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June 25, 2020 1:30 PM, EDT

House Panel Approves Amendment to Raise Minimum Liability Insurance for Carriers to $2 Million

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A measure that would increase from $750,000 to $2 million the minimum liability insurance requirement for commercial motor vehicles was approved by a House panel and included in a recent highway funding bill.

The amendment, inserted into the INVEST in America Act by Rep. Jesus “Chuy” Garcia (D-Ill.), cleared the House Transportation and Infrastructure Committee on June 18 and comes nearly six years after the Federal Motor Carrier Safety Administration, concerned about increasing jury verdicts, issued an advance notice of proposed rulemaking for a possible increase in the insurance minimum. The proposal was withdrawn in 2017 by the Trump administration, which cited a lack of sufficient data on which to base a decision.

Garcia via Twitter said the existing requirement, established in 1980, has not been adjusted for inflation in the ensuing years and is “inadequate” to cover medical costs for individuals involved in catastrophic crashes.

The amendment is being opposed by both American Trucking Associations and the Owner-Operator Independent Drivers Association.

“ATA does not support an arbitrary increase to minimum insurance limits,” Sean McNally, ATA vice president of communications, said in a statement. “To be an effective tool for improving safety, there must be an open, fair and data-driven process to inform and guide what insurance limits should be, not just inserting a number that trial lawyers pull from thin air.”

Norita Taylor

Taylor

“Raising the insurance minimum will do absolutely nothing to improve highway safety and would be nothing short of disastrous for many small motor carriers that are struggling to stay in business,” said Norita Taylor, OOIDA’s director of public relations.

Insurance costs for motor carriers have been on the rise for at least the last few years, and have coincided with rising jury awards — or “nuclear verdicts” — against trucking firms, according to a study released June 23 by the American Transportation Research Institute. However, the study found that while fleets are now paying higher premiums, those premiums are definitively based on safety records.

The study results were based on a sample of 600 jury verdicts from 2006-2019 along with interviews and surveys from dozens of defense and plaintiff attorneys, as well as insurance and motor carrier experts in its study of “nuclear verdicts.”

“One respondent specified that ‘low-risk’ motor carriers are experiencing 8% to 10% increases in insurance costs, while new ventures and average-to-marginal carriers are experiencing a 35% to 40% annual increase — a trend that has occurred for three consecutive years,” the study said. “Based on ATRI’s operational cost data, small fleets and owner-operators pay out-of-pocket considerably more on a per-unit basis than larger fleets.”

In the withdrawal of its proposal in 2017, FMCSA said that despite receiving a significant number of comments in response to the ANPRM, those comments, “did not provide responsive information necessary to allow the agency to proceed to a notice of proposed rulemaking.”

The agency said, “In particular, commenters did not provide sufficient cost or benefit data and the agency was unable to otherwise obtain sufficient data on industry practice with respect to the level of liability limits in excess of the agency’s minimum financial responsibility requirements, the cost of such premiums and the frequency of, and the amount by which bodily injury and property damage claims exceed policy liability limits.”

It continued, “Based on the information provided, FMCSA is not able to determine potential increases in insurance premiums associated with increased financial responsibility limits, or the impact of an increase in minimum financial responsibility requirements on insurance company capital requirements.”

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