An accurate, current MCS-150: More important than you realize

Not only is it about compliance with FMCSA rules and regulations, but it can also determine which insurance companies will offer you insurance, the cost of your insurance premiums and in some cases may result in claims being denied.

When I first got my authority in 1999, like so many I thought that once I had authority I didn’t need to do anything outside of maintaining my insurance, single state permits (now replaced with the Unified Carrier Registration system), truck and trailer registrations, truck and trailer safety inspections, and etc. to be compliant with the Federal Motor Carrier Safety Administration regulations. Like most everyone else, as time went along I began to discover just how shortsighted I was – there’s a lot more to it.

That brings me to a very important and all too often misunderstood and overlooked requirement of the FMCSA. The MCS-150.

Most of us are aware that we are required to do a Biennial Update” (every other year) of our MCS-150 form. However, that is not the only time we are required to update the MCS-150. The FMCSA requires, as it states on its website:

Any time a motor carrier or other regulated entity changes its Legal Business Name, address, or other details in their record, they should update their US DOT and Operating Authority records with FMCSA in a timely manner.

Most do not realize, including myself in my early years, just how important the accuracy of the MCS-150 can be. Lets talk insurance, first.

Insurance companies use the information the FMCSA receives via the MCS-150 from those who have been awarded a U.S. DOT and/or MC number. Each insurance company uses that information to assess the trucking company that has applied for insurance, likewise for its existing insureds. All insurance companies look at the basic information (company name, owner’s name, addresses, etc.). However, not all insurance companies look at everything. Have you ever heard the old saying, “They gave me just enough rope to hang myself”? To me that’s an appropriate way to look at it.

However, it’s not the insurance companies who have given us that rope. It’s the FMCSA!

As reported by Overdrive and many others, the FMCSA does little more than rubber-stamp each application it receives for a U.S. DOT and MC number. It doesn’t check the applicant’s addresses, verify the articles of incorporation or even company ownership. They simply accept what is on the application and — PRESTO! — that applicant is now set up to do business, no matter if the company’s legitimate, has a real address or even a real owner. (Is it any surprise that we have a serious run-a-muck broker fraud problem in trucking? But that is a topic for another day.)

If you are not a bad actor, but simply made an error like a typo, or misunderstood a question … now it should be easy to see why “they gave me just enough rope to hang myself” is appropriate here.

In my opinion, the best insurance companies are the ones who do the deepest dive into our information. They are doing their level best to take that rope away from us and clean up the mess as best they can! Let me explain.

In my article about what goes into calculating your trucking insurance premiums, I briefly discussed why insurance companies don’t like information that doesn’t match. For commercial auto (trucking) insurance, the MCS-150 information we provide to the FMCSA is one of the most important resources insurance companies use to compare to our insurance application. Some insurance companies only check what I will call the basics:

    • Company name
    • Company addresses
    • U.S. DOT number
    • MC number
    • Maybe one or two more general items

Other insurance companies will check those, plus even more:

    • Type of operation
    • Commodities hauled
    • Number of trucks
    • Type of trucks
    • Distance trucks travel
    • Number of drivers
    • Carrier miles

And more.

Those same insurance companies will also compare all that they have learned from our application for insurance and the MCS-150 information with other resources to verify the existence of our company (that it’s a legitimate company), vehicle registrations and history.

Insurance companies that take the time to look at the most information are the insurance companies who want to only insure the best trucking companies (that is to say, the lowest risks to insure). As a result, since they only offer insurance to the best trucking companies, they are the insurance companies who offer the lowest premiums.

When one of those insurance companies who has done that deep dive offers coverage to one of my insureds, it can come with a requirement: To correct to the MCS-150 (update the commodities, number of trucks, radius of operation, etc.). When that happens, it means the insurance company is satisfied that the trucking company is a risk (low) they would be willing to insure. That is a good thing! Other times those better insurance companies will simply decline to quote. That means fewer insurance companies I can get quotes from for my insured, reducing the likelihood that the insured will get the lowest possible premium.

Had that MCS-150 been current and accurate, though, they may well have.

There is one specific part of the MCS-150 that is frequently overlooked or not completed or updated correctly. Most of the time I believe it is not intentional, but a simple error. I have personal experience with this for my own authority. After pulling a reefer for more than 20 years, in 2015 I decided to haul flatbed freight again — and cars on my flatbed when needed. On the MCS-150 it was easy enough to update my commodities. However, it also required me to update question #25, pertaining to hazmat commodities. Most do not realize that there are commodities that can be hazmat. Cars are one of those commodities. They are a Class 9 hazmat commodity.

As I have mentioned many times over in several other articles, deception, whether intentional or unintentional, can result in very serious consequences. Imagine getting involved in an accident after failing to accurately and timely report transporting class 9 hazmat on your MCS-150. It doesn’t take much of an imagination to see how this could result in an unbelievable amount of financial and punitive consequences from local authorities, the FMCSA and/or insurance stalkers (aka lawyers). Not to mention the very real potential of the insurance company denying claims for physical damage, cargo, etc. they are not otherwise obligated to settle (MCS-90 endorsement for BIPD liability to others).

In conclusion, I’m going to step up on my soap box. As many of you know, I started driving a truck in 1983. I applied for and got my own U.S. DOT and MC numbers in 1999, which I still have to this day. Just like most others of my generation, we have seen a serious decline in the quality and safety of the trucking industry. To say it’s alarming would be a gross understatement. There are two glaring issues that need to be addressed and corrected.

First, at a minimum, for any application for a U.S. DOT number the FMCSA receives, the FMCSA should be required to verify the articles of incorporation or sole proprietorship of the company and physically verify that both the company’s physical and mailing addresses are legitimate addresses occupied and used by the company. The FMCSA should also be required to perform a physical biennial re-verification to confirm the that the company is still operating compliantly.

Second, way too many are able to obtain a US DOT and MC number and enter into this industry without a clue as to what is required of them. Insurance agents, financial planners, real-estate brokers, etc. are all required to receive a certain basic level of education, take and pass an exam, purchase a license, perform continuing education to keep up with regulatory changes (or the license can’t be renewed). License renewals for those kinds of entities are required every year or two.

If this same standard was applied to those seeking a US DOT and MC number, there would be a dramatic decrease in those who fail to maintain compliance with safety regulations and everything else – IFTA, IRP, UCR, the tax regs of the IRS, labor rules under the DOL.

On more than one occasion, I have seen or witnessed the damage caused by an 80,000-lb. truck and trailer involved in an accident. Physical and financial damage to others is too often the result — much more damage, furthermore, than any insurance agent, financial planner, real-estate broker, etc., could possibly do. Isn’t it about time that some basic safety and compliance training, testing and licensing be a requirement prior to obtaining a US DOT and/or MC number?

I personally think it’s long overdue.

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