trucking compliance – Learn to Truck

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.

Disclaimer: I no longer transport any hazmat. I am not a hazmat expert or an attorney. This is not expert or legal advice for transporting hazmat. Consult a hazmat expert or attorney to receive legal advice or guidance pertaining to any of the following:

Hazmat classes 1-8 usually require $5,000,000 in Bodily Injury and Property Damage (BIPD) liability insurance coverage (it can vary depending on the specific HAZMAT commodity), placards and a hazmat endorsement on the driver’s CDL. For Class 9 hazmat, though BIPD liability insurance requirements are significantly lower than classes 1-8. Class 9 typically requires $1,000,000. To transport class 9 hazmat, an endorsement on the driver’s CDL is not usually required, and in most cases placards are not required on the container (trailer). Some of the other class 9 hazmat commodities can include but are not limited to:

    • Dry Ice
    • Asbestos
    • Lithium batteries
    • Battery-powered vehicle
    • Benzaldehyde
    • Automobile airbags

Always read the bill of lading (BOL). Check to see if any of the commodities on the BOL are listed in the US Dept. of Transportation’s Emergency Response Guidebook and follow its guidance. Discuss any concerns you may have with the shipper.

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.

To get more great business tips and trucking news visit Overdrive extra!

Avoid Application Errors when Applying for Your USDOT or MC Numbers

All to often application errors lead to extra start up costs, delays and lost income.

Many who contact me through my website LearnToTruck.com or call for an insurance quote have never applied for or had a USDOT (United States Department of Transportation) or MC (Motor Carrier) number before. It is imperative for anyone who wishes to have a USDOT and/or a MC number to be fluent and understand all the different entities and compliance with those entities they will now be required to meet. To help with that, if they have not already hired an “agent” to apply for their USDOT & MC numbers, I always encourage everyone to complete the application themselves. Avoiding fines and penalties from entities such as the FMCSA, IRP, IFTA, UCR, etc. by using the excuse that you didn’t know or the “agent” made a mistake is the same as trying to use the excuse “I didn’t see a speed limit sign” to avoid getting a speeding ticket. Speaking from experience, it’s typically not going to work in your favor. Not to mention the huge amount of money saved by avoiding these “agents.” I have seen these “agents” charge anywhere from $500.00 to $1,500.00 or more in addition to the fees required by each entity just to get started. Then they will point out a supposed need to continue to use their services throughout the year. What they don’t tell you is that it is just as easy for you to complete all the required tasks by giving the exact same information to those entities directly.

Before applying, it’s important to understand that some of the most insignificant or minor errors and/or deceptions can cause some of the longest delays in getting your “Operating Status” to “Authorized for Property” (the most common authorized status for OTR operations). Until your status is updated by the FMCSA you are not compliant and as such can not begin operations. That is to say, you can’t haul loads and generate income. In the Army we had a saying, “fast is slow and slow is fast.” That saying is applicable here as well. When we do things in haste mistakes typically happen. Always review every entry for typos, accuracy and duplications.

Typos – These are most common errors I see. Some are as simple to see and identify, while others are far more difficult to spot.

Misspelling – Auto correct can be our worst enemy. Always verify the spelling of every entry before moving on to the next field.
Punctuation – Whether or not a comma, period, hyphen, etc. is or isn’t present can cause serious headaches.
Spaces – Even a missing or extra space between words or letters can cause some of the biggest headaches to correct. Mainly because they are very difficult to locate.

Accuracy – These are the second most common errors and can be the most time consuming and down right aggravating to correct. They can be an honest mistake or a misunderstanding of what is being asked on the application or they can be deceptions. NEVER be deceptive! It will cause increases in your insurance premium and can potentially be compliance violations. Since accuracy relates to every entry and selection you make, be sure to go slow and double check your work.

Entity Type – “Motor Carrier of Property (except Household Goods)” is the most common entity type. Occasionally an applicant who is hauling new furniture from a manufacture to a warehouse will incorrectly believe this means they are a “Motor Carrier of Household Goods (Moving Companies)” and select the wrong entity type. Be sure to know which entity type is correct for your operation before beginning the application.
DBA (Doing Business as) – This is the most frequent accuracy error and comes in many forms. The best way to avoid DBA errors is not to use a DBA. That said, here are the 3 most common DBA errors.
1. The DBA should NEVER be the exactly the same as the company name. If my company was “W. Joel Baker, Inc” I may want to use a DBA of “W. Joel Baker Trucking.” If they are the same name some insurance companies will not even provide a quote.
2. The DBA should NEVER be a second corporation. If my company was “W. Joel Baker Trucking, Inc” and I add a DBA of “Joel’s Express, Inc” that suggests there could be two separate corporations attempting to use this USDOT and/or MC number.
3. NEVER enter “same,” “same as company name,” “none,” “N/A,” or any other variation. If you are not using a DBA the field must be left blank. ANY entry you put in the DBA field becomes your “Doing Business as” name.
Company Address – This is the most common form of deception. NEVER use a virtual or alternate address as a company address. This is the legal address for the company where all required company records and FMCSA required verifying documents are to be stored, maintained and ready for inspection by any entity such as USDOT, FMCSA, IRP, IFTA, etc.
Mailing Address – Only use a different mailing address if you utilize a USPS PO Box, local UPS store Box, etc. Otherwise you appear to be hiding something or potentially operating as a chameleon carrier. Especially if you are using an out of state mailing address.
HAZMAT – Most generally, this error usually happens by auto transporters. By both those who only haul cars and by those who haul them occasionally. Autos are a class 9 HAZMAT. Class 9 HAZMAT does not require placards but does require more than the standard minimum $750,000.00 in BIPD auto liability insurance filings for those over 26,001 lbs. Auto transporters, even those who only haul cars 2 or 3 times a year, are required to declare class 9 HAZMAT and have $1,000,000.00 in BIPD auto liability insurance.

