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Should compensation for accident victims killed by dangerous trucks be forever stuck at 1980 levels?

July 5, 2014 by Steven M. Gursten

U.S. House voted to block FMCSA from raising “inadequate” minimum insurance liability limits for truck accident victims

Truck insurance

Should the minimum liability insurance requirements for U.S. trucking companies stay forever at $750,000, an amount that was set more than 30 years ago?

The FMCSA, charged with regulating the motor carrier industry, did not think so. The FMCSA found that people who were killed or seriously hurt in truck accidents were being under-compensated – in some cases receiving no monetary compensation for pain and suffering.

But Republican lawmakers in the U.S. House of Representatives, acting at the behest of the powerful transportation lobby, didn’t care.  They voted to over-rule the FMCSA, and then punished the regulatory agency for the transportation industry of, well, regulating.

Here’s what happened: In April of this year, the Federal Motor Carrier Safety Administration (FMCSA) issued a study which concluded:

“[T]he current financial responsibility minimums are inadequate to fully cover the costs of some crashes in light of increased medical costs and revised value of statistical life estimates.”

The FMCSA’s study concluded by calling for the formation of “a rulemaking team to further evaluate the appropriate level of financial responsibility for the motor carrier industry and has placed this rulemaking among the Agency’s high priority rules.”

However, by a 214-212 vote, the U.S. House passed an amendment to the pending Transportation bill which effectively slammed the brakes on FMCSA’s plans. The amendment circumvents the FMCSA’s Congressionally-created rulemaking procedure by blocking any efforts by the FMCSA to increase trucking companies minimum liability insurance requirements beyond the levels set in the 1980s.

Now, my two cents. This politically-motivated, anti-safety maneuver by politicians at the behest of a special interest group is outrageous for several reasons.

First, it’s an end-run around the regulatory process that Congress specifically called for. According to the FMCSA’s April 2014 study, it was Congress who directed the FMCSA to study the issue of minimum insurance requirements and to do something if FMCSA found a problem:

The “Moving Ahead for Progress in the 21st Century Act,” which was enacted in 2012, called for “the Secretary of the U.S. Department of Transportation (DOT) to issue a report” to both the U.S. House and Senate “on the appropriateness of the current minimum financial responsibility requirements for motor carriers …”

Second, the House’s vote flies in the face of the compelling evidence discussed in the FMCSA study showing that the “safety” precautions taken in the 20th Century are “inadequate” and not up to the task of addressing the dangers and carnage and loss of life caused by truck safety issues of the 21st Century.

For instance, by blocking the FMCSA from implementing much-needed and long-overdue increases in trucking companies’ minimum liability insurance requirements, the House has recklessly chosen to ignore the following findings in the FMCSA study:

  • “[C]osts for severe and critical injury crashes can easily exceed $1 million …”
  • “Current insurance limits do not adequately cover catastrophic crashes, mainly because of increased medical costs. The decreasing real value of the current minimum levels of financial responsibility is effectively removing the function of insurance in covering catastrophic crashes.”
  • “[H]ad minimum financial responsibility levels kept pace with core CPI [Consumer Price Index] or medical CPI, by 2013, these minimum levels would have been significantly higher [i.e., approximately $1.7 million for core CPI and approximately $3.2 million for medical CPI].”
  • In report examining the “appropriateness and effectiveness of current minimum levels of financial responsibility for motor carriers of property,” the Pacific Institute for Research and Evaluation (PIRE) concluded that “the current minimum level of $750,000” is “too low.” Given that the range “for liability awards in large truck crashes involving death or catastrophic injury is $9-10 million (in 2012 dollars),” PIRE “recommended that DOT set a policy limit per crash of at least $10 million and index for inflation …”
  • Based on a March 2013 analysis of “crash settlement data,” the Trucking Alliance concluded that “the current $750,000 of insurance required of many motor carriers is inadequate to cover the costs of many crashes.” Additionally, the Trucking Alliance’s analysis determined that “42 percent of the trucking companies’ monetary exposure from these settlements would have exceeded their insurance coverage, if all companies in the study had maintained the minimum $750,000 insurance requirement.”

The House’s amendment is pure, ugly politics.  It is a snapshot illustration of everything that is wrong with government today.  It protects a powerful and very narrow special interest group at the expense of the public good.

It ignores the evidence of what is happening in preventable truck accident injury and death cases all over the country. It shamefully puts the financial burden of catastrophic and severe truck accident injuries back on the accident victims and their families, and shifts the burden of long-term medical care to the taxpaying public through Medicaid, rather than on at-fault trucking companies and motor carriers – where it belongs.

And it makes our roads less safe.

As the amendment goes to the U.S. Senate for consideration, be sure to let your Senator know how you feel.

Tell your Senator that truck safety issues need to catch up with the times: After all, minimum liability insurance limits of $750,000 is so 1980.

Related information:

Safety groups recommend raising truck insurance limits to $4.4 million

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