Due to the constant threat of accidents and injuries from trucks on the nation’s freeways, there has been a minimum coverage rate in place for the past 30 years. There is a proposed rule change for the trucking industry that would raise those minimums for the first time since 1985. The current minimums are:
Many feel the current thresholds are too small to cover modern liability claims for accidents that result in injury or death. A study by a lobbying group found that 42% of 9000 accident settlement claims were over the $750,000 threshold, signaling that the amount is probably too low to adequately insure trucking companies against liability claims.
Are the Current Minimums Inadequate to Compensate Victims?
Wrongful death suits in particular can easily exceed those amounts, exposing a company to financial risk, and more importantly leaving victims with no recourse for compensation. An underinsured trucking company also exposes the shipper or goods to vicarious liability if another source of settlement has to be found.
Although minor accidents are adequately covered by the current rates, major crashes with catastrophic injuries and deaths would not be covered. For example, a truck accident in Ohio recently settled for $34 million, underscoring just how insufficient the current minimums are.
Insurance Costs Must Be a Part of Doing Business As a Motor Carrier
Opponents of raising the minimums state that so few accidents exceed the current levels that it is an unnecessary measure, and that the additional costs imposed by higher premiums would drive some trucking companies out of business. This is a hard argument to swallow, since it is common knowledge that increases in the cost of doing business are typically passed on to the customer, in this case the shipper. Any worthwhile company would not lose its customers based on a price increase that was incremental and out of its control. The shipper in turn would add the increase to the cost of its goods, and the end user or consumer would be the one to pay the increase.
Another way to look at the issue is if a trucking company can only run a profitable enterprise using insurance price structures from 30 years ago, they may not be running a very good business. Especially those companies that ship hazardous materials must account for the enormous liability potential in the event of an accident, and then pass that on to shipping customers who need to transport the material.
In any case, the proposed changes would have to overcome several legislative hurdles, and given the strength of the trucking lobby in the US it may be a long process. There have already been recent law changes that decreased the safety inspection requirements for trucking companies, so there seems to be a very real interest in making sure that the backbone of the country’s transport system does not have to take on additional financial challenges. Unfortunately, the ones who suffer are victims of truck accidents who may find the liable party underinsured and unable to fairly compensate for injuries or deaths.