Increase the Minimum Insurance for Motor Carriers

40 Years of Inaction is Devastating Families and Driving Down Safety in the Industry.

On June 18, 2020, the House Committee on Transportation and Infrastructure voted 37-27 to accept the Garcia (062) Amendment to the INVEST in America Act of 2020. This provision will make the trucking industry safer by increasing the minimum financial responsibility for motor carriers (from $750,000 to $2,000,000) and then indexing the increased amount to inflation.

With this language now included, the INVEST in America Act will help families who have survived truck crashes by ensuring they do not suffer financial devastation in addition to the emotional and physical harm they endured. It will also improve safety throughout the trucking industry by preventing bad actors from driving dangerously and socializing the costs of their unsafe operations.

Background:

In 1980, Congress enacted the Motor Carrier Act of 1980, Public Law 96-296, which set a minimum financial responsibility for motor carriers of $750,000. In setting this minimum insurance requirement, Congress intended to improve safety throughout the trucking industry in several ways.

For one, requiring motor carriers to have a minimum level of insurance was intended to “create additional incentives to carriers to maintain and operate their trucks in a safe manner as well as assure that carriers maintain an appropriate level of financial responsibility.”[i] While the first intention is plainly stated, the legislative history gives further context to the second intention; Congress understood that “the issue of financial responsibility… is inextricably bound to the entry provision of the legislation that directly concern the ‘fitness’ of the carrier to operate in interstate commerce.”[ii] The minimum level of insurance was supposed to serve as a barrier to the entry to those “who might have little concern for the safer operation and maintenance of their vehicles, thereby posing a threat to those who share the highways with them.”[iii]

Unfortunately, the minimum insurance required per crash - $750,000 – has never been raised. With the cumulative rate of consumer inflation having gone up more than 210 percent from 1980 to 2019, this amount is inadequate. Put simply, it does not cover “public liability, property damage, cargo, and environmental restoration” [iv] – which Congress intended to be one of the conditions for a motor carrier to operate in Interstate commerce. Consequently, thousands of families and truck drivers have been financially devastated in addition to the trauma and grief of surviving a truck crash.

Every year that Congress does not act, the final intent of setting the minimum financial responsibility is further diminished. The legislature wanted to ensure that the financial responsibility was set at a level “sufficient to require ‘on-site’ inspection by the insurance company, with minimum to be updated regularly.”[v] This makes sense. In 1980, the federal government was unable to provide sufficient oversight to a growing trucking industry. This problem has not abated; in fact, has gotten worse with the number of motor carriers having skyrocketed over the past four decades.

In 2020, Congress has the chance to change 40 years of inaction. This will help families who have been directly impacted by truck crashes. It will help taxpayers who end up paying for the many victims whose damage costs far exceed $750,000. And this will help make the trucking industry safer by ensuring that the financial responsibility is set to an adequate level that serves as a barrier to entry for unsafe carriers and a motivator for insurers to monitor unsafe carriers.

Summary:

In 1980, Congress Set a Minimum Financial Responsibility of $750,000 for Motor Carriers to: 

Ensure that motor carriers maintain adequate insurance to cover truck crash costs (i.e. damage to persons, property, and the environment),

Serve as barrier to entry for unsafe motor carriers and prevent pressure on safe carriers to cut cost to meet the price of their competitors,

Incentivize insurance companies to conduct ‘on-site’ inspection of motor carriers to supplement inadequate government oversight of the industry,

The minimum was supposed to be raised regularly.

It Has NEVER Been Raised. Not Even to Account for Inflation.

Support Increasing the Minimum Insurance for Motor Carrier

Sources:

[i] House Report No. 96–1069, at 41 (1980)

[ii] Id., at 9

[iii] Id., at 6

[iv] National Transportation Policy Study Commission, “National Transportation Policies through the Year 2000” Final Report, June 1979, p. 250.

[v] House Report No. 96–1069, at 43.