It never ceases to amaze this writer how many transportation and logistics professionals know nothing about the BMC 32 Endorsement. That endorsement, which is a provision added to a carrier's insurance contract, was created to protect shippers against unrecoverable transit losses that occur when shipping via motor carriers and freight forwarders (the freight forwarder version is called the "FF 32 Endorsement"). In my opinion, this is one of the most valuable protections that the Congress and the Interstate Commerce Commission (ICC) ever established to safeguard the shipping public.

Beginning in 1935, the ICC's Bureau of Motor Carriers (BMC) required all motor vehicle common carriers to attach to their cargo-insurance filings this special endorsement from their insurer, which made the insurer primarily liable for the first $5,000 per vehicle, or $10,000 per occurrence, in the case of loss or damage. (Prior to 1976, the limits were $2,500 and $5,000, respectively.) The ICC is long gone, but the requirement is still in force, although cargo-insurance filings must now be recorded with the U.S. Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA).

The most important features of the BMC 32 Endorsement are as follows:

1. The cargo insurance coverage pertains to all losses or damage for which the carrier is liable up to those limits, without regard for any deductibles or exclusions that may be in the policy;and
2. The coverage remains in effect until the insurer files a notice of cancellation or modification with the FMCSA. If the insurer fails to file such a notice, it remains liable for the carrier's claims. To illustrate the importance of this provision, when LTL carrier P.I.E.'s cargo policy lapsed, its insurer forgot to notify the ICC that it had canceled P.I.E.'s insurance, so claimants were able to collect from the insurer long after the motor carrier had filed for bankruptcy.

Furthermore, if the carrier files for bankruptcy, or otherwise is unable to or fails to pay lawful claims, the claimant may recover from the insurer up to the endorsement's limits. Be prepared, however, for the insurance company to decline to pay the claim for a variety of improper reasons. These may include "We've never heard of a BMC 32 Endorsement;" "The carrier denied liability for this claim so we have no liability;" and "The policy excludes coverage for this type of damage."

Note that this coverage only applies to "common carriers." But because Congress eliminated the distinction between common and contract carriers when it shut down the ICC, this requirement should rightfully apply to all motor carriers today. Unfortunately, the DOT has refused to change its registration procedures to include all motor carriers under one category until it completes the single-state registration system. Congress gave the DOT two years to complete that project, and the agency is now four years behind schedule. When the agency finally does finish the job, all motor carriers should have to include this endorsement in their cargo insurance filings.

Perhaps by that time, the FMCSA will recognize the inadequacy of the present amounts and heed the Transportation Consumer Protection Council's request to increase the required coverage to $50,000 per vehicle and $100,000 per occurrence.