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 left 13 dead and several others injured Tuesday, March 2, 2021, in Holtville, CA.
Gina Ferazzi Los Angeles Times | Getty Images
This year should go smoothly for Mike Card, president of Combined Transport. The truck company his father started in 1980 is busier than ever – trying to meet the national demand for goods delivered amid a pandemic.
But with about 500 trucks on the road across the country, Card is constantly thinking about highway safety, because only a bad accident could put his company on the verge of bankruptcy.
“If someone wins $ 20 million from the jury, my insurance companies pay only the first $ 5 [million]. I should pay the next $ 15 million. We couldn’t afford that. We should close our doors, “Card said.
It is not a single concern.
According to data analyzed by the National Safety Council, just over 5,000 large trucks were involved in fatal accidents in 2019, an increase of 43% compared to 2010. The number of injuries associated with truck accidents increased by 7% that year to 160,000, most of them occupants of other vehicles.
Accident jury awards are also on the rise. When considering verdicts of more than $ 1 million, the average size increased by nearly 1,000 percent from 2010 to 2018, from $ 2.3 million to $ 22.3 million, according to a study conducted last summer by the Institute. American Transportation Research.
The 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 you go into jury trials, there’s a lot of feeling that someone has to pay for it. And often there are big pockets,” Fuller said.
The insurance industry calls them “nuclear verdicts” – jury awards in excess of $ 10 million. Liberty Mutual Insurance blames business mistrust, dispute financing and social pessimism, the feeling that the system is flawed, for excessive jury awards.
In the lawsuits that were in favor of the plaintiffs, violations of working hours, lack of a clean driving record and fatigue were usually cited.
The truck industry sees them as unjustly punitive, biased against transport companies and provoked by aggressive lawyers. It indicates high-profile accidents that have led to massive verdicts against truck companies, even when cars are clearly to blame for the accident.
“When you go on trial, there’s a lot of feeling that someone has to pay for it. And often it’s big pockets.”
Eric Fuller
American CEO Xpress
One of the largest comes from a 2014 accident in Odessa, Texas, which involved Werner Trucking. During a winter storm, the driver of a truck lost control and crossed the median, hitting a tractor-trailer in front. The accident killed a 7-year-old passenger and seriously injured three others. The family successfully sued and received $ 90 million. The case is currently on appeal.
“If such an accident is the fault of the driver who was hit by the uncontrolled vehicle, think about what that means for every driver on the road,” 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 negligent 10% or 15% and yet be vulnerable to 100% of financial liabilities.”
Fuller said, “That’s really the kind of thing we want to fix in tort reform.”
The insurance and truck industries put pressure on federal and state lawmakers for lower settlement ceilings and more restrictions on where, when and how often plaintiffs’ lawyers are allowed to file lawsuits.
It appears to be making progress in several states, including Texas and Iowa, where bills aimed at limiting a company’s liability or the size of the verdict operate through state legislatures.
And while costly litigation, verdicts and bankruptcy decisions raise prices for all types of insurance, for small and medium-sized transport companies, rising prices for liability insurance are becoming inaccessible.
The commercial truck market has seen unprecedented increases in commercial insurance rates over the past two years, averaging 20% to 25% annually, according to Craig Dancer, the U.S. transportation industry leader for Marsh & McLennan, the world’s largest insurance broker. . He said the price increases also come with an increase in deductible truck companies that have to pay.
Umbrella or over-liability markets have seen even higher growth – over 75% – causing most trucking companies to buy less insurance, says Dancer.
According to Murray, smaller operators believe that “If the deductibles are too high or the insurance premium becomes too high, I will reduce the amount of coverage I have.”
Federal law requires trucks to insure a liability of $ 750,000.
“That’s not even close to covering the costs for many of these accidents,” Fuller said. “So we would love to see the minimum insurance increase.”
But the cost of insurance is already a top concern for smaller companies, according to Todd Spencer, president of the Association of Independent Owners-Operators. He says the effort for higher minimum coverage could take smaller operators out of business.
“There are proposals on the table that would pretty much increase the minimum required right now by a factor of five. And that would be death for many, many small business truckers,” he said.
But a decision to give up more coverage is also a gamble, putting the survival of a company on the line.
The combined transport card said: “We strive to get excess insurance. Getting $ 5 million or $ 10 million in insurance was so expensive that we couldn’t even afford to buy the extra insurance we wanted. ”
This is the insurance coverage that would protect the Card company in the event of a serious accident. Free? “It would be catastrophic for our company. We would lose. And all our employees will lose their jobs,” he said.