

TAGS: commercial insurance, commercial truck insurance, state truck insurance, truck insurance, Truck Insurance Requirements, trucking companies

What Truckers Need to Know About the FMCSA

The Federal Motor Carrier Safety Administration, located at the U.S. Department of Transportation, Washington, DC 20590, is the official agency of the Federal government that regulates the interstate trucking industry. Many of the truck insurance requirements for commercial trucking are set by FMCSA. The agency’s official site is (click here) Federal Motor Carrier Safety Administration and has online and available to the public all of its hundreds of rules, regulations, safety research and thousands of resources.

All truckers who want to carry freight for hire throughout the United States have to register with the FMCSA. The FMCSA registration process requires that companies (including individuals who carry cargo as a business) must define the type of Motor Carrier, Broker, Shipper and/or Freight Forwarder business operation they will operate. The FMCSA administers the Federal Motor Carrier Safety Regulations (FMCSR) and Hazardous Materials Regulations (HMR) that govern all interstate—and some intrastate—commercial trucking and bus industries. The FMCSA says, “This determination [of type of cargo business a trucker will conduct] is based on self-classification of a company’s planned business operation using criteria such as cargo, operation, and company type.”

The FMCSA sets the standards for all commercial vehicles, drivers and truck and bus companies operating in all interstate transportation of passengers and cargo, including Hazardous Materials. The Agency’s powers include the monitoring and enforcing compliance with regulations governing both safety and commerce. The FMCSA says its focus on both “safety and financial responsibility—is reflected in the dual path of its current registration process. Companies may find they are subject to both registration requirements—USDOT Number and Interstate Operating Authority—or either one separately.”

In order to help a company through the thicket of Federal regulations as they pertain to commercial trucking—and the kinds and amounts of insurance coverage they must obtain—the FMCSA has on its site several tables describing the Federal requirements for each type of commercial trucking business.

FMCSA, however, encourages all who have internet access to use a special site designed to simplify understanding their rules and regulations as they apply to an individual trucking business. The FMCSA says, “A much faster option is to apply through the Online Registration and Compliance Assistant, an easy-to-use Web site designed specifically to help applicants determine which registration forms are required, and to help users complete them correctly.”

The FMCSA site also has a matrix of tables that shows the graduated levels of responsibility for certain licensing ranging from the simple Department of Transportantion “DOT Number,” a number unique to each operating truck, up to the highest and, in a sense most independent, trucking status of having one’s own “operating authority,” a status that is granted by the FMCSA to trucking companies meeting the toughest standards, including commercial truck insurance standards.

TAGS: commercial truck insurance, commercial vehicles, federal motor carrier safety administration, truck insurance, Truck Insurance Requirements, truckers, trucking business, trucking industry