Following the last regulatory update with news about the liability-insurance-minimum hike FMCSA’s got well under way, I queried the blog’s audience here relative to what you were paying today for liability insurance. With many owner-operators packaging both cargo and other insurances, too, with liability, it’s hard to get a 100 percent accurate bead on an average figure for premium costs today.
We also, of course, don’t yet know what the proposed hike will be, but FMCSA’s been citing $1.62 million as accounting for inflation since the $750,000 current minimum was introduced in the 1980s — if that’s the ultimate figure, it would represent a more than twofold increase in the coverage amount required at a minimum, and some groups have called for a higher amount, as much as $4 million.
$4 MILLION?
Actually, the figure is $4,422,000, included in the so-called “SAFE-HAUL” Act, introduced earlier this year in the House following a study by a group of large carriers called the Trucking Alliance that called for much greater insurance minimums.
Under my prior reporting two weeks back on the liability insurance issue, a small fleet owner posting as Semper Fi noted he currently carried $2 million worth in liability (packaged with 100K in cargo insurance, and with a $2.5K deductible) for $550 a month per truck. “The larger issue here,” the commenter said, “is that the minimum car insurance won’t cover damage done to my trucks if it was their fault. I have to cover what their insurance won’t. The minimum car liability needs to be raised.”
And: “Another issue that will come up is the larger companies are self-insured at a much lower cost per unit. I feel this gives them an unfair advantage in the overall picture of operating my business…. This will be mentioned in the comment period for these proposed changes.”
The Owner-Operator Independent Drivers Association commended the administration on a provision in its dead-in-the-water “Grow America Act” highway-bill draft earlier this year that would have eliminated “the self-insurance option for motor carriers,” as an OOIDA statement at the time noted. “This option allows the biggest and most profitable motor carriers to avoid buying insurance on the open market where prices are based upon risk, unlike the majority of the trucking industry which is made up of small businesses.”
Assuming the inflation-adjusted figure, plus a little more, will be the amount, I’ve got somewhat decent (at least) news to report, via perspective on what such a hike would represent in terms of premium increases. I spoke with Steve Libertore of National Risk Management Services — he specializes in trucking companies with 1-15 trucks in 37 states. “We’re based in Ohio,” Libertore says, and “we stay out of the Northeast,” more or less, in terms of states where they don’t operate for carriers with authority.
