As a trucking attorney and consumer safety advocate, I am pleased to report that the Federal Motor Carrier Safety Administration (“FMCSA”) has recently announced that it is considering a rulemaking to increase the minimum levels of financial responsibility for interstate motor carriers, as well as rulemaking pertaining to broker and freight forwarders, trip insurance, bus brokers and self-insurance.  This important move is long, long overdue.

The federal government has imposed mandatory minimum insurance limits for all interstate motor carriers since the Motor Carrier Act was passed in 1980.  The Bus Regulatory Reform Act, passed in 1982, imposed similar regulations on passenger carriers.  The amount of coverage required by the current regulations varies depending on the type of cargo being hauled and the size of the vehicles involved.  General freight carriers are required to carry at least $750,000 in coverage, unless the vehicles being operated are less than 10,001 lbs (GVW), in which case the mandatory limits are reduced to $300,000.  Carriers hauling hazardous materials are subject to increased limits, which may be as high as $5,000,000 depending on the type of materials being transported.  Passenger carrier limits also vary, depending on the number of passengers involved.

At first blush, these limits may seem significant.  However, the sad reality is that they all too frequently fail to cover the medical costs and related damages which are inflicted by negligent motor carriers.  The simple truth is that the current limits may have sufficed in the 1980’s, when they were put in place. However, the financial burdens imposed by the catastrophic injuries negligent carriers cause have dramatically increased since then.  A change is needed to protect the public.

The FMCSA’s review of the appropriateness of current minimum financial responsibility requirements was required by legislation which President Obama signed in 2012.  The FMCSA’s report was issued to Congress in April, 2014 and concluded what we trucking attorneys have known for quite some time:  “that the current financial responsibility minimums are inadequate to cover the costs of some crashes.”  Among the report’s notable findings are the following:

  • “The Costs for severe and critical injury crashes can easily exceed $1 million”
  • “Insurance premiums have declined in real terms since the 1980s and inflation-adjusted premium rates have also declined over the same period.”
  • “Current insurance limits do not adequately cover catastrophic crashes due, in part, to the significant increases in medical costs associated with injury since the current minimum insurance levels were set in 1985.” As such, the “real value of insurance coverage has decreased” over the past 30 years and simply “does not cover as much of the cost of a catastrophic crash as it once did.”

For more information, the FMCSA’s announcement can be accessed here.