SACRAMENTO, CA – JANUARY 20: A collision between a truck and an SUV carrying more than two dozen people near the U.S.-Mexico border Tuesday morning killed 13 people and injured several others on Tuesday. March 2, 2021 in Holtville, California.
Gina Ferazzi Los Angeles Times | Getty Images
This year should be smooth for Mike Card, president of Combined Transportation. The truck company that his father started in 1980 is busier than ever, trying to meet the devouring domestic demand for goods delivered in the midst of a pandemic.
But with about 500 trucks circulating across the country, Card is constantly thinking about road safety, as just one bad accident could put his company on the verge of bankruptcy.
“If someone earns $ 20 million from the jury, my insurance companies only pay the first $ 5 [million]. He would have to pay the next $ 15 million. We couldn’t afford it. We should close the doors, ”Card said.
It is not a single concern.
According to data analyzed by the National Security Council, just over 5,000 large trucks suffered fatal crashes in 2019, 43% more than in 2010. The number of injuries associated with truck crashes increased 7% that year to 160,000 , with the majority being the occupants of other vehicles.
Jury awards for clashes are also skyrocketing. When verdicts of more than $ 1 million are considered, the average size increased nearly 1,000 percent from 2010 to 2018, from $ 2.3 million to $ 22.3 million, according to a study by the American Institute of Research in Transports.
US Xpress has about 7,000 trucks. CEO Eric Fuller told CNBC that for comparable accidents, the size of the verdict has increased up to 10 times in the last three or four years.
“When they go on trial with a jury, there’s a lot of feeling that someone has to pay for it. And it’s often the big pockets,” Fuller said.
The insurance industry calls them “nuclear verdicts” – jury awards in excess of $ 10 million. Liberty Mutual Insurance blames corporate distrust, litigation funding and social pessimism, the feeling that the system is broken, by excessive jury awards.
In the lawsuits that went in favor of the plaintiffs, violations of service hours, lack of a history of clean driving and fatigue were the most mentioned factors.
The truck industry sees them as unfairly punitive, biased against transportation companies and provoked by aggressive lawyers. It points to high-profile accidents that have led to massive verdicts against truck companies, even when passenger vehicles are clearly to blame for the accident.
“When they go to trial, there’s a lot of feeling that someone has to pay for it. And it’s often the big pockets.”
Eric Fuller
CEO of US Xpress
One of the largest arose from a 2014 accident in Odessa, Texas, that affected Werner Trucking. During a winter storm, the driver of a van lost control and crossed the median, colliding head-on with a trailer. The crash killed a 7-year-old passenger and seriously injured three more people. 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, think about what that means for all motorists on the roads,” Werner Trucking said in a statement.
“In most states there is a disconnect between your level of negligence and your level of responsibility,” said Dan Murray, senior vice president of the American Transportation Research Institute. “There are states where you can be identified as 10% or 15% for negligence and still be vulnerable to 100% of financial liabilities.”
Fuller said, “This is really the kind of thing we want to fix in criminal reform.”
The insurance and truck industries are pushing federal and state lawmakers to get lower settlement limits and more restrictions on where, when, and how often plaintiffs ’attorneys can file lawsuits.
They appear to be advancing in several states, including Texas and Iowa, where bills aimed at limiting a company’s liability or the size of the verdict are making their way through state legislatures.
And while costly litigation, verdicts and incredible rulings raise the prices of all types of insurance, for small and medium-sized truck companies the price rises of liability insurance are unbearable.
According to Craig Dancer, practice leader in the U.S. transportation industry at Marsh & McLennan, the world’s largest insurance broker, the commercial truck market has experienced unprecedented increases in average commercial insurance rates between 20% and 25% annually. He said price hikes also often come with an increase in deductible truck companies that have to pay.
Dancer explains that the umbrella or over-responsibility markets generated even larger increases (more than 75%), which caused most truck companies to buy less insurance.
According to Murray, smaller operators think, “If the deductibles are too high or the insurance premium goes up, I’ll reduce the amount of coverage I have.”
Federal law requires trucks to have $ 750,000 in liability coverage.
“This isn’t even close to covering the cost of many of these accidents,” Fuller said. “So we would very much like the insurance minimums to be increased.”
But the cost of insurance is already a major concern for smaller businesses, according to Todd Spencer, president of the Owners-Operators Independent Drivers Association. According to him, the push for higher minimum coverage could drive smaller operators out of the business.
“There are proposals on the table that would increase almost the minimum required right now by a factor of five. And that would be the problem for many, many small business truckers,” he said.
But the decision to give up more coverage is also a gamble, which jeopardizes a company’s survival.
The combined transportation card said, “We’re struggling to get excess insurance. Getting $ 5 million or $ 10 million in insurance has been so expensive that we can’t even afford to buy the extra insurance we’d like. have”.
This is the insurance coverage that the Card company would protect in the event of a serious accident. Without that? “It would be catastrophic for our company. We would lose. And all our employees would lose their jobs,” he said.