By Tim Morgan, Senior Account Executive, Rocky Mountain Regional Manager
Standard business Auto policies exclude coverage for pollution events unless they result from gas, brake fluid, or other substances that are vital to the operation of the vehicle. So if your insured rolls their truck and leaks oil and hydraulic fluid, cleanup costs are typically covered. However, pollution incidents involving other materials not used in the operation or maintenance of the vehicle are excluded. There are several solutions available for insuring over the road pollution exposures. Transportation Pollution Liability (TPL), MCS-90, and CA 99 48 endorsements are the most common coverages. These terms are often used interchangeably, but the coverages are different. Understanding the way these forms respond in the event of a loss is critical as some leave the insured on the hook for damages while others offer broad coverage and can be added for little to no additional premium. It is important to understand how these forms work together in order to provide comprehensive insurance coverage that will meet all state requirements.
The MCS-90 form is a required filing for insureds that offer for-hire interstate transport of goods or passengers. This requirement was created by the Motor Carrier Act of 1980. It is not true insurance coverage, but rather proof of financial responsibility that fills the gaps created by the exclusions on most business auto policies. It is a financial guarantee that the insurance company will respond when there is no coverage under the insurance policy, but there is a judgement against the insured for negligence in the operation of a motor vehicle. Since most commercial Auto policies exclude coverage for pollution incidents, the MCS-90 will respond if your insured causes a pollution event. But the real problems start after the claim is handled. The form language requires that the insured reimburse the carrier for: any payment that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in this endorsement. So now your client is on the hook for the damages if the underlying business Auto policy contains the standard pollution exclusion. While your insured may need this form to complete their filing with the state, they should also consider true environmental coverage solutions outlined below to avoid costly losses that could potentially shut down their operations. Form language can be found HERE.
The CA 9948 – Broadened Transportation Liability Endorsement is an ISO form that can be added to an insured’s business Auto policy to address environmental liability. This is an improvement over the MCS-90 since it is a true risk transfer option without the threat of the carrier seeking reimbursement from the insured following a loss. The form will typically respond to any claim or suit that holds the insured responsible for: monitoring, cleaning up, removing, containing, treating, destroying or neutralizing, or in any way responding to, or assessing the effects of “pollutants”. There is a notable gap in coverage for the loading and unloading of materials onto/off the vehicle. If the insured dumps a bucket of paint into a watershed while hoisting it into the truck, there is no coverage. This gap can be addressed by Transportation Pollution Liability policies. Most auto insurers can extend CA 9948 coverage for an additional premium, but not all markets are willing to offer this form.
Transportation Pollution Liability – TPL
Transportation Pollution Liability is a comprehensive insurance solution that extends coverage for damages or pollution conditions arising out of the ownership, maintenance use or the entrustment to others of any auto owned or operated by or rented or loaned to any insured. The definition of use is further amended to include loading or unloading, making this form broader than the CA 9948. This endorsement is often available for little or no additional premium on Contractors Pollution Liability (CPL) policies or as a stand-alone option. Minimum premium for CPL coverage including TPL has dropped to $1,500-$2,000 in recent years, making this an affordable solution for your clients. Contingent TPL coverage is also available to cover entities that are hauling or loading/unloading materials on behalf of your insured.
Beacon Hill is available to assist you with evaluating pollution exposures and solutions. We have options for the full spectrum of transportation risk, from large scale fleets of crude haulers to a contractor with a single pickup truck. We can often offer an indication for CPL/TPL coverage within 24-hours using only a revenue estimate. Contact your regional Beacon Hill representative to learn more about environmental solutions for your insureds.
Learn more about other types of environmental exposures.