Insurance data shows that over 99% of the claims are settled within $1,000,000.
Well, government officials are at it once again, threatening to increase the minimum commercial liability insurance for the trucking industry.
There’s been a lot of chat from the government on increasing insurance premium minimums from $750,000 to $2 million and maybe even $5 million.
The Fair Compensation for Truck Crash Victims Act was introduced to Congress by Rep. Jesus “Chuy” Garcia, D-Ill with the goal to increase existing minimum insurance levels from $750,000 to $5 million.
Proponents argue the legislation would protect families “from the financial devastation caused by catastrophic truck crashes.”
But opponents say the industry doesn’t need it since most carriers already have $1 million in insurance, which covers damages in all but 0.6% of cases.
According to Denny Beecher, President of RT Specialty of Jonestown, PA, “This talk has been there as long as I’ve been in the business, which is pushing 30 years. Every four years there’s a reoccurring study to see if the $750,000 limit is adequate. Attorneys from one side will say, “No” because they want to create a bigger slush fund. But the data will show that 99% of the claims are settled within $1,000,000. So, the limit is adequate.”
Who would be hurt by increasing truck insurance rates?
The problem, of course, is that we must pass those costs on to the truckers. So, that means there would be more cost for insurance, which has risen 42% in the last decade, and is expected to increase further.
What will that do to an already stressed industry struggling to find drivers, where there’s more demand for shipping than there is capacity to fill it?
FMCSA has pushed back on wanting liability premiums to rise as they have received a lack of data from insurers that is keeping government regulators from figuring out how much current levels should be raised because many lawsuits stemming from serious accidents are settled out of court.
According to FreightWaves, “while larger fleets will likely have self-insurance retention, where they can afford to pay anywhere from $1 million to $5 million and higher on their own before their insurance policy kicks in, smaller fleets typically can afford only “first-dollar” liability, where coverage starts from the first dollar of the cost of an accident.”
So, what would fleets expect to see if insurance premiums increased?
For a fleet currently paying $8,000 to $10,000 per truck per year, they can expect this to double or even quadruple at $5 million coverage.
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