Insurance Act’s latest version calls for 556% increase
May 17, 2021
Rep. Chuy Garcia’s Insurance Act, HR2687, will again attempt to increase the minimum insurance requirement on motor carriers all the way to $4.923 million.
While the text of HR2687 still hadn’t been released on Congress.gov, the office of Garcia, D-Ill., confirmed with Land Line on Monday, May 17 that the bill is “identical” to HR3781, which Garcia introduced in the House during the previous congressional session.
The Insurance Act would require trucking companies to increase their minimum liability insurance from $750,000 to $4,923,153.29 – a hike of 556.42%. The minimum insurance amount would then be adjusted every five years for inflation.
“Small business truckers are under attack,” said Collin Long, OOIDA’s director of government affairs. “Rep. Garcia and anyone else who supports this bill have made it clear they don’t care how hard you’ve worked to keep the country safe and healthy during COVID. They don’t care that over 99% of damages in crashes involving a CMV are covered by today’s minimum. They don’t care about improving highway safety or they wouldn’t be promoting policies that will push the safest and most experienced drivers out of the industry.
“All they care about is helping trial lawyers pocket some more cash when they sue truckers, towers, farmers, ranchers, manufacturers and anyone else who moves products via truck.”
Garcia introduced the Insurance Act in July 2019 and reintroduced the measure for the 117th Congress in April.
According to proponents of the measure, the Insurance Act is necessary since the minimum insurance requirement has not been increased since 1980.
“Families should not be saddled with long-term financial debt after dealing with a devastating injury or loss of a loved one,” Garcia said in a news release. “Still, thousands of families suffer in silence, burdened with insurmountable medical care costs after falling victim to catastrophic crashes with trucks.”
OOIDA, however, says the increase is not necessary because most motor carriers already carry $1 million in insurance and research from the Volpe National Transportations Center found that the current minimum insurance level adequately covered damages in all about 0.6% of the cases.
That same Volpe report from 2014 found that the average truck insurance claim was $18,000.
HR3781 never picked up much steam after Garcia introduced it in 2019. The partisan bill received only six Democrat co-sponsors. The current bill, HR2687, received eight Democrat co-sponsors when it was introduced on April 20 but hasn’t gained any traction since.
Based on that recent history, it appears it would be an uphill climb for the standalone bill to pass the House and Senate.
However, that doesn’t mean a version of the Insurance Act can’t still find its way into the next highway bill. In 2020, Garcia added an amendment to the HR2 that would have increased the minimum insurance requirement for motor carriers to $2 million – a 166.6% increase.
HR2, which included the amendment to increase truckers’ insurance to $2 million, passed the House but was deemed dead on arrival once it reached the Senate.
OOIDA has been working to keep any insurance increase out of the next highway bill, which is expected to be released in the coming weeks. About 60 organizations have joined OOIDA in a coalition aimed at ending efforts to increase the minimum insurance requirement for motor carriers. In addition to trucking, the coalition is represented by organizations from the agriculture, manufacturing, materials, and towing industries.
In May, the coalition sent letters to the U.S. House of Representatives’ Blue Dog Coalition and Problem Solvers Caucus in hopes of swaying enough votes to block any such measure.
“An increase in insurance requirements is wholly unnecessary, would do nothing to improve highway safety and would have a severe negative impact on our members by significantly increasing their operational costs,” the coalition wrote.
In addition to OOIDA’s coalition efforts, the cause found a powerful ally in the construction industry.
The Transportation Construction Coalition, which includes 33 national associations and construction unions representing hundreds of thousands of individuals, made its opposition to an increase known in an April letter to the House Transportation and Infrastructure Committee.
Garcia takes the opposite stance on rail insurance
Earlier this year, Garcia and several other Illinois lawmakers wrote to Transportation Secretary Pete Buttigieg to inform him about commuter rail operators’ difficulties in securing liability insurance.
Specifically, the lawmakers were calling attention to the FAST Act’s adjustment to the passenger rail liability cap for public and private passenger rail operators from $294 million to nearly $323 million.
“While commuter railroads carry liability insurance to cover unlikely catastrophic incidents, the law unintentionally forces operators to navigate shrinking coverage options and associated skyrocketing premiums,” reads the letter from Sens. Tammy Duckworth, D-Ill.; and Mike Braun, R-Ind.; and Reps. Bradley Schneider, D-Ill.; Marie Newman, D-Ill.; and Garcia. “This lack of opportunity and competition represents a broken system and often forces operators into partnerships with a decreasing number of international insurers at inflated costs.”
In April, the OOIDA-led coalition sent a letter to those same lawmakers urging them not to put small trucking companies in the same unenviable position.
“Like commuter railroads, motor carriers are required to carry liability insurance to cover unlikely catastrophic incidents,” the coalition wrote. “Motor carriers currently face many of the same challenges you raised in your letter when navigating the commercial auto liability insurance market. Increasing their minimum insurance requirements would only exacerbate these problems.” LL