Bill would boost truck insurance minimums to account for 33 years of inflation
$750,000 insurance limit for motor carriers hasn’t been adjusted since 1980, and is grossly inadequate to protect truck accident victims
I recently wrote about one of the easiest ways to make the trucks on our roads dramatically safer, which is to raise insurance levels for motor carriers.
This would create a financial incentive for increasing safety and for putting better truck drivers behind the wheel. It would stop many dangerous trucking companies from cutting safety corners and turning a blind eye to the drivers they’re putting behind the wheels of these moving brick walls.
It is harnessing the power of the marketplace. Everyone wins. The problem is that maximum insurance policy limits that cover many trucking companies are just too low, and don’t create a real incentive for the trucking company to lower insurance premiums by increasing safety, or for the insurance company to take a hard look at the safety policies of the companies they’re insuring.
Currently, the FMCSA only requires motor carriers to maintain insurance up to $750,000 per truck accident. This is stunningly low, and hasn’t changed since 1980. The mandatory insurance requirement also has not been adjusted for inflation.
Now, a new bill proposed by U.S. Rep. Matt Cartwright would adjust the $750,000 insurance limit for motor carriers to $4.4 million to account for inflation relating to medical care. The bill is called H.R. 2730: Safe And Fair Environment on Highways Achieved through Underwriting Levels Act of 2013.
According to a recent story in Transport Topics, Cartwright said the current level is insufficient to protect crash victims, and that the proposed figure represents the increase in the cost of medical care in the 33 years that have passed since the original level was instituted.
To put the $750,000 limit into perspective: Many of our clients have incurred $750,000 in medical bills within a few short months of being involved in a serious truck wreck. They get nothing, even when their lives are ripped away from them by another person’s carelessness.
These very low insurance limits fail to give insurance companies incentives to undergo a thorough assessment of the motor carriers they insure, because their own liability and exposure is capped at $750,000. And all that these dangerous truck companies have to do is pay their insurance policy limits, close for business, and then re-open for business under a new name immediately afterward. These “chameleon carriers” go on to cause more of the same wrecks.
Truck attorneys like myself and the founding partners of the Truck Attorneys Roundtable have long recognized how inadequate these insurance policy limits are to compensate truck wreck victims and their families when a loved one is killed or catastrophically injured. When both myself and Michael Leizerman were presidents of the American Association for Justice Truck Accident Lawyer Group, we pushed hard for these insurance policy limit changes. We’re still pushing hard for these changes today.
Let’s level the playing field and stop punishing the good trucking companies who play by the rules
If Cartwright’s bill becomes law, bad trucking companies who do not follow the laws or who cause too many injury wrecks would face prohibitively high insurance premiums. It is the market working efficiently, punishing unsafe companies and rewarding good ones with lower premiums as they represent lower risk.
The safe truck companies who do follow the rules and the traffic safety laws would be further rewarded because they would have a competitive advantage bidding for jobs.
Currently, the companies that break the rules underbid the good companies because safety and proper maintenance cost money, and they can pay less and then underbid the companies who play by the rules.
Consider this recent study: The Trucking Alliance, a group of seven carriers that lobby for safety legislation, found that the dollar settlements in many accident cases were far above the $750,000 minimum federal insurance requirement, according to an article on truckinginfo.com, New Study Puts Spotlight on FMSCA Insurance Requirement. These high settlements occurred only about 1% of the time, but the amounts were enough to create an uninsured liability of 42% for the motor carriers.
Higher insurance means insurance companies will be more careful on who they insure and that will increase safety, while reducing truck accidents.