Cut-rate insurance coverage the norm in commercial trucking, placing drivers and families at risk

In 1980—44 years ago—Jimmy Carter is President, “Call Me” by Blondie is number one on the radio, “Star Wars: The Empire Strikes Back” is number one in the box office, and Congress sets the minimum insurance coverage for truck companies at $750,000. In the 44 years since, inflation has risen by 284%, the size and weight of semi-trucks has dramatically increased, and the number of people injured in truck wrecks annually has increased to over 150,000, but the minimum amount of requiring semi-truck insurance has stayed the same.

Despite costlier wrecks, bigger semitrucks, and more injuries and fatalities annually, the bare minimum coverage required—$750,000—is still the law in America. Carter-era economics dictating the insurance coverage available for catastrophic injuries in 2024 has obvious and devastating consequences for travelers and their families. The cut-rate coverage fails to cover the astronomical medical bills of seriously injured crash victims or the lifetime of lost wages of a family breadwinner killed in a truck wreck.

According to the Federal Motor Carrier Safety Administration (FMCSA), non-fatal semitruck wrecks result in an average of $1,200,000 in direct damage, while fatal collisions result in an average of $7,200,000 in direct damage, far more catastrophic than an ordinary car wreck. These amounts do not even include pain and suffering or punitive damages, only medical expenses, lost wages, and lifecare for seriously injured crash victims.

The current insurance minimums are all many trucking companies will carry and are unrealistically low, leaving families high and dry. $750,000 in 1980 is only worth $193,819 in 2024 inflation-adjusted dollars. If the minimum coverage amount kept up with inflation, it would be over $2,900,000 today—far more in line with the level of damage semitruck wrecks cause on average.

The bare minimum coverage exists at the same time the trucking and shipping industry has boomed across America. In 2022, the trucking industry generated $940 billion in revenue, larger than the entire economy of banking powerhouse Switzerland. Insurance costs account for only 4% of all costs in the trucking world and truck companies spend six times as much on fuel as they do on insurance, according to the American Transportation Research Institute.

As a result of underinsuring semi-trucks, families and taxpayers end up footing the bill. Broken families and crash victims left undercompensated are often forced to declare bankruptcy, sell their homes and assets, and go on disability and Medicare, passing the buck from a truck company responsible for a wreck to family members and taxpayers.

Unless Congress or federal regulators act, this broken system is unlikely to change. It also creates a serious safety issue for travelers. Because trucking insurance policies are cheap—due to the low minimum levels—there is no economic incentive to improve safety. As the American Association for Justice points out, for normal insurance policies, like your driver’s insurance, the more recklessly you drive and more wrecks you cause, the higher your premiums. That safety incentive does not exist in the trucking industry because of the low insurance levels.

Big trucking companies with fleets of semis will often buy more insurance than the minimum required because, if a crash victim gets a large jury verdict, large truck companies want to protect their valuable assets. However, 95.8% of trucking companies operate fewer than ten semi-trucks and these are the smaller companies more likely to only carry the minimum insurance amount.

When crash victims obtain verdicts higher than the minimum insurance amounts, smaller companies will frequently shut down and then reopen with a different name to evade liability. The FMCSA has tried to stop these “chameleon carriers,” but they have proven nearly impossible to stop. The result of small insurance policies and smaller companies evading liability when there is a catastrophic truck wreck is that drivers and their families suffer financial ruin with no recourse.

For years, there has been talk in Congress and among federal regulators about raising the 44-year-old insurance coverage minimum, but opposition from trucking groups and bogus claims that raising minimums “only benefits lawyers” has stopped any progress. Until there is change, many truck wreck victims will be stuck with 1980s coverage and the threat of bankruptcy and becoming a ward of the government.

At the Poppe Law Firm, we represent victims and their families who suffered catastrophic injuries or death in semi-truck wrecks across America. If a loved one of yours has been the victim of a semi-truck wreck, please do not hesitate to contact us at the Poppe Law Firm.