Throughout 2005 and 2006 there were only 11 or 12 insurance companies available that primarily covered tractor trailers. Today, that number has risen to over 25. The increase in competition lowered prices.
In his recent article, Premiums Fall 10% to 50% As New Firms Enter Market, Frederick Kiel describes the effect that the drop in premiums has on the trucking companies, as these new insurance companies are offering across the board rates to trucking companies in an effort to compete for their business. Regardless of whether a truck has a perfect record or a poor record, low rates are being offered. The article states, “’The fleets with good records are getting very good rates, but even the guy with a bad record can find insurance for a good price,’” said Jack de la Cova, the chief executive officer of Insurance Network Specialties Inc, based out of Plantation, Florida.
These new insurance companies are offering low premiums in an effort to gain new business, a trend that has been seen intermittently since the 1980s. Perhaps now is the time to look at the minimum insurance required to be carried by tractor trailer companies. Congress set the minimum rates back in 1984 at $750,000 for some companies with most being required to carry $1,000,000. Inflation and time have eroded the value of the coverage. Medical bills and the costs associated with catastrophic injuries have risen dramatically. Today, in a catastrophic case, the minimum limits are paid and quickly spent. The injured are then left for the taxpayer to pay for through medicaid or some other assistance program.
The time is right to increase the minimum insurance requirements of a trucking company.
My thanks to Jacquie Bretell who contributed to this article.