Is Trucking Doing Enough to Prevent Crashes and Compensate Victims?

Inflation has been in the news a lot this year, whether it’s the price of a cart of groceries or home prices out of reach for young people. While the rate of price increases has slowed significantly, everything is more expensive than it used to be.

I’ve gotten to the age where I can bore people with tales of how cheap things used to be. When the trucking industry was deregulated in 1980, going to see “The Empire Strikes Back” cost about $3. A Big Mac? Around $1.50.

Why 1980? That’s the year the trucking industry was deregulated.

Trucking deregulation was not something I paid attention to at the time. But as I learned when I started covering trucking about 10 years later, deregulation meant a massive change in how motor carriers operated. Instead of the Interstate Commerce Commission regulating which companies could run freight on which routes and how much they could charge (a system that originally came into being to protect the railroads from competition from trucking), deregulation of interstate commerce opened up trucking to free-market competitive forces and all sorts of new entrant carriers.

Which brings me to the conversation I had earlier this year for the HDT Talks Trucking podcast with Lane Kidd, managing director of The Alliance for Driver Safety & Security.

A Small Group of Trucking Companies Wants the Industry Held to a Higher Standard

The Trucking Alliance, as it’s called for short, was created in 2011 by a handful of large trucking fleets that were frustrated about safety reforms they felt were taking too long to happen, such as electronic logging devices, hair testing for drugs, mandatory speed limiters, and more recently, mandatory automatic emergency braking.

Earlier this year, Kidd penned a commentary on “Trucking’s Duty to Public Safety,” asking questions such as why so many more people die in truck crashes than airline crashes.

He not only argued that the industry should aggressively pursue a goal of zero crashes caused by large trucks, but also that trucking has a duty to compensate crash victims.

At a time when ambulance-chasing plaintiffs’ attorneys run ads targeting trucking, my initial, visceral reaction to that statement was, well, less than positive.

But then Kidd explained that further, and this is where the inflation comes in.

Why Federal Motor Carrier Minimum Insurance Requirements Should be Higher

In the 1980s in the early days of a deregulated industry, Congress passed a law requiring motor carriers to have a minimum of $750,000 in liability insurance or reserves.

“Congress believed that if we deregulated the industry and didn't put any limits on who could enter the industry, that we would have a lot more carriers operating than could safely operate; that we would have underfunded, underfinanced motor carriers," Kidd said.

"So, you had to either have financial worth of 750,000, or you had to post an insurance policy that showed that you had a $750,000 liability insurance policy.”

The thinking was that a high minimum insurance requirement, which it was at the time, would prompt insurance underwriters to only provide the insurance for carriers that were safe.

“Because a $750,000 policy in the 1980s was a considerable policy,” he said.

“Secondly, they wanted to make sure that if a crash occurred and the carrier was at fault, there would be enough dollars there to compensate the victims for the injuries that they sustained. “That's fair, that's something that I think anybody who operates their business in the public sector within 3 or 4 feet of motorists every day, should have an obligation to do.”

Kidd said that “considerable” $750,000 policy from 1985 (when the insurance minimum was enacted) today would equate to a $2.1 million liability policy.

If you take into account higher medical costs and the “nuclear verdicts” landscape, even $2 million is probably low.

Compensating Truck Crash Victims

In reality, larger motor carriers today carry far more in liability insurance than the minimum. The companies with the minimum are more likely to be smaller companies. They often are less-safe companies, and some of these carriers close their doors in the wake of a legal judgment and simply reincarnate under another name.

Even if someone who’s been injured in a truck crash obtains a legal judgment that’s higher than the $750,000 allowed by law, some of these companies simply go out of business. And often the owners start up a new business under another name, known as reincarnated or chameleon carriers.

It’s been 10 years since the Federal Motor Carrier Safety Administration sent a report to Congress saying that it was clear that insurance minimums needed to be reevaluated. It’s been 12 years since Congress called for the agency to address the insurance issue in the 2012 highway law, MAP-21.

FMCSA found that while only a small fraction of catastrophic crashes where costs exceeded minimums were rare – just 1% of crashes. But for those crashes, the costs easily exceeded the $750,000 minimum, or even the $1 million that most insurance carriers were actually writing as a minimum.

That was 10 years ago. The agency pulled a rulemaking on insurance minimums in 2017, because it said it had not collected enough information to warrant going forward.

Meanwhile, inflation essentially pushes that insurance minimum lower and lower every year.

Compensating truck-crash victims is the right thing to do, Kidd told me.

“That’s fair. That’s something that I think anybody who operates their business in the public sector within 3 or 4 feet of motorists every day, should have an obligation to do.”

Watch the full episode: