Update on Proposed Increase of Financial Responsibility for: Motor Carriers, Freight Forwarders, and Brokers

In November of 2014 The Federal Motor Carrier Safety Administration (FMCSA) issued an Advance Notice of Proposed Rulemaking that it was considering increasing the minimum levels of financial responsibility for motor carriers. The increased minimums could also apply to hazmat motor carriers, which already carry higher minimums than general freight carriers. Rates have been the same since 1985, despite several legislative attempts to raise them.

For most interstate carriers, the minimum financial responsibility level is $750,000, but hazardous materials carriers must meet higher financial minimums of either $1 million or $5 million, depending on what they’re hauling.

The FMCSA proposed that the minimums are inadequate to cover the cost of serious crashes and that the increases are intended to “assure that public safety is not jeopardized.”

The ruling would:

  • increase liability coverage for bodily injury or property damage
  • establish financial responsibility requirements for passenger carrier brokers
  • implement financial responsibility requirements for brokers and freight forwarders
  • revise existing rules concerning self-insurance and trip insurance

A 90 day comment period on the proposed rulemaking began, allowing comments in response to a list of 26 questions that the agency posed. Numerous comments were submitted as the implications for the Trucking industry could be far-reaching.

The Owner-Operator Independent Drivers Association, opposes an increase in insurance stating it would mean a death sentence for small businesses. “The amount of insurance carried by motor carriers has never been shown to have a correlation with safety,” said Todd Spencer, executive vice president at OOIDA.

The Association formed a rulemaking team to further evaluate the appropriate level of financial responsibility and stated that a new mandate for minimum cost will be “among the agency’s highest-priority rules.” The agency continues to meet with stakeholders, impacted industries, safety advocacy groups, and private citizens, as it progresses toward developing the proposed rule.

We will continue to monitor the proposed ruling and will keep you informed of any updates. At McSweeney & Ricci keeping our clients’ fully protected is always our highest priority and we will do our best to keep your costs at a minimum while doing so.

For more information on issues affecting the Trucking Industry, contact Certified Transport Risk Specialist, Tim Hall

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