Tips for FMCSA Registration and Compliance 

Motor carriers face a variety of regulations that they must follow based on many aspects. The FMCSA (Federal Motor Carrier Safety Administration) requires different types of licenses and insurances for motor carriers. The system can easily become complicated, especially if you are unsure about what motor carrier classification you are under. In addition, freight brokers face different requirements than common or contract carriers. Here are some starting tips that every motor carrier business should be aware of.

Do I Need a USDOT Number?

The answer to this question is almost always yes. The minor exception to this rule is if a motor carrier has non-hazardous material and both the vehicle and cargo never leave the state they are registered in. However, many states have additional programs that require a USDOT number even if the cargo is not hazardous. Contact your state's Office of Motor Carrier Safety to clarify if your motor carriers are required to have a USDOT number. 

The Process to Receive a USDOT Number

In order to apply for a USDOT number a Motor Carrier Identification Report must be filled out. There is no fee for this application and it can be found at this website. Information will need to be written down such as the past year's carrier mileage, the company operation, and information about passengers and cargo. There is also an online registration assistant to make the process run much more smoothly.

Insurance Requirements

• If a business is a common carrier, or provides for-hire truck transportation and is open to the public, the FMCSA requires liability insurance, but insurance for cargo is not necessary.
• If a business is a contract carrier, or hires specific individuals and requires a contract, only liability insurance is necessary.
• Both common and contract carriers carrying household goods are required to have liability insurance and cargo insurance.
• If you are a broker, or your business manages the transportation of property through motor carriers, the FMCSA requires a surety bond or trust fund agreement.

Invest in Reliable Insurance

These tips only cover very basic information about the FMCSA's requirements. It is incredibly important to make sure you are following all of your federal and state requirements. Global Solutions Insurance Services can provide reliable insurance for motor carriers. Both domestic and international logistics insurance can be provided. GSIS also has experienced staff that can help customize your insurance to fit your business' needs. If you are interested in more information, please do not hesitate to contact us at 310-379-9660 and we would be happy to assist you with any questions you may have about our services

A Brief Overview of the Carmack Amendment

The Interstate Commerce Act was established in 1887 to deal with the rise of the railroads and the growth of cross country travel and freight delivery. The intent was to regulate interstate transportation.

In 1906, the Carmack Amendment was added to the Interstate Commerce Act which was enacted by Congress to establish uniform federal guidelines for shipping across state lines. These guidelines were designed to reduce confusion surrounding a carrier's liability when there was damage to a shipper's interstate shipment.

The Carmack Amendment establishes the limits of liability for the carriers. The liability imposed is for the “actual loss or injury to the property”. There are no caps on liability the carrier assumes through the Carmack Amendment. Therefor, when the carrier takes possesion of the cargo they become 100% liable for the load.  

The carrier and the shipper sign a contract named a "bill of lading". The Carmack Amendment allows some carriers to limit their liability in this contract. The amount they assume for cargo damage can vary, but it's generally around $1 Per Lb.
The Carmack Amendment supersedes individual state laws and ensures that all parties are treated with one set of rules. This also means that any state law claims can be dismissed, as the Carmack Amendment takes precedence.

There is a protocol for filing claims under the Carmack Amendment. In order to bring a lawsuit, a written claim must be filed with the carrier within nine months of the date of the delivery of the property. If no delivery was made, then the claim needs to be filed within nine months after a reasonable time for delivery has passed.

Feel free to contact us with any questions or concerns you may have about the Carmack Amendment or other shipping related laws. It's our speciality and we're happy to help.

Acting outside the box of a "Property Broker"

I recently read an article in which a Property Broker was successfully sued for an accident that resulted in the death of one man and other serious injuries. What had led up to the verdict is as follows:

 

A Carrier was involved in an accident with 3 cars, killing one person & seriously injuring others. The Carrier, like 90% of the carriers on the road only carried $1 Million in liability coverage. The lawyers on the case recognized that they needed to find a fatter pig to feed the hungry mouths of the injured victims and suffering family. They successfully found that pig when they recognized that the property broker that brokered this load was a major player in the industry. Also, through some more research in the SAFER site it was discovered that the carrier of the load had a terrible safety record (I.e. 238 safety violations, 3 accidents, 1 more fatality in 18 months prior).

 

Through even more investigation it was found that the Property Broker an additional DOT authority (Something that is common in the Third-Party Logistics world). At the time of the accident the Broker had common carrier authority. This exposed them to the Carmack Amendment in which they were exposed to potentially unlimited Liability.

Statistics:

 

Ø  5000 fatalities a year on average take place relating to common carrier accidents within the U.S.

Ø  120,000 injuries a year on average take place relating to common carrier accidents within the U.S.

Ø  Actuarial statistics support average settlement for fatality in U.S involving a common carrier is 2.6 million.

Ø  It’s estimated that 90% of companies with common carrier authority only have 1 million of auto liability coverage.

 

The Storm was perfect, the broker failed to do what is arguably one of the most important jobs of a property broker which is Vetting the Carriers it chooses to tender loads. Further, the broker left himself wide open for lawsuits under his authority of a common carrier.

 

This is a prime example of the importance of a proper Risk Management Plan. GSIS,inc. is dedicated to success of every business and person we touch. Each insured is offered Risk Management Consulting Services. Our goal as an insurance provider is not only to be there when the unthinkable happens but also, minimize the exposures before the unthinkable occurs.