Legislation to Adjust Motor Carrier Insurance Requirements Reintroduced
This week, U.S. Rep. Jesus “Chuy” Garcia (D-Ill.) reintroduced legislation aimed at ensuring that minimum insurance requirements for motor carriers are periodically updated to reflect the inflation rate of medical expenses.
Historical Context of Insurance Minimums
In 1980, Congress set the minimum insurance requirement for motor carriers at $750,000 to promote public safety and assess the financial viability of companies entering the field. Over the last 40 years, the cost of living has increased by over 200%, and per capita healthcare spending has soared from about $1,000 to around $12,000. However, the minimum insurance standards have not been adjusted to keep pace with these rising costs. The INSURANCE Act aims to address this disparity.
Findings from FMCSA
A study published by the Federal Motor Carrier Safety Administration (FMCSA) in 2014 found that the existing minimum financial responsibility amounts are insufficient to cover the costs of certain accidents due to rising medical expenses and revised life value estimates. Although the FMCSA proposed a rule to enhance these minimums, it later retracted the proposal in 2017.
Support for the Legislation
The Truck Safety Coalition, which includes 48 truck safety advocates from 26 states and Washington D.C., sent a letter urging members of the U.S. House Committee on Transportation and Infrastructure to support the legislation. This letter featured signatures from survivors of truck accidents and family members of victims.
Backing and Opposition
The proposal also receives backing from several organizations, including Citizens for Reliable and Safe Highways, Parents Against Tired Truckers, the Institute for Safer Trucking, the American Association for Justice, and Road Safe America. Conversely, it faces opposition from the Owner-Operator Independent Drivers Association (OOIDA), which argues that the legislation could significantly increase insurance premiums for small-business truckers without improving highway safety due to a lack of correlation between insurance coverage and safety outcomes.
OOIDA’s Concerns
According to OOIDA representatives, federal law currently mandates motor carriers to hold at least $750,000 in liability insurance ($5 million for those transporting hazardous materials). However, most carriers carry $1 million or more in coverage. The association contends that while more coverage isn’t necessary, the insurance industry naturally adjusts to market conditions. They estimate that if Congress were to raise the minimums to $2 million, premiums for small-business truckers could double, driving costs from $10,000 annually to $20,000.
FMCSA and Minimum Insurance Rulemaking
Following the retraction of the proposed rulemaking regarding minimum insurance standards, the question of how to ensure adequate coverage for motor carriers remains a topic of pressing concern within the industry.
