A proposed bill aimed at increasing the minimum liability insurance for motor carriers by 566% is gaining traction, with U.S. lawmakers intensifying the debate over its potential impact on the trucking industry. The Fair Compensation for Truck Crash Victims Act, introduced by Rep. Jesus “Chuy” Garcia (D-Ill.), seeks to raise the required minimum insurance for trucking companies from $750,000 to $5 million. The bill’s latest co-sponsor, Rep. Kevin Mullin (D-Calif.), joined the cause on September 6, 2024, bringing the total number of supporters to seven.
The Push for Change
Proponents of the bill argue that the current minimum liability requirement is woefully inadequate. They claim it does not reflect the true costs faced by victims and families affected by serious truck crashes. Rep. Garcia, the bill’s primary advocate, said the measure is about justice and ensuring that victims aren’t left bearing the financial burden after devastating accidents.
“For too long, truck crash victims and their families have been burdened by tremendous emotional and financial consequences, facing a mountain of medical debt and shattered lives,” Garcia said when introducing the bill. “It’s time to ensure that trucking companies have adequate insurance to cover the true cost of their actions.”
Opposition from the Trucking Industry
However, the bill has sparked significant opposition, particularly from the Owner-Operator Independent Drivers Association (OOIDA) and small trucking companies. OOIDA argues that the increase is unnecessary, pointing to studies indicating that the current $750,000 minimum covers damages in 99.4% of accidents. The association warns that a $5 million requirement would cause insurance premiums to skyrocket, putting small trucking businesses at risk.
“This increase would cause insurance premiums to skyrocket and would be absolutely devastating for small businesses,” said OOIDA Executive Vice President Lewie Pugh. He added that smaller carriers, which make up 98% of the trucking industry, might be unable to afford the insurance hike. As a result, some companies might cut corners on safety and maintenance just to stay afloat.
Rep. Mike Collins (R-Ga.), a trucking company owner, echoed these concerns. “There’s no way that 98% of trucking companies can afford a $5 million policy. If you were to implement that law, you are going to destroy the trucking industry,” Collins said.
Implications for the Insurance Industry
The proposed hike in liability insurance presents significant implications for the insurance industry. On the one hand, it could mean a substantial increase in premiums for trucking businesses, particularly smaller carriers. Insurers would likely need to adjust pricing models and underwriting practices to accommodate the larger policies required under the new law.
This increase could also drive more claims towards higher payouts, leading to potential changes in the way insurers assess risk within the trucking sector. With more significant liability exposure, insurance companies may seek to enforce stricter safety measures and compliance requirements to minimize claims. Additionally, the rise in nuclear verdicts—excessively large jury awards in trucking accident lawsuits—could further pressure insurers to reconsider their approach to trucking policies.
Legislative Outlook
Although previous attempts to raise the minimum insurance requirements have failed, this latest push has raised concerns within the industry. While Garcia’s earlier versions of the bill did not gain sufficient support in Congress, there is a worry that the proposal could be included in a broader transportation package, increasing its chances of passing.
The debate over the Fair Compensation for Truck Crash Victims Act underscores a broader conversation about balancing the needs of crash victims with the financial viability of small businesses in the trucking industry. As the bill continues to gain traction, both lawmakers and industry stakeholders will need to weigh the potential benefits and consequences of such a dramatic change in liability insurance standards.
For now, trucking companies and insurers alike are watching closely as the bill moves through Congress, knowing that its passage could reshape the industry’s landscape.