When you travel on the highways and see motor carriers, you may only consider the transporting of goods from one location to another; however, there are many insurance issues going on right now involving the required minimum insurance limits. Present insurance limits were set in the mid-1980s, and in the last few years, groups have claimed the current minimum insurance limits are too low to cover the costs of today’s crashes; however, The Federal Motor Carrier Safety Administration (FMCSA) has officially stated the proposed minimum liability limits increase has been withdrawn, citing that a lack of information/sufficient data was not provided to back up a need for an increase.
The FMCSA did a study that suggested that the current limits of $750,000 were no longer adequate and had failed to keep up with inflation or rising liability costs that are present today. In response, the Advanced Notice of Proposed Rulemaking (ANPRM) researched the effects of varying costs of insurance premiums with higher insurance limits with providers and carriers, how often insurance carriers go bankrupt as a result of paying claims for crashes that exceeded the minimum limits of liability, and the percentage of times claims exceeded the minimum insurance limits, amongst many other issues hinting at the need for an increase.
Despite the research, the FMCSA says lack of sufficient information found from key participants, such as insurers, carriers, brokers, shippers, and others, led to a withdrawn proposal of an increase in minimum limits of liability required for motor carriers.
Both of the insurance industry’s top lobbyists, the Owner-Operator Independent Drivers Association and the American Trucking Associations declared the need was not warranted because of the following:
- A mandated increase in the insurance limits would increase insurance premiums, which could push out the smaller insurance carriers
- Findings show that only 1% of trucking related crashes exceeded the $750,000 in liability claims
- Typically, most carriers carry at least $1 million in liability limits
Unanswered Questions Remain
As of today, there is no plan to increase the minimum insurance limits; however, there are still questions being proposed to the key stake holders in the trucking community, which involve:
- What percentages of mobile carriers already have limits of liability higher than required?
- How would an increase in premium affect the varying levels of liability insurance coverage and would it be different from smaller carriers to larger ones?
- Would there be a formula for increasing the minimum requirements in the future in relation to inflation?
- What are the current insurance premium rates for mobile carriers?
- How would an increase affect the smaller carriers in obtaining insurance?
The Ruling, For Now, Is Over
So, for the time being, the call for an increase has been hung up, but who knows what may happen “down the road” for mobile carriers? If you have any questions regarding this information, feel free to contact our office at 866-869-3335.