Truckers Criticize Potential Increase in Minimum Insurance Requirements

This story appears in the March 9 print edition of Transport Topics.

The Federal Motor Carrier Safety Administration received more than 2,000 comments on its advanced notice of proposed rulemaking to increase mandatory insurance minimums, many of them questioning whether an adjustment was needed.

For most carriers, the minimum coverage requirement is $750,000. Fleets specializing in hazardous materials must have either $1 million or $5 million in coverage, depending on what they haul.

The minimum levels have been in place since 1985. In November, FMCSA requested that stakeholders provide comments and answer about two dozen questions regarding insurance.

Earlier in 2014, the agency said it would write a new insurance rule because “inflation has greatly increased medical claims costs and related expenses.”

American Trucking Associations said in its comments that it will continue to review the issue but noted that FMCSA’s own sponsored research concluded that 99.5% of crashes are covered by existing minimum levels.

“At first glance, it would appear the limits should be raised,” ATA wrote. “However, as noted in these comments, available crash and claims data when viewed through the lens of congressional intent strongly suggest the limits continue to meet their purpose.”

The trade federation added, “Until credible data demonstrate otherwise, ATA cannot envision a sound policy rationale for selecting a new, higher minimum that would justify the likely disruption in the trucking industry.”

A majority of comments came from independent truckers who generally agreed with their largest trade group, the Owner-Operator Independent Drivers Association, that increasing the minimums would hurt their businesses.

“Raising insurance minimum requirements for interstate trucking companies would make highways less safe and harm small-business truckers unnecessarily,” OOIDA said in comments.

The American Bus Association also opposed raising the levels, saying there is no evidence to support an increase.

“For small businesses, a large increase in the insurance premiums will likely force many ABA members out of business,” ABA said. “In addition, we do not agree that requiring higher insurance limits has any correlation with the financial security or financial wherewithal of a carrier.”

C. David Deweese, an owner-operator from Greer, South Carolina, wrote that the proposal “scared him to death.”

“So I parked my truck and trailer in May 2014, hoping someone would do the right thing by the small trucking companies,” Deweese wrote. “Still paying my $700 a month for insurance, I finally gave up this week, dropped my insurance, stopped my MC authority and stopped my USDOT number as well.”

The American Insurance Association, which represents more than 300 insurers, said that data compiled by the Insurance Services Office show that 91% of “long-distance zone-rated truck policies” are written at a $1 million limit.

“The current financial responsibilities are more than adequate in the vast majority of situations, and there will be substantial challenges to the transportation sector should those mandates be raised, and in particular at a time when safety is improving outcomes even further,” the insurance trade group wrote. “The AIA believes that they should remain unchanged.”

However, the Delaware Trial Lawyers Association said it supported raising the minimum financial responsibility for interstate motor carriers.

“The $750,000 requirement has been in place since 1980 and has remained unchanged despite inflation and the substantial increase in medical costs,” DTLA wrote. “As a consequence, victims are unable to afford necessary and required care, and the burden then falls to government assistance programs such as Medicare, Medicaid, Tricare and the [Affordable Care Act] ultimately passing along the costs to the taxpayers instead of the at-fault parties.”

Trucking Safety Coalition, a nonprofit group, said the minimum amount is not set at a “sufficiently high enough level to require insurance companies to seriously underwrite motor carriers and require safe operations before agreeing to insure them.”

“Death and catastrophic injuries have become accepted as part of the cost of doing business, with most of that cost being shifted to the impacted members of the motoring public and to the American taxpayers,” the coalition wrote.