Sacramento, CA – January 20: A collision between a truck and an SUV carrying more than two dozen people near the US-Mexico border on Tuesday morning left 13 dead and several others injured on Tuesday, March 2, 2021 in Holtville, CA.
Gina Ferazzi | Los Angeles Times | Getty Images
This year should be a smooth one for Mike Card, president of Combined Transport. The road transport company that her father founded in 1980 is busier than ever – trying to meet the country’s voracious demand for goods delivered in the midst of a pandemic.
But with about 500 trucks on the roads across the country, Card is constantly thinking about road safety, because only a serious accident could put his company on the brink of bankruptcy.
“If someone wins $ 20 million from the jury, my insurers pay only the first $ 5 [million]. I would have to pay the next $ 15 million. We couldn’t afford it. We would have to close the doors, ”said Card.
It is not a single concern.
According to data analyzed by the National Security Council, just over 5,000 large trucks were involved in fatal crashes in 2019, an increase of 43% over 2010. The number of injuries associated with truck crashes increased 7 % in that year to 160,000, the majority being occupants of other vehicles.
The jury’s awards for accidents are also skyrocketing. When considering verdicts of more than $ 1 million, the average size increased by almost 1,000% from 2010 to 2018, from $ 2.3 million to $ 22.3 million, according to an American Transportation study last summer Research Institute.
US Xpress has about 7,000 trucks. CEO Eric Fuller told CNBC that, for comparable accidents, the length of the verdict has increased by 10 times in the past three or four years.
“When you enter a jury trial, there is a feeling that someone has to pay for it. And it’s usually the big pockets, ”said Fuller.
The insurance industry calls them “nuclear verdicts” – jury awards that exceed $ 10 million. Liberty Mutual Insurance blames corporate mistrust, litigation funding and social pessimism, a sense that the system is broken, due to excessive jury awards.
In lawsuits that were in favor of the plaintiffs, violations of service hours, lack of a clean driving record and fatigue were factors commonly cited.
The truck industry sees them as unjustly punitive, biased against transport companies and provoked by aggressive lawyers. He points to high-profile accidents that have resulted in massive verdicts against road transport companies, even when passenger cars are clearly to blame for the accident.
“When you enter jury trials, there is a feeling that someone has to pay for it. And it is often the big pockets.”
Eric Fuller
US Xpress CEO
One of the biggest resulted from an accident in 2014 in Odessa, Texas, involving Werner Trucking. During a winter storm, a truck driver lost control and crossed the central construction site, crashing head-on with a trailer. 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 under appeal.
“If an accident like this is the fault of the driver who was hit by the out-of-control vehicle, think about what it means for every driver on the roads,” said Werner Trucking in a statement.
“In most states, there is a disconnect between your level of neglect and your level of responsibility,” said Dan Murray, senior vice president at the American Transportation Research Institute. “There are states where you can be identified as 10% or 15% negligent and still be vulnerable in 100% of the financial liability”.
Fuller said, “This is really the kind of thing that we want to fix in the reform of civil wrongdoing.”
The insurance and truck industries are lobbying federal and state legislators for lower limits on agreements and more restrictions on where, when and how often plaintiffs’ lawyers are allowed to file cases.
They appear to be gaining ground in several states, including Texas and Iowa, where bills aimed at limiting a company’s liability or verdict are undergoing state legislatures.
And while expensive litigation, verdicts and jaw-dropping deals are driving up prices for all types of insurance, for small and medium-sized transportation companies, price increases in liability insurance are becoming unaffordable.
The commercial truck market has experienced unprecedented increases in commercial insurance rates over the past two years, averaging 20% to 25% per year, according to Craig Dancer, US industry practice leader for Marsh & McLennan, the largest insurance broker in the world. He said that price increases also often come with an increase in the deductible that road transport companies have to pay.
The umbrella or surplus liability markets passed on even greater increases – more than 75% – causing most transport companies to purchase less insurance, says Dancer.
According to Murray, smaller operators think, “If the deductibles are too high or the insurance premium gets too high, I will reduce the amount of coverage I have.”
Federal law requires trucks to carry $ 750,000 in liability coverage.
“It doesn’t even come close to covering the cost of many of these accidents,” said Fuller. “So, we would really like to see insurance minimums go up.”
But the cost of insurance is already a major concern for smaller companies, according to Todd Spencer, president of the Association of Independent Drivers of Owner Operators. He says pressure for higher minimum coverage could drive smaller operators into bankruptcy.
“There are proposals on the table that would greatly increase the minimum required now by a factor of five. And that would be the death sentence for many, many small business truck drivers,” he said.
But the decision to forgo more coverage is also a gamble, putting the company’s survival at risk.
The Combined Transport card said: “We are struggling to get surplus insurance. Getting $ 5 million or $ 10 million in insurance has been so expensive that we can’t even buy the extra insurance we would like to have.”
This is the insurance coverage that would protect the Card company in the event of a serious accident. Without this? “It would be catastrophic for our company. We would lose. And all of our employees would lose their jobs, ”he said.