According to the Federal Motor Carrier Safety Administration (FMCSA) the agency is exploring the potential to raise the $750,000 insurance minimum requirement for commercial motor vehicles. In a report to Congress in April 2014, the FMCSA says current minimums are inadequate to meet the costs of some crashes because “inflation has greatly increased medical claims costs and related expenses.” The FMCSA has formed a team to further evaluate required levels of financial responsibility.
The report was mandated by MAP-21 legislation and includes findings from a study that weighed the benefits of increasing insurance minimums, including improved compensation for crash victims and reductions in commercial vehicle crashes, against costs imposed on commercial motor vehicle operators and the insurance industry.
The $750,000 minimum has been in place since 1985, and the agency says if it had kept up with the core consumer price index, the minimum would be $1.62 million, and if it kept up with the medical consumer price index, which measures the annual increase in medical costs, the number would be $3.18 million in liability insurance.
As expected, the Owner-Operator Independent Drivers Association (OOIDA) responded to the FMCSA’s report saying that any increase in insurance rates would devastate small businesses that comprise over 90 percent of the trucking industry.
“Even though the agency’s report confirms that fewer than one percent of all truck-involved accidents result in injuries or property damage that exceed current insurance requirements, it seems pretty clear they plan to raise those requirements anyway,” says Todd Spencer, executive vice president. He also points out that “the amount of insurance carried by motor carriers has never been shown to have a correlation with safety.”
The American Trucking Associations (ATA) echoed the OOIDA in a statement about the report that said “ATA has yet to see any evidence that increased insurance minimums will lead to improved highway safety, and until we can review the underlying study FMCSA’s report relies on, that continues to be the case.”
Despite industry reaction, the FMCSA intends to make the matter a priority and has formed a rulemaking team “to further evaluate the appropriate level of financial responsibility for the motor carrier industry.”
The Hamilton Firm urges a substantial increase in the minimum limits given the devastating effects of a collision between a passenger car or small truck and a tractor trailer or other large commercial vehicle. The likely result of such collisions is catastrophic injury or death. The current minimum limit of $750,000 is grossly inadequate.
A copy of the FMCSA’s report can be viewed at: