The Michigan commercial truck insurance requirements mandate a minimum of $750,000 in liability coverage for bodily injury and death after a crash. Unfortunately, these minimums have not been updated since they were set in the 1980s. As such, they’re too low to cover crash-related damages for a current day crash.
As a Michigan truck accident attorney, Past-President of the Truck Lawyer Litigation Group for the American Association for Justice, one of only three lawyers in the country to be inducted into the Truck Accident Lawyers “Hall of Fame,” and as a current member of the Board of Regents for the Academy of Truck Accident Attorneys, I have called for the minimum commercial truck insurance requirements to be increased for many years.
When the issue was last before the U.S. Congress (which sadly failed to take long-overdue action), I strongly advocated that the minimum liability limits should be increased from $750,000 to $5,000,000 to reflect inflation, rising medical costs, and the reality of the compensation, damages, and costs associated with truck crashes in the 21st century.
Why are the truck crash liability insurance minimums too low?
Here are the problems with the current, woefully low and inadequate commercial truck insurance requirements for Michigan and across the U.S.:
- The current commercial truck insurance requirements for Michigan truck drivers offer a limit that is dangerously inadequate to provide the necessary compensation to truck accident injury victims involved in a serious truck crash.
- Often for many truck crash victims, the current $750,000 minimum limits can be exhausted just paying for the medical bills and hospital bills.
- Also, far too often, the $750,000 is a single limit policy that must then be divided among multiple plaintiffs. It is common for a serious truck accident to involve more than one car. If multiple passengers in multiple cars are all injured from the same truck (such as a driver who falls asleep and plows into a line of cars stopped in traffic), this $750,000 policy has to be split among all the injured parties. As an example, I currently represent a woman who is paralyzed from the chest down after a truck driver smashed into her car, and several others, near Lansing, Michigan. The policy limit that insures that truck and driver must now be divided among several injured plaintiffs. It is a heart-breaking injustice for my client, and for the other people who have also had their lives completely shattered by this negligent driver.
- This protects trucking companies and truck drivers as well. The current commercial truck insurance requirements risk exposing trucking companies and truckers to excess judgments (i.e., damage awards whose dollar amount exceeds their insurance coverage) which only perpetuates the cycle of unsafe trucking practices, prompting these companies to declare bankruptcy and then reincarnate under new names “chameleon carriers” so they can hide their track record of safety violations.
- The current commercial truck insurance requirements are adding insult to injury for families and victims of 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 truck accident victims and their families, shifting 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.
What is the federal law on commercial truck insurance requirements?
The federal law on commercial truck insurance requirements was passed by the U.S. Congress which set the mandatory minimum limits for truck liability insurance at $750,000. Specifically, the “Minimum financial responsibility for transporting property” law provides:
- “The Secretary of Transportation shall prescribe regulations to require minimum levels of financial responsibility sufficient to satisfy liability amounts established by the Secretary covering public liability, property damage, and environmental restoration for the transportation of property by motor carrier or motor private carrier (as such terms are defined in section 13102 of this title) in the United States between a place in a State and (A) a place in another State; (B) another place in the same State through a place outside of that State; or (C) a place outside the United States.” (49 U.S. Code Section 31139(b)(1))
- “The level of financial responsibility established under paragraph (1) of this subsection shall be at least $750,000.” (49 U.S. Code Section 31139(b)(2))
What does the FMCSA say about commercial truck insurance requirements?
The Federal Motor Carrier Safety Administration (FMCSA), whose “primary mission . . . is to reduce crashes, injuries and fatalities involving large trucks,” has enacted safety regulations regarding trucks’ financial responsibility that mirror the commercial truck insurance requirements provided by the federal law. Specifically, the FMCSA’s rule provide:
- Trucking companies, trucks and motor carriers engaged in the commercial transportation of property must have “minimum levels of financial responsibility” that provide at least $750,000 in public liability. (49 CFR § 387.9)
- “No motor carrier shall operate a motor vehicle until the motor carrier has obtained and has in effect the minimum levels of financial responsibility as set forth in §387.9 of this subpart,” i.e., $750,000 in public liability. (49 CFR § 387.7(a))
Michigan has adopted the FMCSA’s insurance requirements for commercial trucks. (MCL 480.11a(1)(b))
What have the truck safety experts said about the existing commercial truck insurance requirements?
Here is what the FMCSA said about the commercial truck insurance requirements in its 2013 study, “Financial Responsibility Requirements for Commercial Motor Vehicles“:
- “If the liability limits [of $750,000 was] adequate when the legislation was enacted [in 1982], then the current equivalents would be two to four times the original levels,” i.e., $1,717,500 and $3,203,649, respectively. (Page xv)
- “At current levels, liability insurance does not appear to be functioning effectively as catastrophe coverage, as evidenced by the small but significant share of crashes that exceed the current limits.” (Page xviii)
Here is what the FMCSA said in its 2014 report, “Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders – Report to Congress“:
- “[C]osts for severe and critical injury crashes can easily exceed $1 million.” (Page 10)
- “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. From 1985 to 2013, the medical consumer price index (CPI) increased at a significantly higher rate than the core consumer price index (4.9 percent annually for medical care, compared to 2.8 percent for core). In fact, the medical consumer price index has outpaced overall inflation in all but one of those 29 years. . . [Considering] the inflation adjusted current minimum levels of financial responsibility using the Core CPI and the Medical CPI,” ” . . . the core CPI-adjusted level for general freight coverage is approximately $1.7 million; the medical CPI adjusted level is approximately $3.2 million. Thus, had minimum financial responsibility levels kept pace with core CPI or medical CPI, by 2013, these minimum levels would have been significantly higher.” (Page 11)
- “When catastrophic and severe/critical injury crashes [involving commercial motor vehicles] do occur, the costs of resulting property damage, injuries, and fatalities, can far exceed the minimum levels of financial responsibility.” (Page 14)
- “Over the past 29 years, while insurance premiums have declined, the decreasing real value of the current minimum levels has effectively removed the function of insurance in covering catastrophic crashes, as medical and other crash-related costs have increased significantly.” (Page 14)
- “The legislative history of the Federal minimum insurance requirements strongly suggests that Congress recognized that crash costs would change and that DOT would regularly examine the levels and make adjustments as necessary.” (Page 14)
- “In conclusion, FMCSA has determined that the 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.” (Page 14)
- In a 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 “an order of magnitude 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 …” (Page 13)
- Based on a March 2013 analysis of “crash settlement data,” the Trucking Alliance concluded that commercial truck insurance requirements are not enough stating “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.” (Page 13)
In its 2018 report, “Motor Carrier Financial Responsibility Report to Congress,” the FMCSA concluded the commercial truck insurance requirements are low stating:
- “The conclusion of [the FMCSA’s 2013 and 2014] reports that current insurance limits do not adequately cover catastrophic crash costs has not changed.” (Page 30)
As recently as its 2022 report, “Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders – Report to Congress,” the FMCSA explained:
- “The current minimum financial responsibility levels for motor carriers of property, hazardous materials, and passengers were established in the 1980s. Over the past 40 years, the medical and other costs of catastrophic crashes have increased significantly. [When] catastrophic and severe/critical injury crashes do occur, the costs of resulting property damage, injuries, and fatalities can significantly exceed the minimum levels of financial responsibility.” (Page 1, Executive Summary)
- The 2013 report’s findings on the commercial truck insurance requirements “provided preliminary support for increasing the current levels of financial responsibility.” (Page 10)
- “Current insurance limits did 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. From 1985 to 2019,36 the medical consumer price index (CPI) increased at a significantly higher rate than the core consumer price index (4.6 percent annually for medical care, compared to 2.6 percent for core). In fact, the medical consumer price index has outpaced overall inflation in all but three of those 35 years. As depicted in Table 5, the core CPI-adjusted level for general freight coverage is approximately $1.9 million; the medical CPI- adjusted level is approximately $3.5 million.” (Page 11)
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