What Iowa’s $5 Million Liability Cap Means For Trucking Companies

What Iowas $5 million Liability Cap Means For Trucking Companies

On May 12, 2023, Iowa Governor Kim Reynolds signed into law legislation that tries to limit the nuclear verdicts affecting trucking companies in the state.

ATRI defined a nuclear verdict as one in excess of $10 million in its 2020 report “Understanding the Impact of Nuclear Verdicts on the Trucking Industry.”

“Iowa ranks as one of the top states to do business,” Rep. Bill Gustoff, R-Des Moines, said during a committee hearing on the bill Jan. 31. “We’re just trying to keep it that way and avoid some of the nuclear verdicts that we’ve seen in a lot of other states.”

The new law caps noneconomic damages at $5 million that can be awarded to victims in a lawsuit against a trucking company whose employee caused an accident.

Let’s take a closer look at this law.

Iowa law limits pain and suffering in trucking crash lawsuits

Iowans killed or severely injured after being struck by a commercial motor vehicle would be limited to receiving $5 million per plaintiff for pain and suffering.

The legislation passed the Senate in February with a $2 million limit, but to get the bill over the finish line in the House, lawmakers raised the cap to $5 million, with adjustments for inflation starting in 2028.

“While many said it was a bridge too far for the Iowa Motor Truck Association and trial attorneys to come together and support tort reform, commonsense tort reform, I think the goal of this amendment is protecting Iowans who are injured while lowering and protecting predictability and stability for our critical, critical components of our supply chain,” said Sen. Mike Bousselot, R-Ankeny.

The new law does limit economic damages, such as compensation for lost wages or medical expenses, and all punitive damages go to the plaintiff.

When is the $5 million limit waived?

The cap is waived if a court finds the driver:

  • Was driving under the influence of drugs or alcohol
  • Refuses to submit to chemical testing
  • Was also committing a felony
  • Was involved in manufacturing/distributing controlled substances
  • Did not have a proper commercial driver’s license
  • Was driving a vehicle involved in human trafficking
  • Was driving recklessly
  • Was using a mobile phone, computer, tablet or other device while driving in violation of state or local law
  • Was speeding more than 15 mph

Companies also could not be sued for negligence in hiring a truck driver who is involved in a crash, but employers still could be sued for direct negligence in supervising, training or trusting an employee.

Why is Iowa’s tort reform so important?

This is the third state that has recently passed or may pass some type of tort reform, which brings certainty to the insurance market for trucking companies.

The idea is that these limits will help bring down insurance rates as the total cost of claims and litigation can be reduced over time.

Then carriers can look for other ways to protect their drivers and companies, through compliant paperwork.

Litigators will look at the crash information and the driver files to find unsafe driver trends. Some of the documents they will look for include driver qualification files, training records, pre-and post-trip inspection reports, daily activity logs, and post-collision alcohol and drug testing results.

[Related: How to protect yourself from truck accident litigation with compliant driver files]

If the company handles their hiring and driver qualification process well, there is a reduced chance of litigators finding unsafe driver trends that can harm the company with violations and heavy fines. 

This will help you resolve a trucking claim and litigation quickly.

So, what should you do? Reach out to CNS!

At CNS, our DQ file management system is completely customizable to your company’s needs. Our DOT Compliance Specialists will ensure all DQ files for your company will be ready to pass an FMCSA audit.

Start managing your DQ Files now!

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