What auto insurance does my oilfield fleet need, and what is the MCS-90 for?

Oilfield auto risk is not a fleet of delivery vans. It is pickups running lease roads before daylight, vac trucks and water haulers, hot oil units, winch and gin pole trucks, flatbeds pulling equipment trailers, and crews riding together to location.

A complete program usually has four pieces:

• Owned auto liability for every power unit and trailer you own or lease long term.
• Hired auto liability for vehicles you rent or borrow, including a rental pickup when one of yours is down.
• Non-owned auto liability for employees driving their own vehicles on company business. This is the one that gets missed. A hand who drives his own truck to pick up parts creates liability for your company.
• Physical damage (comprehensive and collision) on the units you cannot afford to replace out of pocket.

Mounted equipment deserves its own conversation. The pump on a hot oil unit or the vacuum system on a vac truck may be treated as part of the auto or may need to be scheduled on an equipment floater, depending on how the policies are written. See oilfield equipment insurance.

Operators and the compliance platforms check the auto certificate for limits, additional insured status, waiver of subrogation and, frequently, that hired and non-owned coverage is included. A missing hired and non-owned box is one of the most common reasons an auto line fails review.

If your operation is subject to federal financial responsibility rules, the minimum public liability limits come from 49 CFR 387.9. The regulation applies to for-hire carriers hauling property in interstate commerce, and to carriers (for-hire or private) hauling hazardous materials, substances or wastes in interstate, foreign or intrastate commerce, as described in 49 CFR 387.3. Vehicles under 10,001 pounds GVWR are generally excluded unless they carry the highest-risk materials, and non-bulk oil and hazardous materials moved in intrastate commerce are excluded.

The schedule of limits reads like this (summarized; the regulation's wording controls):

When federal financial responsibility applies, your auto policy carries the MCS-90 endorsement. Contractors often think it adds coverage. It does something different.

In the language courts have quoted, the insurer "agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured" for covered public liability, and no condition, provision or limitation in the policy relieves the insurer of that obligation. In the same endorsement, "the insured agrees to reimburse the company for any payment made by the company on account of any accident" that it would not have been obligated to pay but for the endorsement.

The Fourth Circuit described it as creating "a suretyship by the insurer to protect the public" when the policy otherwise provides no coverage. In plain terms:

• If your policy covers the accident, the MCS-90 changes nothing.
• If your policy does not cover it (an unlisted truck, an excluded driver, a pollution exclusion), the insurer may still have to pay the injured member of the public, and then it can come after you for the money.

So the MCS-90 protects the people your trucks might hurt. It does not protect you. Do not count it as pollution coverage or as a fix for a vehicle that never got added to the policy. See what is MCS-90.

Plenty of oilfield fleets never cross a state line. Texas intrastate carriers register with the Texas Department of Motor Vehicles (TxDMV) rather than relying only on federal authority.

Per TxDMV, you need to register as an intrastate motor carrier if, among other triggers, you operate a commercial motor vehicle or combination with a gross weight, registered weight or gross weight rating over 26,000 pounds, or you transport hazardous materials in a quantity that requires placarding.

TxDMV's published minimum liability amounts include:

Operator MSAs almost always ask to be named as an additional insured on your auto policy. The usual tool is ISO CA 20 48, Designated Insured for Covered Autos Liability Coverage, which attaches to the Business Auto, Motor Carrier or Auto Dealers coverage form.

Read what it says. The endorsement "identifies person(s) or organization(s) who are 'insureds'" and states plainly that it "does not alter coverage provided in the Coverage Form." The scheduled party is an insured only to the extent it qualifies under the policy's Who Is An Insured provision. In practice that is mostly vicarious liability: if the operator is sued because of your driver's accident, the operator is covered as an insured for that claim.

That is usually what operators need, and it is how most contractors satisfy an auto AI requirement. Two things to check:

• Whether your insurer uses a blanket version (any party you agree in a written contract to include) or requires each operator to be scheduled by name. Scheduled endorsements fail the moment you sign a new MSA and forget to call.
• Whether the MSA also requires the auto coverage to be primary and non-contributory. CA 20 48 does not say that by itself. See what is primary and non-contributory.

MSAs also ask for a waiver of subrogation on auto, usually in favor of the operator "and its group." On ISO paper, the auto waiver is CA 04 44, Waiver of Transfer of Rights of Recovery Against Others to Us. It modifies the policy's transfer of rights condition so your insurer gives up its right to pursue the parties you agreed in writing, before the loss, to waive.

Two practical points:

• A waiver only works if the written agreement came first. Signing the MSA after the accident does not help.
• Like the AI endorsement, it can be blanket or scheduled. Blanket is easier to live with if you work for several operators.

See what is a waiver of subrogation.

In order of how often we see them:

1. Limits below the MSA. The auto policy is $1,000,000 but the MSA wants $2,000,000, with no umbrella shown over auto.
2. No hired and non-owned. The policy covers scheduled autos only.
3. AI and waiver boxes checked, endorsements missing. The reviewer asks for the CA 20 48 and the waiver form and they are not attached, or the operator is not on a scheduled version.
4. Umbrella does not list auto as underlying. Then the umbrella does not help the auto requirement. See oilfield umbrella insurance.
5. Vehicle not on the policy. A new truck goes to work before it is added. This is exactly the situation where the MCS-90 can make the insurer pay a third party and then seek reimbursement from you.

If a platform has dinged your auto line, see why was my certificate rejected or send us the deficiency notice.