Cargo Filings- The End is Near

A good deal of you are probably aware that cargo filings will no longer required soon- but many parties involved with trucking insurance are not. The D-Day is on March 21st, 2011.

There has been very poor or no communication from the insurance companies on what the procedure is, how it will be communicated, and what it all means. I thought I might take a minute and tell you what it means:

The history is pretty interesting with respect to cargo filings. US Code 49 USC13906 required that motor carriers of cargo operating within federal jurisdiction must show evidence of cargo liability insurance with minimum limits of a whopping $5,000 for loss or damage to the contents of any one vehicle and $10,000 for aggregate losses or damage at any one time or place,

With that came the famous or infamous Form BMC32. What did that do? It required insurers to endorse motor truck liability policies with the BMC32- which actually is a certificate of insurance. The endorsement is entitled "Endorsement for Motor Carrier Polcies of Insurance For Cargo Liability" -pretty darn official.

So what effect does or did the BMC32 have? It required the insurer to pay the shipper or consignee for all loss or damage for which the motor carrier is legally liable. It is important to know that the insurer's responsibility was not limited to the terms, conditions, or exclusions of the motor truck cargo policy. Moreover, a deductible on the policy made no difference. If the insured was legally liable for a $100 loss, if the insured did not reimburse for the loss, the insurer would have to- which is one of the reasons that most carriers financially underwrote every potential cargo insured- and smartly looked at their O S & D reports. With the BMC32, the insurance company is required to investigate every claim to determine the motor carrier's liability- a big deal.

So what is happening again? Common, contract carriers along with freight forwarders will no longer have to have cargo filings ( the exception is household goods carriers will still have to make a filing). Also note that the filings will all merely expire on March 21st, 2011 so that there is not the need to cancel them or have them removed by endorsement. The FMCSA will keep for 2 more years (due to the statute of limitations on filing a cargo claim) until March 18,2013.

So what are some of the ramifications of all this:

* more and more shippers will require being named as a loss payee ( and even an additional insured(which is a whole other subject) under the cargo policy in an effort to be provided notice of cancellation
* more E & S companies will get into underwriting MTC as no longer will a filing be required ( which had to be done by an admitted company in most cases with the exception having been Lloyds)
*there will be less financial underwriting of MTC
*it will be harder to understand who the MTC carrier was due to the lack of information available from the FMCSA .
* Canal estimates this affects approximately $93,800 insureds!

Expect there to be more ramifications....