Will Higher Insurance Premiums be Required for the Trucking Industry?

trucking industry

Trucking insurance is a foundation element of risk management in the commercial transportation industry. This valuable insurance protects company assets, vehicles, and cargos from losses. Unfortunately, premium costs have grown in recent years, and recent proposals to federal rule changes could cause price increases. The Biden Administration has been exploring an increase to minimum liability insurance coverage for trucking operations, potentially threatening the economic recovery being driven by the transportation industry.

Proposed Increases by the Federal Motor Carrier Safety Administration

The slow economic recovery in the wake of the COVID-19 pandemic has impacted businesses of every size and type. The trucking industry is no exception. Despite the essential nature of commercial trucking, proposals to increase trucking insurance coverage minimums could upend any economic gains experienced by the sector.

Building on a proposal in 2014 by the Federal Motor Carrier Safety Association (FMCSA), the Biden Administration is once again exploring the possibility of raising certain trucking insurance minimum coverages. In particular, proposals to increase minimum coverages for liability insurance have been discussed among Cabinet officials, including the newly-confirmed Secretary of Transportation Peter Buttigieg. The 2014 Advanced Notice of Proposed Rulemaking, published in November 2014, sought input from commercial transportation stakeholders how raising insurance minimums would impact operations. The FMCSA had already studied increases in liability coverage minimums, which had been set at $750,000 in the 1980s and have remained unchanged since then. While the FMCSA argued that coverage minimums have not kept pace with inflation or with rising costs of liability claims, the agency received little or no feedback from the industry and tabled the proposal in June 2017.

Pushback from the Trucking Industry

Facing the prospect of increases in trucking insurance coverage minimums, trucking associations across the country actively lobbied against the new Biden Administration proposal. In all, 62 associations, among them agricultural and state trucking organizations, drafted a letter to the House Committee on Transportation and Infrastructure to discourage members on the committee from voting for proposed increases.

In the letter, the coalition of signatories stated that, “An increase in insurance requirements is wholly unnecessary, would do nothing to improve highway safety, and would have a severe negative impact on truckers, farmers, and manufacturers by significantly increasing their operational costs.” The coalition argued that a federally-funded research study had already determined such trucking insurance minimum increases were not necessary. The study, conducted by the John A. Volpe National Transportation Systems Center in 2014, showed that most crashes involving commercial vehicles had losses that were easily covered by existing levels of mandatory liability insurance. The study also demonstrated that the few losses exceeding minimum levels were often covered by other trucking insurance policies or financial assets.

While it is unclear if the Biden Administration will go ahead with legislation to change mandatory minimums, the trucking sector is bracing for cost increases, having experienced climbing premium rates from insurers nearly every year for the past decade. Time will tell if the proposals are accepted, or if the government will maintain current the current minimum at $750,000.

About Western Truck Insurance Services

Western Truck Insurance Services is a commercial truck insurance agency with roots dating back to 1954. We have evolved into a highly respected, professionally managed, truck and transportation insurance brokerage. The hallmark of our organization is our desire to provide unparalleled service. We go way beyond what you expect to receive from an insurance brokerage. Equipped with state of the art automation, Western Truck Insurance can provide you with lightning fast truck insurance quotes, customer service, Insurance certificates, and coverage changes. Contact us today at (800) 937-8785 to learn more!