Carrier Insurance Rule Hits Small Business Hardest

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Are your insurance premiums going up? The FMCSA finally issued its Advance Notice of Proposed Rulemaking (ANPR), which proposes an increase in the minimum financial responsibility required of carriers, but the notice stops short of suggesting a dollar amount. Instead, the FMCSA is asking for input from trucking companies and other industry stakeholders.

The ANPR includes 26 questions that the FMCSA wants answered during the proposal’s public comment period, which ends Feb. 26. The FMCSA asks how much carriers currently pay for insurance, how much they expect their premiums to increase if the minimum is raised, and how the proposed rule would affect small carriers differently than large carriers.

Small Business Hit Hardest

Many of the largest carriers are self-insured, meaning they meet the financial responsibility requirement through bonds, letters of credit, or through some other financial means. Financial responsibility for small carriers and owner-operators generally equates to insurance coverage. The current minimum of $750,000 for general freight has been in place since 1985. The FMCSA noted when it first took up the question of financial responsibility that, had the current minimums kept pace with inflation, the minimum would be about $1.6 million today as measured by the consumer price index. Measured against the medical consumer price index, it would be $3.2 million. That wide range makes it difficult to speculate on what the new minimum might be.

Increasing the minimums would hit small carriers and owner-operators hardest, as it would lead to higher insurance premiums, already one of the biggest business costs for a carrier. Commenters in our last story about carrier insurance said that they pay anywhere from $4,000 to $13,000 per year on insurance premiums for one rig. The increased costs would force many out of business, even as demand for trucks is high and rates have risen significantly.

Not Worth the Cost

The current driver shortage and tight capacity already limits the trucking industry’s ability to keep up with high demand from shippers. Raising insurance premiums would add another check on capacity growth and only addresses settlements tied to the very few catastrophic accidents that occur each year. Even the studies submitted by organizations that support raising the limit found that it’s rare for a crash to exceed the current limit. The Trucking Alliance, a group of seven large carriers that are lobbying to raise the limit, found that only 1 percent of the claims it studied were settled above the current minimum.

ATA and OOIDA both oppose the measure, and ATA’s study of data from two of the 10 largest trucking insurers found that there’s only a 0.7% chance of crash resulting in a settlement above $1 million. The ATA study included ten times as many settlements as the Trucking Alliance’s, and it found that the average cost per crash is $11,229.

To comment on the FMCSA proposal and answer the agency’s questionnaire, go to

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