Overdrive Magazine | Trucking Business News & Owner Operator Info
Issue link: http://read.dmtmag.com/i/409537
VOICES 4 | Overdrive | November 2014 A t press time, the Federal Motor Carrier Safety Ad- ministration was preparing to publish an Advanced Notice of Proposed Rulemaking that would begin the process of raising the minimum required liability cover- age for carriers. Independents have taken a keen interest in what the regulation will cost them. Considering the current $750,000 liability minimum, the range of potential minimums being proposed is great. Even an oft-cited FMCSA fi gure, $1.62 million, would more than double the current minimum. That amount would account for ba- sic Consumer Price Index infl ation since the 1980s, when the current minimum was introduced. If ad- justed by the specialized Medical CPI, however, the minimum would exceed $3 million. The highest proposal has been $4,422,000, included in the so- called "SAFE-HAUL" Act. It was introduced this year in the U.S. House following a study by a group of large carriers called the Trucking Alliance that called for much great- er insurance minimums. The good news in whatever new minimum gets approved, if you can describe it as such, is that premiums should not rise in proportion to the coverage. Results of Overdrive polling on ex- isting coverage amounts for the in- dependents who responded showed eight in 10 independent businesses falling in the above-minimum-re- quired range between $750,001 and $1.5 million, with $1 million being a common amount. Assuming FMCSA sets coverage at $2 million, established owner-op- erators are likely to see about a 25 percent increase in premium rates if they have to double their cover- age amounts. That's the assessment of Steve Libertore of National Risk Management Services, which specializes in companies with one to 15 trucks. Libertore says going from $1 million to $2 million in liability cov- erage typically means paying 25 per- cent more, or an additional $1,000 to $1,300, per year in premiums. "I don't think that will be too hard on the small guy," he says. The $1,000 to $1,300 fi gures, Li- bertore notes, are in the low range and may underestimate slightly the cost of liability for established owner-operators. Liability premium costs most often cited by owner-operators fall in the $5,000 to $8,000 range. A premium increase of 25 percent for that range would be $1,250 to $2,000 annually. PAYING FOR HIGHER LIABILITY INSURANCE Jodan Loan CURRENT DISTRIBUTION OF OWNER- OPERATOR LIABILITY POLICY LIMITS OverdriveOnline.com poll The minimum $750,000 10% $750,001- $1 million 53% $1,000,001- $1.5 million 28% More than $1.5 million 9%