Raising Truck Insurance Requirements – Maybe a Bad Idea?

On the face of it, raising mandatory truck insurance requirements would seem to be a good thing. Higher insurance requirements would mean that any big judgements against a trucking company would be much more likely to be collectible. But does this make sense?

The whole idea behind mandatory insurance requirements is to protect the public. For large trucking companies, this isn’t really an issue. Most of them carry large amounts of insurance (or have sufficient reserves to self-insure). If nothing else, they have sufficient assets to render even a huge judgement collectible. The real issue is with the smaller carriers.

Insurance is a huge expense for small trucking companies. Particularly in these troubled economic times, increasing insurance expenses would simply put many of these smaller companies out of business. This is not something that should be done lightly. Small companies provide a significant percentage of our national truck capacity. Removing them from the playing field would cause significant disruptions, and at a minimum would increase prices.

Larger insurance premiums would also cause many of these small carriers (at least the ones who managed to stay in business) to try to cut corners elsewhere. One of the prime areas for cutting corners is maintenance. Fuel has to be bought, and drivers have to be paid, so that leaves repairs as the first thing that gets cut.

Large amounts of insurance are also a disincentive to safety improvements. Some take the attitude that "we don’t have to worry about that — that’s why we have insurance". If you knew that a single crash could cause you to lose your entire business, wouldn’t you try to be as safe as you possibly could?

Where insurance requirements are badly in need of being raised, is that of automobiles. Since around 80% of the car vs. truck crashes are the fault of the car driver, their mandatory insurance requirements should be raised substantially. For example, in Indiana, automobile drivers are only required to carry $10,000 in PD insurance. It’s not unusual for the value of a truck and it’s cargo to exceed a million dollars. When a car driver causes such a wreck, shouldn’t they be held liable and be required to have sufficient insurance to pay for the results of their bad actions?

Before we consider raising insurance requirements for trucks, we should look at all of the ramifications, and consider the question of insurance for all highway users as a whole.

Comments welcome.