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FMCSA to Congress: Raise insurance minimums for truck crashes

Under current insurance requirements, truckers already often find themselves pushed into court by attorneys after accidents that were not their fault because of the possibility of high-dollar settlements.

By LYNDON FINNEY
The Trucker Staff

4/18/2014

WASHINGTON — The Federal Motor Carrier Safety Administration has reported to Congress that current financial responsibility minimums for the commercial motor vehicle industry are inadequate to meet the costs of some crashes and the agency says it will initiate a rulemaking to raise the limit higher than the current $750,000.

FMCSA noted findings from a recent 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 agency said that while catastrophic motor carrier crashes are rare, the costs for resulting severe and critical injuries can exceed $1 million and that current insurance limits do not adequately cover these costs, which are primarily because of increases in medical expenses and other crash-related costs.

The agency has formed a rulemaking team to further evaluate the appropriate level of financial responsibility for the motor carrier industry.

MAP-21 requires FMCSA to issue a report every four years on financial responsibility requirements.

The announcement by the FMCSA comes less than a year after Rep. Matt Cartwright, D-Pa., introduced legislation that would raise the required insurance minimum for motor carriers from $750,000 to $4,422,000 per truck, an increase of almost 500 percent. There was no immediate indication of how much the FMCSA might recommend the minimum be raised.

Congress established the current insurance minimum in 1980.

Cartwright’s bill never made it to committee.

Before being elected to Congress last year, Cartwright was a member of the law firm of Munley, Munley and Cartwright, a firm that specializes in accident and injury claims. After Cartwright was elected, he resigned the firm, which is now called Munley Law.

In present dollars adjusted for the increase in the cost of medical care, it takes more than $4.4 million to provide for the equivalent of the $750,000 in the original law, Cartwright said.

"This is a matter of public safety. Tragically, more than 100,000 people have been killed in commercial vehicle collisions since 1980. This legislation is essential to protecting our nation's highways and ensuring that victims receive the proper amount of compensation for their losses."

The current minimum of $750,000 fails to perform the basic functions that Congress intended: to promote safe operations by holding insurers responsible for inspecting trucking operations prior to underwriting policies and to protect the public, he added.

Trucking interests responded swiftly to the FMCSA announcement.

“Based upon the data that we have seen, TCA believes that the current minimums are satisfactory,” said Dave Heller, director of safety and policy at the Truckload Carriers Association.

The American Trucking Associations responded through Vice President of Communications & Press Secretary Sean McNally:

“ATA has yet to see any evidence that increased insurance minimums will lead to improved highway safety,” said McNally, “and until we can review the underlying Volpe study FMCSA’s report relies on, that continues to be the case. In addition, we are disappointed by the report's lack of depth in exploring these issues.”

The Owner-Operator Independent Drivers Association responded by noting that FMCSA acknowledged that more than 99 percent of commercial vehicle accidents are readily covered under current requirements and that they have not done an assessment of the financial impact that increased requirements would have on small businesses. 

"Even though the agency's report confirms that fewer than 1 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," said Todd Spencer, OOIDA executive vice president. 

OOIDA contends that an increase in insurance would sound the death knell for the small businesses that comprise more than 90 percent of the trucking industry.

"The amount of insurance carried by motor carriers has never been shown to have a correlation with safety," continued Spencer. "The agency seems to be bowing to the economic objectives of the personal injury attorneys and mega-trucking companies who have been campaigning for higher insurance requirements. Trial lawyers will see windfall payouts in the increases, and big trucking companies — who already use special exceptions in the law to avoid buying insurance on the open market — see an opportunity to drive up business costs and do away with their small-business competitors."

Under current insurance requirements, truckers already often find themselves pushed into court by attorneys after accidents that were not their fault because of the possibility of high-dollar settlements.  

The Trucker staff can be reached to comment on this article at editor@thetrucker.com.

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