Many Owner operators and small trucking companies have had their authority revoked through no fault of their own. When a business owner pays their insurance premium on time, but their insurance company fails to file the proper documents with FMCSA, the business owner typically loses the authority to operate. Without the authority to operate, the business is unable to contract loads. Losses can be quite large.
What if a business with five trucks and a lucrative contract with FedEx is shut down for two months? Then the business loses their contract with FedEx? What if their drivers quit and go to another company? The downtime losses and the time it takes to rebuild this business due to having their authority revoked are massive.
For example, one of our most recent clients has 20 trucks and was down 60 days due to a mistake by his insurance company causing his authority to be revoked. Half of his drivers quit. It will take him a considerable amount of time to rebuild this business. The corresponding losses are huge as well.
Another client has 6 trucks and a lucrative contract with Amazon. He was down for a month, and Amazon canceled the contract. Amazon told him to check back with them in 6 months. Massive losses ensued all because his insurance carrier failed to properly file his insurance information with FMCSA.
To be technical, Code of Federal Regulations, Title 49 – Transportation, Part B and the Federal Motor Carrier Safety Administration (FMCSA) govern the situation. According to the FMCSA, it is the insurance company who has to file insurance information. The motor carrier itself is not allowed to do so, as published on 12/5/14. “Insurance forms must be filed by the insurance company, not the carrier or broker.”(https://ask.fmcsa.dot.gov/app/answers/detail/a_id/116) and “Liability and cargo insurance forms must be submitted directly (online) by the home office of the insurance company furnishing the coverage.” (https://www.fmcsa.dot.gov/registration/insurance-requirements)
Thus, you may recover these losses through a first-party claim. You would file a claim against your insurance carrier. Because their error created the problem, they may have to repay your business. CFR, Title 49, Section 13906(b)(2)(C) states, “In an action against a surety provider to recover on a claim described in subparagraph (A), the prevailing party shall be entitled to recover its reasonable costs and attorney’s fees.” (https://www.law.cornell.edu/uscode/text/49/13906)
In my interpretation, there could also be penalties imposed by the US government for an insurance company’s failure to properly file a member’s insurance documents. Section 14907 states:
A person required to make a report to the Secretary…or make, prepare, or preserve a record under this part about transportation…
(1) does not make that report;…
(3) does not make, prepare, or preserve that record in the form and manner prescribed;
(5) files a false report or record;…
(6) makes a false or incomplete entry in that record about a business related fact or transaction;
…is liable to the United States for a civil penalty of not more than $5,000. (https://www.law.cornell.edu/uscode/text/49/14907)
Don’t be a victim. If you’re facing this situation, please contact our office for a free consultation. We are happy to discuss your options for getting reimbursed by your insurance company for your losses.