Currently pending in the U.S. House of Representatives is a bill to amend the minimum mandatory insurance coverage for interstate trucking companies from $750,000.00 to $4,923,154.00 per event. H.R. 3781—the “Improving National Safety by Updating the Required Amount of Insurance Needed by Commercial Motor Vehicles per Event (INSURANCE) Act of 2019”—is primarily sponsored by Rep. Jesus G. “Chuy” Garcia (D-IL). The stated purpose of the bill is “To increase the minimum levels of financial responsibility for transporting property, and to index future increases to changes in inflation relating to medical care.”

The limits currently set date from 1980. In the bill’s findings, Section Three (3) states that the U.S. Bureau of Labor Statistics has found that the $750,000 minimum coverage first enacted in 1980 would today have the same purchasing power as the suggested coverage of $4,923,154, when adjusted for “medical-cost inflation.” A brief check at various general inflation rates would place a non-medical inflation-adjusted value in the realm of $2,300,000 to $2,400,00 in 2019 dollars. The future increases based off of the medical inflation rate would be adjusted “quinquennially”—that is, every five (5) years. The bill does not seem to account for the fact that not all damages are medical in nature.

The Impact of H.R. 3781 on Trucking Companies

This increase obviously represents a large jump in the required insurance that an interstate motor carrier will have to carry. Even large trucking companies with extensive assets do not often maintain this much coverage on a per-event basis. Smaller companies and sole proprietorships would, of course, feel the impact of this large increase most drastically. While individual claimants might obtain greater benefits for accident-related damages, the price for consumers in terms of cost increases from higher insurance premiums on trucking and the loss of competition and choice may lead to a net decrease in social benefit.

At the same time, should legislators at either the national or state levels enact measures that decrease medical costs, theoretically any potential increase in the required insurance mandated under federal regulations could one day decrease. If medical costs deflate over a five-year span, this bill should mandate a decrease in required insurance coverage.

Intra-state Carriers Not Affected

It should be noted that this would only cover interstate carriers who are already covered under federal law and the Federal Motor Carriers Safety Regulations (FMCSRs). The bill does not make any other substantive changes. Purely intra-state carriers would still be subjected only to their state-mandated insurance coverage minimum requirements. In Louisiana, those can be found at La. R.S. 32:900(M).

What’s Next

H.R. 3781 was referred to the House Committee on Transportation and Infrastructure and its Subcommittee on Highways and Transit, chaired by the Hon. Eleanor Holmes Norton (D-Washington, D.C.). The text of the bill can be found here.