$4,923,154 Minimum Financial Responsibility Limit Proposed

7/16/2019 – A bill (H.R.3781 ) has been introduced in the House which seeks to increase the minimum levels of financial responsibility by 556% for transporting property, and would index future increases to changes in inflation relating to medical care.

At a press conference in Washington D.C., Representative Jesus Garcia (D-Ill) proclaimed “we’ve seen how victims, their families, hospitals, and our strained social safety net are forced to foot the bill for irresponsible driving.” Garcia was joined by members of the Truck Safety Coalition and accident victims to announce the bill and to introduce the Safe Roads Act. The legislation would require Automatic Emergency Braking technology as standard features on commercial vehicles.

This is not the first go-around for increasing minimum insurance limits. In April of 2014, the FMCSA examined the appropriateness of the current financial responsibility requirements. The agency concluded that catastrophic crashes involving CMVs are relatively rare occurrences. When catastrophic and severe/critical injury crashes do occur, the costs of resulting property damage, injuries, and fatalities, can far exceed the minimum levels of financial responsibility. Based on that research, the FMCSA announced a Advance Notice of Proposed Rulemaking (ANPRM). After a public comment period and hearing from its own Advisory panel (Motor Carrier Safety Advisory Committee), in November 2014 it withdrew its ANPRM due to insufficient data or information to support an increase.

The newly proposed legislation does not point to any new data to further support its cause. According to Section 2 of the legislation’s text, it finds that increasing financial responsibility is to encourage the carriers to engage in practices and procedures that will enhance the safety of their equipment so as to afford the best protection to the public. Accordingly, it also states that the $750,000 minimum amount set in 1980 equates to $4,923,154 in today’s dollars.

On this subject, the American Trucking Association previously revealed data (through 2012) obtained from the Insurance Services Office (ISO), under nondisclosure agreements, from two of the 10 largest trucking insurers covering all their large truck (over 26,000 lbs) policies. That data showed that only 6.5% of insurance policies for those trucks are written at limits under $1 million, while 83% are written at $1 million, and the remaining 10.5% are written over $1 million. Analyzing the data further, it was found that there is a 1.40% chance of a claim exceeding $500,000, a 0.73% chance of a claim exceeding $1 million, and a 0.31% chance of a claim exceeding $2 million.