House lawmakers approved an amendment this week that would more than double the required minimum insurance coverage for truck owners, and industry leaders are worried about what those additional costs could do to small businesses.
The Federal Motor Carrier Safety Administration-required minimum coverage is $750,000, but the adjustment increases that amount to $2 million.
While bigger companies may be able to afford rising insurance costs, smaller companies can’t.
“Insurance rates have been spiraling out of control for truckers. There’s no end in sight,” Brian Fielkow, president of multimillion-dollar trucking and logistics company Jetco Delivery, told FOX Business. “Higher costs further could push more truckers out of business, a trend that accelerated in 2019 and continues now.”
Insurance premium costs per mile have increased more than 17 percent since 2013, according to data from the American Trucking Research Institute. Between 2017 and 2018, they rose 12 percent. In 2018, they were about 80 cents a mile.
Proponents believe the liability insurance requirement is too low given lawsuit verdict size and inflation, Fielkow said. And simply raising it does not treat what he sees as the underlying problem.
“Raising the federal insurance limits is a fool’s mission unless coupled with meaningful action to curb lawsuit abuse,” Fielkow said.
Insurance costs have been a point of contention for the industry because of a number of verdicts, which refer to jury awards where the penalty is in excess of $10 million. Penalties have become larger throughout recent years. According to law firm Roetzel & Andress, between 2012 and 2015, 12 verdicts resulted in $900 million worth of awards.
Insurance costs have been credited, in part, with helping drive nearly 800 trucking companies to failure in 2019.
Trade publication CDL Life said if the increase passes, it will cause struggling small carriers to go under.
The amendment to the INVEST Act was passed by a House committee on Wednesday. The measure, introduced by Illinois Democrat Rep. Jesús “Chuy” García, was lauded by the Institute for Safer Trucking, which noted that the required minimum has not been raised since the 1980s.
“This amendment will help families who have survived truck crashes and help make the trucking industry safer,” the group wrote in a Twitter post.
García said the increase would ensure insurance requirements keep up with inflation. He also said it is not “an attack on truckers,” but rather about supporting families who have lost loved ones.