Fleet insurance requirements under under microscope

Updated Jun 12, 2013
wrecker truck wreck

The Trucking Alliance, a coalition of carriers wants federal insurance requirements increased for carriers, but has not convinced the American Trucking Associations it’s worth doing.

In compliance with last year’s highway authorization act, the Federal Motor Carrier Safety Administration is analyzing the adequacy of the $750,000 minimum insurance requirement set for motor carriers in 1980.

The Alliance submitted 8,692 accident settlements from 2005 to 2011 to an actuarial firm for analysis.  Only 1 percent of these settlements exceeded the minimum requirement, but per occurrence average is what determines true risk, it stated.

If all the study’s companies had maintained the minimum $750,000 requirement, 42 percent of monetary exposure from these settlements would have exceeded the carriers’ insurance coverage. “Conversely, 42 percent of the injury claims could have had no avenue for offsetting medical costs,” the Alliance wrote.

Also, of the settlements exceeding $750,000 of insurance, the uninsured liability exposure was 37.5 percent at the $1 million insurance level to 17.7 percent at the $4 million of insurance coverage.

The ATA wants to review the alliance’s data and methodology, said Sean McNally, ATA vice president of communications. The group said 1 percent of settlements exceeded the current minimum for general freight, yet recommended “limits be increased to some undetermined amount in satisfaction of some unstated goal,” he said.

The FMCSA has “consistently found over the same time period examined by the Trucking Alliance that the average cost of a crash involving a large truck is less than a third of the minimum limit required today,” McNally added.

The Owner-Operator Independent Drivers Association’s Todd Spencer called the Trucking Alliance’s study “bogus,” saying the group “cherry picked data to make a claim that just isn’t so. Even the firm that compiled the report put the disclosure right in the heading,” he said.

“What the Trucking Alliance put together isn’t a study. It’s an x-rated fairly tale. Something you would expect to see on late night television interspersed between all the other claims for miracle products and personal injury lawyers,” Spencer said. “No one should take this bogus study seriously. In 98 to 99 percent of crashes involving trucks, claims are settled well below the $750,000 minimum. But even at that, most truckers have $1 million in coverage. All the Alliance will succeed in doing is increase costs for their competition in trucking and chum the water for personal injury lawyers.”

The coalition’s full name is the Alliance for Driver Safety & Security, Inc.  and its regulatory agenda includes support for mandatory electronic on-board recorders and speed limiters. Alliance members are J.B. Hunt Transport, Schneider National, Knight Transportation, Maverick USA, Fikes Truck Line, Boyle Transportation and Dupré Transportation.

CCJ editor Jeff Crissey wrote a blog post last week about the Trucking Alliance’s push. Click here to read it.