Motor Carriers Must Insure

US District Court Judge Joanna Seybert of the Eastern District of New York ruled in M. Fortunoff of Westbury Corp. v. Peerless Insurance Co. that the BMC-32 Endorsement to a motor carrier's cargo liability policy applies to shipments transported by motor contract carriers. Fortunoff filed a series of loss and damage claims against Fredrickson Motor Express between March 1997 and January 1998. When the carrier ceased operations in January 1998, Fortunoff sought payment from Peerless Insurance. Peerless said Fredrickson was acting as a contract carrier in this instance and declined to pay the claim.

According to Raymond A. Selvaggio of Augello, Pezold & Hirschmann PC, attorney for Fortunoff, "The BMC-32 Endorsement is an important tool in claims recovery. It allows a shipper or consignee to recover cargo claims directly from the motor carrier's insurance company, even if the motor carrier is bankrupt or otherwise out of business."

Judge Seybert stated, "Congress specifically changed the wording of the statute from 'motor common carrier' to 'motor carrier.' Congress must have intended that the BMC-32 Endorsement requirement that was formerly applicable to common carriers be applied to all motor carriers. Thus, the BMC-32 Endorsement necessarly applies to all motor carriers, regardless of whether they were perviously classified as a common or contract carrier. As such, the court finds that a review of the plain language of ICCTA dictates that the BMC-32 Endorsement applies to all carriage contracts and that, as such, the Plaintiff [Fortunoff] is entitled to summary judgment in this case." Payments under the BMC-32 are limited to $5,000 for losses occuring on one motor vehicle and 410,000 for aggregate losses occurring at any one time and place, attorney Selvaggio noted. He added that payments made pursuant to the BMC-32 are not subject to any deductibles or exclusions under the policy.

Consult www.transportlaw.com or www.tcpcinc.com

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