In the 1980s, the minimum insurance requirement for motor carriers was increased from $500,000 to $750,000. Nearly 30 years later, many are questioning whether that number remains sufficient.
As part of the surface transportation bill, signed last July by President Obama, the Department of Transportation is required to “evaluate the adequacy of the $750,000 minimum level of insurance required for motor carriers.” 1
The Trucking Alliance, which includes the carriers JB Hunt, Schneider National, Maverick Transportation, Knight Transportation, Fikes Truck Line, and Boyle Transportation, are in support of an increase, referencing a recent study they conducted which analyzed 8,692 accidents (recorded by confidentially named companies participating in the study) settled between 2005 and 2011. 1 Although “only 1 percent of these settlements exceeded the minimum requirement,” the Alliance stated, “the per occurrence average is what determines true risk. If all the study’s companies had maintained the minimum $750,000 requirement, 42 percent of monetary exposure from these settlements would have exceeded the carriers’ insurance coverage.” 2
As the Trucking Alliance’s senior manager Lane Kidd explains, “This uninsured exposure means that trucking companies must pay out the additional dollars from within the business or in the worst case, file bankruptcy to avoid paying.” 1
Those carriers that were covered up to $1 million dollars faced uninsured liability in 37.5% of cases while 17.7% still experienced it with $4 million coverage. 1
While the Trucking Alliance is in support of increasing the insurance minimum, the Owner-Operator Independent Drivers Association (OOIDA) is against it. According to OOIDA’s Todd Spencer, the Trucking Alliance, “cherry picked data to make a claim that just isn’t so. No one should take this bogus study seriously. In 98 to 99 percent of crashes involving trucks, claims are settled well below the $750,000 minimum. But even at that, most truckers have $1 million in coverage. All the Alliance will succeed in doing is increase costs for their competition in trucking and chum the water for personal injury lawyers.” 2
The Federal Motor Carrier Safety Administration’s mandated analysis, which is near being finished, could become the basis for whether the insurance requirement will be raised to the $1 million proposal which was considered by Congress. Once completed, the FMCSA’s findings will be reviewed and sent to the White House Office of Management and Budget, all of which could take up to three months. 3
The American Trucking Associations is waiting for the FMCSA’s study as well as any data before taking a position.
Do you believe that the minimum insurance requirement set for motor carriers should be increased to $1 million? What do you think are the outcomes if they are? Are not?
Click on the graph below to view the list of insurance requirements provided by fmcsa.dot.gov.