Opinion ID: 729639
Heading Depth: 2
Heading Rank: 1

Heading: Motor Carrier Industry

Text: 2 It is common practice for motor carriers who operate under the authority of the ICC, i.e. authorized carriers 1 , to lease equipment from independent contractors who are not regulated by the ICC. Historically, this practice led to abuses which threatened the economic stability of the trucking industry and public interest. American Trucking Ass'ns v. United States, 344 U.S. 298, 304-05, 73 S.Ct. 307, 311-12, 97 L.Ed. 337 (1953); Empire Fire & Marine Ins. Co. v. Guaranty Nat'l Ins. Co., 868 F.2d 357, 362 (10th Cir.1989); 4 Saul Sorkin, Goods in Transit, 45.02 (1994). Unscrupulous ICC-licensed carriers would use leased vehicles to avoid safety regulations governing equipment and drivers. American Trucking, 344 U.S. at 305, 73 S.Ct. at 312. Authorized carriers' use of non-owned vehicles also caused public confusion as to who was financially responsible for the vehicles. Empire Fire, 868 F.2d at 362; Mellon Nat'l Bank & Trust Co. v. Sophie Lines, Inc., 289 F.2d 473, 477 (3d Cir.1961). 3 To right these wrongs, Congress amended the Interstate Commerce Act to allow the ICC to promulgate regulations governing all aspects of the non-owned equipment by authorized carriers. See 49 U.S.C. § 304(e)(1956), revised 49 U.S.C. § 11107 (1978); see also 49 U.S.C. § 10927. 2 See generally Empire Fire, 868 F.2d at 362, 4 Sorkin, Goods in Transit, § 45.03. ICC regulations now require that every lease entered into by an ICC-licensed carrier must contain a clause stating that the authorized carrier maintain exclusive possession, control, and use of the equipment for the duration of the lease, and assume complete responsibility for the operation of the equipment for the duration of the lease. 49 C.F.R. § 1057.12(c)(1)(1995). Further, all authorized carriers must maintain insurance or other form of surety conditioned to pay any final judgment recovered against such motor carrier for bodily injuries to or the death of any person resulting from the negligent operation, maintenance, or use of motor vehicles under the carrier's license. 49 C.F.R. § 1043.1(a)(1995). 4 The regulations contain a form endorsement to be included in the authorized carrier-lessee's insurance policy (the ICC endorsement). See 49 C.F.R. § 387.15 (1995). It provides in relevant part: 5 The insurance policy to which this endorsement is attached provides automobile liability insurance and is amended to assure compliance by the insured within the limits stated herein, as a motor carrier of property, with sections 29 and 30 of the Motor Carrier Act of 1980 and the rules and regulations of the Federal Highway Administration's Bureau of Motor Carrier Safety (Bureau) and the Interstate Commerce Commission (ICC). 6 In consideration of the premium stated in the policy to which this endorsement is attached, the insurer (the company) agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of sections 29 and 30 of the Motor Carrier Act of 1980.... It is understood and agreed that no condition, provision, stipulation, or limitation contained in the policy, this endorsement, or any other endorsement thereon, or violation thereof, shall relieve the company from liability or from the payment of any final judgment, within the limits of liability herein described, irrespective of the financial condition, insolvency or bankruptcy of the insured.
7 Bob-tail in trucking parlance is the operation of a tractor without an attached trailer. Reeves v. B & P Motor Lines, Inc., 82 N.C.App. 562, 346 S.E.2d 673, 675 (1986); 4 Sorkin, Goods in Transit, § 45.01. For insurance purposes, however, it typically means coverage only when the tractor is being used without a trailer or with an empty trailer, and is not being operated in the business of an authorized carrier. 4 Sorkin, Goods in Transit, § 45.02. Bob-tail/deadhead 3 insurance is also known as non-trucking use insurance. Id. See also Reeves, 346 S.E.2d at 675-76 (interpreting endorsement denominated as Truckmen--Insurance for Non-Trucking Use (Bob-tail only) defined as used in business of any person to whom rented and excluding coverage whenever lessor is in the business of the lessee). Owner-operators who lease trucks, tractors and trailers with drivers to authorized carriers frequently carry limited liability or bob-tail/deadhead insurance. 4 Sorkin, Goods in Transit § 45.02.