Will Legal Payouts Make Trucking Insurance Costs Soar?
Trucking has always been an industry with little margin for error. Given that the size and weight of commercial vehicles makes accidents involving them much more dangerous, numerous safety regulations have been adopted to reduce the chance of these dangers. Still, accidents happen – but when they do, the payouts can be huge.
These large sums have seemed to impact the experience carriers have for insuring their fleets. As big legal payouts involving trucking accidents piled up over the past year, insurers have been much more skeptical about just how much risk they are covering.
Trucking accident rates were higher than normal last year, and a number of large payouts made insurance companies take notice. Some settlements involving trucks for large carriers like Wal-Mart Stores totaled tens of millions of dollars. Federal law requires truckers to have $750,000 worth of coverage per accident, though it is common for carriers to insure for up to $1,000,000.
Popular companies Zurich Insurance Group AG and American International Group both dropped coverage for many for-hire fleets earlier in the year. However, both insurers still provide coverage for trucks ran directly by manufacturers or retailers.
A broker who works with large trucking companies noted that these pull outs triggered a bit of a panic. He said that the string of higher-than-normal verdicts seem to catch insurers “flat footed.”
Though trucking activity in general seems to be improving according to a recent ATA report, losing coverage could prove extremely detrimental to carriers. In an already fragmented market coming out of a recent slump, this could have a noticeable impact on productivity.
However, it is worth noting this jump in accident rates may be nothing more than a random coincidence. Though numbers did increase last year, accident rates in general have been dropping at a rate of 2% per year for the last decade.