A Montana tow company says its insurer let a trucker default, then ducked the $377,660 bill.
Iron Horse Towing has hauled Intact Insurance and Atlantic Specialty Insurance Company into federal court, asking a judge to rule that the carriers must pay a default judgment their own policyholder abandoned. The complaint, filed June 10, 2026 in the US District Court for the District of Montana, is a classic duty-to-defend fight - and the admissions Iron Horse attributes to the insurer are what give it teeth.
The story, as the complaint tells it, starts on December 8, 2023, when a trucking company called Destiny Motor Freight allegedly crashed its tractor-trailer on Interstate 90 in Granite County, Montana. The Montana Highway Patrol called in Iron Horse to clean up, tow and store the wreck - work the company says state law requires it to keep at a locked, staffed facility.
Iron Horse says it phoned the insurer the next day and was told the company "will not let a third party start a claim for Destiny Motor Freight." Its lawyers tried again through January and February 2024, the filing says, but the insurer stayed "essentially non-responsive for nearly two months."
So Iron Horse sued Destiny in state court on May 10, 2024. Destiny never appeared. On October 8, 2025, the court entered a default judgment of $377,660.00, with interest at Montana's statutory rate.
This is where it gets pointed for claims professionals. The complaint alleges that on March 2, 2026, a company representative called Iron Horse's counsel, said the claim had been handled improperly by the original adjuster, and admitted the carrier "were aware [of the claim] and did not provide a defense for that [lawsuit]." According to the filing, the representative also said the insurer "were the first-party carrier. We cannot ignore a statement of claim. We have to protect everyone."
The next day, the complaint says, a claims manager emailed to acknowledge Destiny had third-party liability coverage with an MCS-90 endorsement, but argued it didn't reach towing and storage claims.
That endorsement is the crux. A federally required attachment on interstate trucking policies, it commits the insurer, in wording Iron Horse quotes, 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…" The complaint points out the MCS-90 defines "Property Damage" as "damage to or loss of use of tangible property" - exactly what Iron Horse claims it lost.
The underlying policy, number CFA319404831, ran from February 23, 2023 to December 29, 2023 and carried up to $750,000 in coverage, the complaint says.
Iron Horse's pitch is straightforward: an insurer on notice of a potentially covered claim has to defend, and skipping that can waive its defenses and stick it with the judgment. It also argues the MCS-90 works like a surety - applying "even if" the claim isn't otherwise covered.
The takeaway for carriers and claims teams is blunt. The complaint describes notices that went unanswered, an internal admission that nobody defended the insured, and a judgment that swelled while the file sat idle. Whether a judge sees it the same way is the open question.
These remain allegations. They have not been tested in court and no court has ruled.
