The Federal Motor Carrier Safety Administration (FMCSA) is finally addressing a longstanding need — increasing the minimum liability insurance limit for the commercial motor vehicle industry. Current levels have been the same for the last 32 years, with minimums that are inadequate to meet the cost of some crashes.
So what does this mean for the public? Motor carriers have long been required to maintain a certain level of financial responsibility as a means to protect the public in the event of a crash and to protect the carriers against dishonest and financially unstable brokers. An increase in the minimum levels provides the public with improved compensation for crash victims and hopefully will result in reduced commercial vehicle crashes.
Current minimum levels for motor carriers of property took effect January 1, 1985. This set the standard of $750,000 for the transportation of property, $1,000,000 for low-hazardous materials, and $5,000,000 for high-hazardous materials. Current minimums for passenger vehicles were set on November 19th, 1985 at $1,500,000 for small buses and $5,000,000 for large buses.
In response to widespread interest among Congress and safety advocates regarding the appropriateness of current levels, particularly by Rep. Matt Cartwright (D-PA), the FMCSA has sponsored an extensive study of this topic. This report was issued to congress just last week, and has determined the following:
- While catastrophic motor carrier related crashes are relatively rase, the costs for these severe and critical injuries can easily exceed more than $1,000,000.
- Adjustment for inflation alone would not cover the costs of catastrophic crashes, because of the disparity of increased medical care costs and consumer costs as a whole.
- The study, while focused mainly on freight carriers is also applicable to passenger and hazardous material carries, and shows the need for higher minimum levels of financial responsibility for those vehicles as well.
Additional reports were cited, including one by the Pacific Institute for Research and Evaluation and the American Trucking Associations.
The FMCSA has formed a rulemaking team to further evaluate the correct level of financial responsibility for the motor carrier industry and has stated that it has placed this rulemaking among ‘the Agency’s high priority rules.” Plans are in place to move forward with developing a proposed rule to raise these minimum rates.
Report to Congress (Examining the Appropriateness of the Current Financial Responsibility and Security Requirements for Motor Carriers, Brokers, and Freight Forwarders)
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