FMCSA Starts Rulemaking to Raise Minimum Insurance Requirements
The agency's report to Congress says the current insurance limits don't cover catastrophic costs, mainly because of increased medical costs.
The Federal Motor Carrier Safety Administration has submitted a report to Congress explaining that current insurance minimums it has set for the commercial motor vehicle industry are inadequate to meet the costs of some crashes. This report to Congress was required in the most recent federal transportation bill, and FMCSA has begun a rulemaking to address the problem. The agency included findings from a recent study that weighed the benefits of increasing insurance minimums, including improved compensation for crash victims and reduced commercial vehicle crashes, against costs imposed on CMV operators and the insurance industry.
Its analysis shows catastrophic motor carrier crashes are rare, but the costs for resulting injuries can exceed $1 million--and current insurance limits do not adequately cover these costs, which are primarily due to increases in medical expenses.
The current minimum levels for motor carriers of property took effect Jan. 1, 1985: $750,000 for the transportation of property, $5 million for transportation of certain hazardous materials, and $1 million for the transportation of other hazardous materials. The current minimums for motor carriers of passengers took effect Nov. 19, 1985: $5 million for carriers operating vehicles with a seating capacity of 16 or more passengers and $1.5 million for carriers operating vehicles that seat 15 or fewer passengers. The current level for brokers and freight forwarders, $75,000, went into effect Oct. 1, 2013.
Had these limits been raised to keep pace with medical cost inflation since 1985, the $5 million for carriers operating vehicles with a seating capacity of 16 or more passengers would have been $21,255,000 in 2013, and the $1.5 million for smaller vehicle operators would have been $6,376,500, according to the report, which cites the Bureau of Labor Statistics as a source for the data.