Caught Between a Truck & a Hard Place

By Diane Tait

Image courtesy flickr

If you’re a commercial trucker, you should know that the US House of Representatives is doing its best to increase your liability requirements nearly seven-fold.  You heard me right.  HR 3781 which was sponsored by Representative Matt Cartwright in July 2019, proposes to raise the minimum liability limit you are required by law to carry from $750,000 to $4, 923,153.29.  The bill which was named “Improving National Safety by Updating the Required Amount of Insurance Needed by Commercial Motor Vehicles per Event Insurance Act of 2019,” is being touted as a necessary update to the commercial trucking insurance law that has been on the books since 1980.  The reason given by Mr. Cartwright for the seven-fold increase in the requirements was that $4,923,153.29 is the amount needed to achieve the same purchasing power as $750,000 with regards to medical-cost inflation.  That’s the bad news.  The good news is that while the bill has been assigned to the House Transportation and Infrastructure Committee, no action has yet been taken.

What’s the rationale behind the bill? – After 38 years, it was felt that commercial truck insurance requirements was woefully behind the times when it came to compensating victims of truck accidents in the US.  As is often the case in the aftermath of many truck-related accidents, $750,000 is barely adequate to cover the associated medical costs, especially if it is divided among multiple plaintiffs in the same vehicle or multiple vehicles involved in the crash.  While $750,000 may have been adequate back in the 80’s and 90’s to compensate victims, medical costs have soared in the new millennium.  This says nothing about such things as loss of income, property damage or pain and suffering endured by many survivors of truck-related accidents.

Back in 2013, the Federal Motor Carrier Safety Administration reported that trucks and motor carriers engaged in the commercial transportation of property must be willing to shoulder financial responsibility resulting from truck crashes.  The FMCSA further admitted that the costs for severe and critical injuries resulting from truck crashes can easily exceed $1 million.  They then added that current truck liability limits are insufficient to cover truck-related catastrophic injuries due to rapidly increasing medical costs.

In 2014 FMCSA reported that “Over the past 29 years, while insurance premiums have declined, the decreasing real value of the current minimum levels has effectively removed the function of insurance in covering catastrophic crashes, as medical and other crash-related costs have increased significantly.”

Image courtesy A&B Insurance

If the prospect of increased liability isn’t a hard enough pill to swallow, the trucking industry itself is currently experiencing higher than normal demand for freight hauling, coupled with a shortage of qualified drivers due to the retirement of older drivers.  As the requirements and regulations placed on truckers continue to become ever more stringent, young people entering the workforce find issues like highly regulated hours of service, average pay and factors affecting home life make the prospects of driving over the road less attractive than other occupations.  As a result, the industry is having difficulty keeping up with the demand.

Other complaints faced by existing drivers include the requirement of installing an Electronic Logging Device in their truck to automatically record the hours of service logged.  Other than the cost of the device, truckers have complained about the time it takes to install an ELD, as well as the affrontery of having their every move tracked.  While the DMV considers the devices to be a safety enhancement, most truckers consider them to be an intrusive black box that is more a hindrance than a help.

Image courtesy Pixabay

As the demand has risen for freight hauling, so has the competition.   With capacity being tight for long-haul trucking, both spot and contract rates have risen to the point where shipping by rail instead of by truck is becoming more and more attractive to shippers.  In addition to cost factors, other considerations are causing shippers to consider the railway as opposed to the highway.  These include maximizing the efficiency of transport across the full spectrum of transportation modes.  Since the 1990’s, partnerships between railroads and large trucking concerns were established to allow major shippers to maximize their logistics by hauling fully loaded trailers on railcars.  Over the past few decades, this intermodal form of transport has become available to ever smaller shipping concerns.  While this kind of efficiency is good for major trucking companies, it has cut into the profitability of mom & pop trucking companies and owner operators who lose out to larger intermodal operators.

Other competition will soon include the introduction of autonomous trucks which require no driver.  On June 28, 2019 Starsky Robotics completed its first test of a driverless big rig in Florida.  While the 10-mile test run carried no freight, its success is hardly likely to be the last. Other manufacturers including Freightliner and Volvo Trucks are also in the process of developing autonomous trucks.  Major shippers like UPS are investing heavily in the development of driverless trucks that could be on the road within 5-10 years.  Since long haul drivers are required to rest 10 hours for every 11 hours on the road, the availability of automated trucks that only need to pull over to fuel up and offload could conceivably be another stumbling block that truckers will soon have to deal with.

Fully automated trucks aside, today’s truckers are forced to deal with all kinds of automation as their cabs see ever more sophisticated electronic components and apps added that are designed to make their jobs easier and safer.  That being said, it takes time to integrate and train on their use, which is a luxury that many truckers do not have. 

In the meantime, as the world of trucking becomes ever more complicated and automated, truck drivers will have to ask themselves if the outlay of time and money is worth the effort or if they’re doomed to be forever caught between a truck and a hard place.

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on commercial truck insurance, go to her site or fill out the form at right.