Duplications – Address duplications happen multiple times a day. Carefully read the address instructions and verify your entry(s).

Some find it helpful to have a few things written down or in a document on their computer before beginning the application. Such as:

Company name with correct spelling and punctuation
If one is desired, a company DBA
Company address (and mailing address if different)
Commodities (cargo) intended to haul
1. Identify any possible HAZMAT. Both those that require placards and those that do not (class 9).
2. Choose more than general freight from the list provided by the FMCSA.
3. If necessary, using the “other” option, specify any type of unique or special cargo that does not adequately fit into one of the choices provided.
Company address (and mailing address if different)

One way to avoid some of the most-common errors could be to be fall back on tried-and-true filing methods, setting aside the convenience and speed of the agency’s online forms in favor of the printed (or pdf version of the) authority application. Manually filling out the printed form, or the pdf version, means someone at FMCSA itself will be directly involved in entering that information into its system’s central registration system. If they introduce errors, the paper trail back to your original form might even save you money on a name change, for instance, if the error can be proven to be theirs and not your own. (Yes, it’s true that some errors you might have to actually pay to correct.)

Once the FMCSA application is complete, it’s highly advisable to request your new USDOT PIN immediately. With that PIN many of the simple errors such as duplications, typos, address, company name, etc. can all be corrected online quickly and fairly easily.

I have seen just as many application errors by “agents” as by those who complete the application themselves. As I mentioned earlier, I always recommend completing all regulatory and compliance responsibilities as possible. By doing so it significantly reduces operating costs while simultaneously educating the new company owner as to all that is involved to operate and be compliant. That education is vital because of the countless bad actors out there who charge for services under the guise of “compliance.” All to frequently it’s more about how to charge the new company for additional services because the new company is unaware of what is and is not required to be compliant.

To get more great business tips and trucking news visit Overdrive extra!

Drug & Alcohol Clearinghouse

What Every Truck Owner Needs to Know

The latest FMCSA burden on truck owners is the new Drug & Alcohol Clearinghouse. In an already over regulated industry this new requirement adds yet another hurdle to overcome to be compliant when operating your own FMCSA Operating Authority. All who have an FMCSA Operating Authority are required to participate in the FMCSA Drug & Alcohol Clearinghouse. The FMCSA even went out of their way to single out Independent Owner Operators such as myself.

An owner-operator (an employer who employs himself or herself as a CDL driver, typically a single-driver operation) is subject to the requirements pertaining to employers as well as those pertaining to drivers. Under the Clearinghouse final rule, an employer who employs himself or herself as a CDL driver must designate a consortium/third-party administrator (C/TPA) to comply with the employer’s Clearinghouse reporting requirements (§ 382.705(b)(6)).

Unlike the ELD mandate, there is not a way to avoid this compliance obstacle. You must participate in the Clearinghouse or face the certain consequences that are sure to follow if you do not. To avoid those consequences I strongly suggest creating your FMCSA Drug & Alcohol Clearinghouse account as soon as possible. In doing so you can continue to operate compliantly and not have a target on you for an FMCSA audit. Here is how to get it done.

The first step is to create an FMCSA Drug & Alcohol Clearinghouse account.

Authorized users must register to request access to information in the Clearinghouse. You will need to sign in with a login.gov account to begin your Clearinghouse registration.

On the surface that seems simple enough. However, when you examine the details a little closer you’ll discover that you can’t use your FMCSA login PIN or your USDOT login PIN. In order to create a FMCSA Drug & Alcohol Clearinghouse account you must first have a login.gov account. Once you have created your login.gov account you will be able to continue. As a truck owner with an FMCSA Operating Authority you will create an “Employer Admin” account. If you are an Independent Owner Operator there will be an option to select specifically for Independent Owner Operators. As an Independent Owner Operator, once you have successfully created your Employer Admin account you will want to register as a Driver as well.

The next is to select you Drug & Alcohol Consortium.

Designate Your C/TPA (required)
As an owner-operator, you are required to work with at least one consortia/third-party administration (C/TPA) to manage your drug and alcohol testing program. You will need to designate your C/TPA(s) in the Clearinghouse before they can conduct queries and/or report violations on your behalf.

Once you have created your account as an Employer Admin, you will need to select your Drug & Alcohol Consortium provider from the FMCSA Drug & Alcohol Clearinghouse participating consortiums. This is where you can run into issues. If your Drug & Alcohol Consortium is not listed, they are NOT an approved Drug & Alcohol Consortium. You must contact your Drug & Alcohol Consortium and ask them to register with the FMCSA Drug & Alcohol Clearinghouse or you will need to choose another Drug & Alcohol Consortium provider who is approved by the FMCSA Drug & Alcohol Clearinghouse and compliant.

Lastly, you will be required to purchase a “Query Plan.”

All employers of CDL drivers must purchase a query plan in the Clearinghouse. This query plan enables employers, and their consortia/third-party administrators (C/TPAs), to conduct queries of driver Clearinghouse records.

Registered employers must log into their Clearinghouse accounts to purchase their query plan. Query plans may be purchased from the FMCSA Clearinghouse only.

For Independent Owner Operators, I recommend purchasing the “Flat per query rate ($1.25), for limited and full queries.” It is by far the most affordable and does exactly what you need without over paying.

There are a multitude of other compliancy rules and regulations you must comply with when having your own FMCSA Operating Authority. To learn more about them read my post How to get an FMCSA Operating Authority.