The minimum insurance requirements for interstate general freight trucking have remained unchanged since 1980 while the purchasing power of that amount of money can continually eroded. Such long delays can produce updates that, when they come, can seem abrupt.
Last week, the Federal Motor Carrier Safety Administration (FMCSA) Motor Carrier Safety Advisory Committee (MCSAC) recommended updating the minimums coverage for interstate general freight trucking from $750,000 per collision, which set in 1980. Adjusting this number by the inflation rate for health care costs results in a present day value of $4,422,000.
After lengthy study, on May 20, 2014, the MCSAC voted to recommend the FMCSA begin rule making to change the minimum financial responsibility requirement to $4.422 million, with some phase-in period and with automatic adjustment to the medical CPI every four years. From what I hear, the inflation-adjusted insurance minimums will not likely go into effect until about 2017.
The process is not finished. Proposed regulations have to go through a process of publication and public comment. Large trucking companies, most of which already carry higher amounts of insurance, will likely support some increase in the minimum insurance requirement. So will the insurance industry. Small owner-operators who carry the lowest amounts of insurance and, in my own experience, have the weakest safety management programs, will adamantly oppose it. Reading some of the trucker blogs and tweets, it appears that some of the loudest opposition is likely to be emotional and profane.
The $4.4 million recommendation is based on the rate of medical inflation, as much of impact of catastrophic injury claims is driven by medical expenses, both past and future. If the general rate of inflation under the Consumer Price Index (CPI) since 1980 were applied, the inflation-adjusted figure would be $2,157,815.
There are also different minimum insurance requirements, unchanged since 1985, for low-hazardous carriers such as fuel ($1,000,000), small buses ($1,500,000) and large buses and hazardous materials carriers (both $5,000,000). I expect to see recommendations to adjust all of these for the rate of medical inflation since 1985.
Adjustments to insurance requirements to account for the rate of medical inflation would be most rational. I will join others around the country in advocating for that. I expect the trucking industry to advocate for a number at or below the general inflation rate, which small truckers vehemently oppose any increase. In the end, I would not be surprised to see the FMCSA settle on a number somewhere between the general and medical inflation rate adjustments. Wherever the numbers are set, I expect the final rule will also include a provision for future inflation adjustments so things might not get quite so far out of date going forward.
Ken Shigley is past president of the State Bar of Georgia (2011-12), double board certified in Civil Trial Advocacy and Civil Pretrial Advocacy by the National Board of Legal Specialty Certification, and lead author of Georgia Law of Torts: Trial Preparation and Practice. His Atlanta-based civil trial practice is focused on representation of plaintiffs in cases of catastrophic personal injury and wrongful death.