Truckers at Risk

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Truckers at Risk

A last-ditch effort by congressman Michael Bost (R-Ill) failed to block an amendment by fellow Illinois representative Jesús “Chuy” Garcia (D) increasing the minimum General Liability insurance requirement for truckers from $750,000 to $2 million. On Wednesday, the House of Representatives passed the $1.5 trillion transportation and infrastructure bill known as the Moving Forward Act, bringing the increase one step closer to reality.

The amendment, pushed by truck accident lawyers and the consumer advocacy groups they fund, was opposed by independent owner/operators, who see it as just the latest in a series of adverse regulatory actions tilting the playing field in favor of large “mega” carriers — which are self-insured and therefore would be unaffected by an increase. Political support for the amendment, which had failed to get traction as a stand-alone bill, split along party lines, with the Democratic majority prevailing. The entire transportation bill is expected to face major headwinds in the Republican Senate, however, leaving at least some hope that the increase will never make it to the President’s desk.

As we’ve previously reported, Garcia and others say an increase is needed to adequately compensate victims of accidents involving large trucks. The American Trucking Associations (ATA), the trade association which represents the megas, has come out in favor of the measure.

The Owner-Operator Independent Drivers Association, which supported the transportation bill in its original form, withdrew its support when the insurance provision was added.

“We cannot support legislation that will cause many of our members to lose their businesses and livelihoods,” OOIDA wrote in a letter to members of the House Transportation and Infrastructure Committee. “An overnight increase in minimum financial responsibility of 167% will undoubtedly devastate many small trucking businesses. The 265,000 single-truck operators working in America today will be particularly at risk.”

Insurance payments have been increasing as a percentage of trucker operating costs, and the effect has been felt most acutely by owner-operators, who lack the leverage of larger fleet owners. According to a recent survey by the American Transportation Research Institute, small-business truckers pay four times as much for their insurance as larger carriers.

And that’s at a time when insurance premiums are already increasing across the board, thanks to a trend toward large “nuclear” jury verdicts against trucking companies. One insurance carrier respondent specified that “low risk” motor carriers are experiencing eight to ten percent increases in insurance costs, while new ventures and average-to-marginal carriers are experiencing a 35 percent to 40 percent annual increase – a trend that has occurred for three consecutive years.

In addition to raising premiums, some insurers are becoming more selective in who they will insure or have stopped insuring truckers altogether. As a result, motor carriers have fewer options for purchasing full coverage and have had to take on more risk in the form of higher deductibles.

Jeremy Johnson, a Minnesota owner-operator who maintains $1 million in general liability coverage purchased through the carrier he hauls for, said he has been told his total premium of $250 per week would increase by approximately $40 per week — roughly 16 percent — if the minimum liability requirement increased to $2 million. Although he says that, alone, would not put him out of business, it has to be considered in the context of all vehicle operating expenses, which have also been increasing according to ATRI.

Senate Majority Leader Mitch McConnell, R-Ky, has said that the house bill has zero chance of making it through the Senate. “This so-called infrastructure bill would siphon billions in funding from actual infrastructure to funnel into climate change policies,” he said. “. . . the White House has declared it ‘not a serious proposal’ and made it clear this will never become law.”

But even if the insurance increase doesn’t pass this round, trucking advocates say the seed has been planted and that truckers need to be calling and writing their representatives to let them know EXACTLY how such an increase would affect them, how small businesses aren’t the same as the big self-insured fleets represented by ATA, and why increasing the minimum liability requirement would ultimately not be in the public interest.

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