My Crash Course on Underwriting for Trucking Minimum Liability Could Impact You

In case you did not know it, the minimum level of liability insurance, which trucking companies are required to have, is $750,000 and has not increased in over 35 years. It has not kept up with inflation as Congress intended when it originally authorized the Secretary of Transportation to set that limit.

“The Motor Carrier Act of 1935 first directed the establishment of Federal rules and regulations for interstate motor carrier operations that govern “security for the protection of the public.” Over time, both Congress and the Federal government have taken numerous actions to address the levels of financial responsibility, most recently with the recent enactment of MAP-21. The current minimum levels of financial responsibility for commercial motor carriers were established by Congressional legislation in the early 1980’s. Recently, there has been interest in determining whether the current mandated levels continue to accomplish these goals and whether victims of truck- and bus-related crashes are adequately compensated.” p. xi

As one daughter of a truck crash victim has said, “That’s $750K for each incident, not each person injured or killed in a crash. So if several families or cars are involved all those injured and all the families of those killed must share the $750K if that is all the truck company has.”

In contrast, check out this DOT document which they prepared in order to determine the value of lost life and injury and its impact on rulemaking decisions:                                          VSL Guidance-2013-2 DOT value of life .

In the fall of 2014, the Federal Motor Carrier Safety Administration (FMCSA)  issued an advanced notice of proposed rulemaking  in order to study, among other things, the question of whether the minimum liability level should be increased in order to more adequately compensate for lost life and injury due to truck crashes.

  • The Federal Government has long required motor carriers to maintain certain levels of financial responsibility, either through insurance, a bond, or other financial security, as a means to protect the public in the event of a crash.  An April 2014 Report to Congress found that while catastrophic motor carrier crashes are rare, the costs for resulting severe and critical injuries can exceed $1 million; current insurance limits do not adequately cover these costs, which are primarily due to increases in medical expenses and other crash-related costs. – See more at:
  • From a study released in April 2014, FMCSA says that, “The legislative history of minimum insurance requirements for commercial motor vehicles (CMV) indicates that Congress recognized that crash costs would change over time and that DOT would periodically examine the levels and make adjustments as necessary. A variety of recent studies indicate that inflation has greatly increased medical claims costs and related expenses. In conclusion, FMCSA has determined that the current financial responsibility minimums are due for re-evaluation. The Agency has formed a rulemaking team to further evaluate the appropriate level of financial responsibility for the motor carrier industry and has placed this rulemaking among the Agency’s high priority rules. The FMCSA will continue to meet with the stakeholders, including impacted industries, safety advocacy groups, and private citizens, as it moves forward with developing a proposed rule.”

Unfortunately, despite the insistence of many that this increase is necessary, the trucking industry is lobbying against it–declaring it unnecessary–and, at present, has put a rider in the THUD appropriations bill now being voted on. If the bill passes with that rider intact, then FMCSA will no longer be funded to complete the rulemaking process which has already been authorized.

What is the truth in this matter–necessary or unnecessary? That is what I would like to know. And I think that truckers and lawmakers and the public need to know this as well. And that is why I set out on a quest recently to find the answer to that question.

The support for halting the rulemaking which is coming from the trucking industry includes the Independent Owner Operators, who in particular are being told that their premiums will skyrocket if the rule were to pass.  According to Jami Jones from OOIDA (Owner-Operator Independent Drivers Association),

“An increase such as the one Cartwright is proposing would cripple small-business-truckers. Currently, the national average cost for a small-business trucker insuring one truck is about $5,000 per year.

It’s virtually impossible to project what the cost would be if the minimum liability requirement were increased more than 500 percent.

For starters many insurance carriers may quit offering insurance because of the increased amount of financial resources they would have to have in place to even write the policies. Secondly, there is no straight-line increase that can be drawn. But early estimates place annual premiums at $20,000 or more for a one-truck owner-operator for a $4.2 million liability policy.” – See more at:

In contrast, check out this opinion on the potential premium: John Lannen, executive director of the Truck Safety Coalition, has shared background information with us which he has gathered from numerous sources, presentations, and conversations regarding the economics of additional insurance coverage for motor carriers.  It turns out that the first million dollars’ worth of  trucking insurance is the most expensive and each incremental amount is cheaper. . . . ” (For more details, go here: )”

Additionally, I have been having online conversations with truckers and have not found any evidence to verify the validity of that $20,000 estimate. Many people in the industry pooh-pooh safety advocacy which they consider based merely on emotion. But do they hold themselves to the same standard and insist on FACTS?

I am certainly motivated strongly by emotions to be in this quest for safer roads for the long haul. But I hope that I am basing my statements and my advocacy on facts and logical reasoning. In fact, I am not content to accept at face value statements by the trucking industry which influence both those whom they represent and also lawmakers who make decisions on truck safety legislation. I am, therefore, concerned about decisions being made on matters which impact victims of truck crashes and which quite possibly may be impacted by misinformed fears.

Because I feel so strongly about getting to the bottom of this question, I have spent many hours this week trying to find out what the new premiums will actually be for truckers if the minimum liability level is eventually raised. In order to educate myself on this topic, I have spoken or emailed with:

  • Todd Spencer, Executive Vice President of OOIDA–the Owner-Operator Independent Drivers Association (awaiting a response from him)
  • National Association of Insurance Commissioners (who explained to me that as liability limits go up, rates go down. He also told me that insurance companies are required by law to file their rate tables with the state and that I should be able to contact a state department of insurance and ask for that information. He said that the rate tables would list the options for liability limits and that each level would indicate a figure which would be a multiplier–to be multiplied by the trucker’s base rate in order to find out the new premium at higher levels. I have yet to get access to these tables.)
  • North Carolina Department of Insurance (still have to check with the Property and Casualty Division)
  • Numerous insurance agencies
  • Several truckers, including:

Many independent owner operators are concerned that they would bear the brunt of increases — being at a disadvantage to the larger self-insuring trucking companies. FMCSA’s rulemaking addresses this issue.

Along that line, please read this paper written by an independent owner operator:      Tilden Curl Paper on Trucker Insurance

Finally, I contacted FMCSA, to whom, on May 5, 2014, we originally presented our petition request for raising the minimum liability. At that time, they indicated that in order to get access to proprietary insurance information to determine estimated premiums they would have to initiate the rulemaking process–which they did in November 2014.

However, when I emailed FMCSA today to find out if they had gotten access to that proprietary information, they let me know that they did not yet have the information to estimate the increase in insurance premiums. In order to get that information, they have recently published a rulemaking entitled “Confidential Business Information,” which would “help encourage insurance companies to share some of their proprietary information” for use in the agency rulemaking process–without disclosing confidential information to the general public.

The evident lack of transparency really bothers me, especially with all of the rumors going around–rumors which are swaying decisions and actions that impact life & death matters.

Meanwhile, who pays the price for this issue being stuck in limbo? Some would claim that, “In the end, if minimum liability insurance is increased to $4.2 million, the only winners would be the trial lawyers and large motor carriers – with small-business trucking suffering an expensive, wildly burdensome and completely unnecessary mandate.” – See more at:

Really? What about those who already bear the brunt of unexpected, unnecessary tragedy and untimely death? Aren’t they the ones that the insurance is intended to benefit?


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