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The Bipartisan Infrastructure Bill & the Importance of Increasing Minimum Insurance Requirements

When a tractor-trailer is involved in a crash there are no fender benders. Instead, victims of the negligence of trucking companies face life-altering injuries or death. However, current minimum insurance requirements are insufficient to cover victims’ injuries. Imagine, having a case where a father loses a limb and watches his son die as the result of a tractor-trailer crash. Then, further research discovers that the trucking company only has $750,000 in insurance coverage which is not even enough to cover the medical bills let alone compensate for the pain and suffering. This situation is all too common. Currently, legislation is pending that would increase minimum insurance requirements. These changes are necessary for the victims of large truck accidents.

Kate Brown’s life changed in 2005 when her son was struck by a truck.

As a result of the accident, the Medill News Service reports that the family had over $5 million in medical bills, but the trucking company only paid $750,000 because that was its insurance policy limit. This meager policy limit is enabled by outdated federal laws that require motor carriers of property to have only $750,000 in insurance. This low insurance minimum guarantees that stories like Brown’s happen constantly. It is especially regrettable since the federal government knows about the problem. An analysis by the FMCSA in 2013, determined that the average cost for a severe crash was $1.158 million and the cost of a critical crash was $3.86 million respectively. While the cost of a fatal accident was $5.8 million on average. The FMCSA refers to the problem as “undercompensated injuries.” An undercompensated crash is one where the insurance of the motor carrier involved is insufficient to cover a verdict against the carrier or the costs of the injured party.

One way to reduce the prevalence of fatal motor vehicle crashes lies in increasing insurance requirements. The current $750,000 requirement was set in 1980. Further, the requirement is less than what was recommended by National Transportation Policy Commission in 1979 prior to the passage of the law. The Commission based on extensive research determined that $1 million was the appropriate minimum. Further, adjusting for inflation the $750,000 minimum in 1980 is equivalent to almost $5 million today.

The Motor Carrier Safety Advisory Committee observed in 2015 that motor carrier insurance minimums are a safety issue. The Committee looked at the history of the insurance minimums and found that the whole purpose of specifying minimum amounts was twofold: First, Congress wanted carriers to have coverage sufficient to ensure that those injured could cover the cost of their injuries; Second, Congress wanted minimums so that insurers had enough skin in the game that they would incentivize safe behavior.

In recent years, Congress has attempted to raise the insurance minimums.

In 2019, Congress failed to pass the INSURANCE Act which would have increased requirements to $4.5 million to address the rising costs facing victims of large truck accidents. In 2020, Illinois Representative Chuy Garcia successfully added a provision to the Section 4408 of the Investing in a New Vision for the Environment and Surface Transportation Act (the INVEST Act) amends 49 USC Section 31139(b) by changing the $750,000 minimum insurance requirement to $2,000,000. The bill did not successfully become law.

While these past efforts have failed due to trucking industry opposition, there is current legislation pending that could provide much-needed change.

Another option is the INSURANCE Act. The bill would raise the insurance minimum requirement from $750,000 to $5 million due to the inflation in medical costs.

In support of the bill, Illinois Representative, Chuy Garcia said, “Families should not be saddled with long term-financial debt after dealing with the devastating injury or loss of a loved one. Still, thousands of families suffer in silence, burdened with insurmountable medical care costs after falling victim to catastrophic crashes with trucks Families should not be saddled with long term-financial debt after dealing with the devastating injury or loss of a loved one. Still, thousands of families suffer in silence, burdened with insurmountable medical care costs after falling victim to catastrophic crashes with trucks.

In response to this common-sense legislation, trucking industry members have claimed that these regulations will drive companies out of business.

However, this argument by industry members seeks to place the cost on victims of those company's negligence. In 2018, the FMCSA submitted a report to congress analyzing current insurance minimum requirements. It observed that because the cost of critical and severe injury crashes “can easily exceed $1 million…. Current insurance minimums cannot adequately cover catastrophic accidents….” Additionally, while the industry claims that increasing insurance minimums does not increase safety, research has shown that increasing minimum insurance requirements reduces fatal crashes.

It is clear that higher minimum insurance policy limits are needed. The cost of crashes and medical bills will continue to rise. Companies should not be allowed to place the cost of their negligence on those their harm.

In the meanwhile, understanding that there are other responsible parties to pursue is essential to developing a case. This issue will be discussed in a future blog.


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