Sacramento, CA – January 20: A truck-SUV collision involving more than two dozen people at the US-Mexico border left 13 dead Tuesday morning and several others injured on Tuesday, March 2, 2021 in Holtville, CA.
Gina Ferazzi | Los Angeles Times | Getty Images
This year should go well for Mike Card, president of Combined Transportation. The transportation company his father started in 1980 is busier than ever, trying to meet the country’s hungry demand for goods delivered in the midst of a pandemic.
But with some 500 trucks on the road across the country, Card is constantly thinking about highway safety, because just one major crash could put his company on the brink of bankruptcy.
“If someone wins $ 20 million from the jury, my insurance companies will only pay the first $ 5 [million]I would have to pay the next $ 15 million. We couldn’t afford that. We should close our doors, ”Card said.
It’s not a unique concern.
According to data analyzed by the National Safety Council, just over 5,000 large trucks were involved in fatalities in 2019, an increase of 43% from 2010. The number of injuries from truck accidents rose 7% that year to 160,000 , the majority of which were that year. occupants of other vehicles.
Jury awards for crashes are also skyrocketing. Considering statements of more than $ 1 million, the average size increased nearly 1,000% between 2010 and 2018, from $ 2.3 million to $ 22.3 million, according to a study by American Transportation last summer. Research Institute.
US Xpress has approximately 7,000 trucks. CEO Eric Fuller told CNBC that for similar accidents, the size of the verdicts has increased as much as 10 times in the past three or four years.
‘When you get into jury cases, you feel like someone has to pay for it. And it’s often the big bags, ”said Fuller.
The insurance industry is calling them “nuclear rulings” – jury awards that exceed $ 10 million. Liberty Mutual Insurance blames corporate mistrust, litigation funding and social pessimism, a sense that the system is broken, for outrageous jury rewards.
In lawsuits in favor of the plaintiffs, violations of duty hours, lack of clean driving history, and fatigue were often cited.
The transportation industry sees them as unfairly punitive, biased against transportation companies and caused by aggressive lawyers. It points to high profile accidents that have led to massive sentences against truck companies, even when passenger cars are clearly to blame for the accident.
‘When you get into jury cases, you feel like someone has to pay for it. And often it is the big bags. ‘
Eric Fuller
American Xpress CEO
One of the largest resulted from a crash in Odessa, Texas in 2014 involving Werner Trucking. During a winter storm, the driver of a pickup truck lost control and crossed the central reservation, hitting a tractor-trailer head-on. In the accident, a 7-year-old passenger was killed and three others were seriously injured. The family successfully sued and received $ 90 million. The case is currently on appeal.
“If an accident like this is the fault of the driver who was hit by the out of control vehicle, consider what that means for every driver on the road,” Werner Trucking said in a statement.
“In most states, there is a gap between your level of negligence and your level of liability,” said Dan Murray, senior vice president of the American Transportation Research Institute. “There are states where you can be identified as 10% or 15% negligent and still vulnerable to 100% of the financial liabilities.”
Fuller said, “That’s really the kind of thing we want to fix in tort reform.”
The insurance and transportation industry is lobbying federal and state legislators for lower settlement limits and more restrictions on where, when, and how often plaintiffs’ attorneys can file legal proceedings.
They seem to be making headway in several states, including Texas and Iowa, where bills aimed at limiting a company’s liability or the magnitude of judgments are making their way through the state legislature.
And while costly lawsuits, overwhelming judgments and settlements push up prices for all types of insurance, for small and medium hauliers, the price increases of liability insurance become prohibitive.
According to Craig Dancer, practice leader in the US transportation industry for Marsh & McLennan, the world’s largest insurance broker, the commercial truck market has seen unprecedented increases in commercial insurance rates averaging 20% - 25% per year for the past two years. He said the price increases are also usually accompanied by an increase in the deductible truck companies that have to pay.
Overarching or redundant liability markets showed even bigger increases – more than 75% – leading most carriers to cut down on insurance, Dancer says.
According to Murray, the smaller operators think, “If the deductible is too high or the insurance premium is too high, I’ll reduce the coverage I have.”
Federal law requires trucks to transport $ 750,000 in liability coverage.
“That’s nowhere near the cost of many of these accidents,” Fuller said. “So we would really like to see insurance minima go up.”
But according to Todd Spencer, president of the Owner-Operator Independent Drivers Association, insurance costs are already a major concern for smaller businesses. He says the pursuit of higher minimum coverage could put smaller operators out of business.
“There are proposals on the table that increase the minimum currently required by a factor of five. And that would be the death knell for many small truck drivers,” he said.
But a decision to forgo more coverage is also a gamble, putting a company’s survival at stake.
The Combined Transport card: “We are struggling to get a deductible. $ 5 million or $ 10 million insurance has been so expensive that we can’t even afford to buy the extra insurance we need. would like to have. ”
That’s the insurance coverage that would protect Card’s business in the event of a serious accident. Without it? “It would be disastrous for our company. We would lose. And all of our employees would lose their jobs,” he said.