High liability rates are increasingly common in the trucking insurance market. A large part of the cost comes from liability coverage. The purpose of liability coverage is to pay out injuries and damage to property after an accident. Therefore, you are mandated by the Federal Motor Carrier Safety Administration (FMCSA) to meet a $750,000 minimum limit.
Liability costs are continuously going up, with no plans of slowing down. In fact, a $1 million liability policy premium can range anywhere between $6,000 and $16,000. Of course, this rate is also dependent on certain factors. High liability rates are becoming more and more problematic for truckers, but what’s the reason for the increase?
Some say that it extends back to the 2008 recession. As the economy rebounded from poor business sales, insurers weren’t so quick. As a result, an excess of premiums followed. However, over the past few years, truck insurers have raised their rates, and do not plan on going backwards.
Furthermore, the economy has begun to pick itself up, thus resulting in more jobs, and higher wages. Additionally, there have been more drivers, and more freight on the road as well.
High liability rates also stem from several factors. This includes, the freight type, age of equipment, length of haul, and states that the freight will transport through.
In the same manner, as liability rates have increased, so have applications for new operating authority. However, obtaining liability coverage has become a challenge. As a result, this has caused many truck insurance companies to institute stricter requirements when it comes to operating.
What do you think the reason is for such high liability rates? Comment below.