Get ready, trucking industry. Here we go again.
First came the Hours of Service rule, which exacerbated truckers’ work week that limited daily driving time to 11 hours, on-duty time to 14 hours, required a 30-minute rest break within the first eight hours and installed a 34-hour restart each week.
Then came the $75,000 broker bond, which increased the minimum broker bond from $10,000 to $75,000 for every freight broker and freight forwarder to maintain their status as a licensed broker/forwarder.
Follow that up with the new ELD mandate (which is currently in the comment period), which will require trucks to install an electronic logging device to measure driving time for HOS and other information.
And now? The Federal Motor Carrier Safety Administration has announced it will begin moving forward to create a rule raising the minimum liability insurance requirement per truck.
Currently, truck drivers must carry a minimum of $750,000 liability insurance. According to FMCSA, the liability minimum, which was set in 1985, has not kept pace with inflation or medical costs and does not “adequately cover catastrophic crashes” today. Had insurance kept pace with the consumer price index, which measures inflation, the minimum required insurance would be $1.
62 million today. However, had it kept pace with the medical consumer price index, which measures the increase annually in medical costs, the required
amount of liability insurance would be at $3.18 million today.
The news came last week in a FMCSA report to Congress. The study was a requirement of the MAP-21 highway funding act of 2012.
FMCSA has said, adjusting for inflation, that insurance premiums have dropped slightly on average in nominal terms. Today, the agency said, the current $750,000 insurance policy runs (on average) about $5,000 per year per truck.
Declining insurance rates, however, will likely not offset an increase in premiums should insurance requirements double or quadruple the current amount. Such a dramatic increase to insurance premiums could well be a death knell to small businesses in the transportation industry.
According to Owner-Operator Independent Drivers Association Executive Vice President Todd Spencer, just 1 percent of all crashes where trucks are involved exceed the $750,000 payout in damages. While the FMCSA agrees with the 1 percent statistic, the Trucking Alliance said in a report last March that between 2005 and 2011, 42 percent of all settlements paid by its carrier members exceeded the minimum amount.
FMCSA says it has already formed a rule making team to determine a new minimum liability insurance level and considers it among its high priority rules.
The American Trucking Association, however, is questioning FMCSA’s study, saying it does not see a direct connection between liability insurance rates and safety.
Meanwhile, Spencer said he believes FMCSA is simply bowing to economic objectives for personal injury lawyers and big trucking companies. Both have been campaigning for higher insurance rates for some time. He said attorneys will see a windfall from the insurance increases and big trucking companies will see the opportunity to drive up business costs and eliminate their small-business competitors who survive the increase to insurance rates.