Give FMCSA Your Opinion on Minimum Insurance Coverage in Trucking

DON JERRELL
HNI Associate Vice President

The Federal Motor Carrier Safety Administration late last month published an advance notice of proposed rulemaking on financial responsibility for motor carriers, freight forwarders, and brokers.

This is FMCSA's latest move on minimum insurance coverage, and the news was "buried" in the Federal Register on Nov. 28 — Black Friday.

Most of us have woken up from our Thanksgiving food coma, so now's a good time to dig into this major piece of proposed transportation law.

At a Glance: What's in the Advance Notice of Proposed Rulemaking

For your reference, click here to read the proposed rulemaking PDF (it's five pages) that was published in the Federal Register, the daily newspaper of the U.S. government.

In my opinion, FMCSA is trying to sell an increase by using statistics. For example, the Bus Regulatory Reform Act (page 70840 of the PDF) stands out. In this piece of legislation, minimum levels of financial responsibility covering public liability and property damage were set for the transportation of passengers by for-hire motor vehicles in interstate and foreign commerce.

FMCSA also is looking for comments on four issues beyond minimum insurance coverage:

1.) Raising financial responsibility for brokers to $75,000

2.) Mexican motor carriers operating in commercial zones

3.) Bond or insurance requirements for carriers of passengers

4.) Self-insured carriers “should submit evidence” of an adequate safety program

The real meat and potatoes of the advance notice are pages 70842 and 70843, where FMCSA sets out its issues and questions on which it wants comments.

Following is an overview of the questions (yes, there's even more where this came from!):

How much will premium rates be, and how much would a rate increase cost?

How many fleets already have liability coverage exceeding current limits?

How rates are determined: By driver? By credit? By safety history?

Is there a discount for having a certain number of vehicles in a fleet?

Is there a discount for bundling?

What are the most common deductible rates?

How often is the current financial responsibility limit insufficient?

How often does hazmat exceed limits?

Would increasing minimum requirements affect small and large carriers differently?

Would increasing minimum requirements affect money being spent on safety programs, maintenance, etc.?

What are the current state requirements for financial responsibility?

How many carriers participate in risk retention groups, and how would increasing requirements affect these groups and their rates?

What percentage of cases settle before trial at the current minimums?

What minimum levels are needed to protect against uncompensated losses associated with crashes?

What other mechanisms are available to more fully compensate people who suffer catastrophic losses?

How would out-of-court crash damage settlement agreements be affected if the minimum went up?

What can FMCSA do to get data that insurance companies and motor carriers historically have not been willing to share?

What other sources of information should FMCSA evaluate?

If there is an increase, what should be the phase-in period?

Should minimum financial responsibility requirements follow a schedule for regular updates?

How should FMCSA guide the handling of BMC-84 and BMC-85 forms?

How does trip insurance for Mexican commercial zone carriers stack up to insurance required for domestic carriers?

Should bus brokers be required to prove financial responsibility?

Should the requirement that carriers in the self-insurance program have "an adequate safety program" be enhanced?

Our Two Cents on the Advance Notice of Proposed Rulemaking

My ATA contacts say that most large carriers support increasing amounts for minimum insurance coverage. That's because many large carriers have experienced crashes involving their vehicles where the other motor carriers' insurance is insufficient and they end up having to cover the additional costs.

In my opinion, the advance notice probably is an attempt by FMCSA to gain information to support its plan for increased limits. It is not uncommon for an advance notice to solicit information. In a notice of proposed rulemaking, to compare, FMCSA is more likely to show its hand by actually laying out a dollar amount.

You can count on some groups out there attempting to sway FMCSA. It seems to me that the trucking industry tends to be more reactive than proactive in these types of scenarios. Trucking is more apt to react to the actual proposed numbers in the notice of proposed rulemaking than it is to be proactive and sound off on the contents of the advance notice.

To me, the real issue is not increased insurance limits. Trucking ought to dig deeper to address why the insurance limits are needed — medical costs, costs of litigation, what attorneys are paid, etc. We are looking at a situation where we're hot to treat the symptoms, but not the disease.

How You Can Share Your Opinion on Minimum Insurance Coverage

You've got an idea (or three) about how this issue should shake out. Here's a quick guide on how to let FMCSA know how you feel about the proposed rulemaking:

Step 1: Get familiar with the advance notice of proposed rulemaking. The questions you should pay special attention to are on pages 70842-70843 (check the top of the PDF document). The questions are numbered 1-26, and they fall into the following areas:

Premium rates
Current minimum levels of financial responsibility
Impacts of increasing the minimum level of financial responsibility
Compensation
Information sources
Timelines
BMC 84 and 85 filers
Trip insurance, bus brokers, and self-insurance

Step 2: Let your voice be heard. Here's how:

Deadline: Comments are due by Feb. 26.

Special note: Make sure your comments are identified by Docket Number FMCSA-2014-0211.

Online: Via Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for commenting.

Mail:

Docket Management Facility
U.S. Department of Transportation
1200 New Jersey Ave. SE
West Building
Ground Floor
Room W12-140
Washington, D.C. 20590-0001

Hand delivery or courier:

Make a delivery between 9 a.m. and 5 p.m. Monday through Friday (except federal holidays) to:

West Building
Ground Floor
Room W12-140
Washington, D.C.

Fax: 202-493-2251

There are more notes on how to comment on the first page of the rulemaking PDF. They start at the top of the middle column under Public Participation and Request for Comments: Submitting Comments.

Will you be sharing your two cents with FMCSA? What are you predictions on this issue? Please share in comments!