Minimum insurance requirements under federal law

Minimum Insurance Requirements Under Federal Law

Governing Authority

• The Federal Motor Carrier Safety Administration (FMCSA) sets the financial responsibility standards for trucking companies.
• Requirements apply to carriers operating in interstate commerce and those transporting hazardous materials.

Current Minimum Coverage Amounts

1. General Freight (Non-Hazardous Cargo)

   • Trucks over 10,000 pounds must carry at least $750,000 in liability coverage.
   • Many carriers voluntarily carry $1,000,000 or more due to high accident costs.

2. Oil Transport

   • Minimum coverage of $1,000,000.

3. Hazardous Materials (HazMat)

   • Minimum coverage of $5,000,000 due to the extreme risks posed by toxic, flammable, or explosive cargo.

4. Passenger Carriers (Buses)

   • Coverage depends on seating capacity:
     • $1,500,000 for vehicles seating 15 or fewer passengers.
     • $5,000,000 for vehicles seating 16 or more.

Purpose of Federal Requirements

• Protects the public by ensuring that carriers have sufficient resources to cover accident damages.
• Promotes accountability and discourages unsafe operators from entering the industry.

Criticism and Reform Discussions

• Critics argue that the $750,000 minimum for general freight is outdated, set in the 1980s, and does not reflect today’s medical costs and inflation.
• Safety advocates push for significantly higher minimums to ensure victims receive full compensation.

Legal Relevance

• If a carrier lacks required insurance, it may face fines, loss of operating authority, and increased liability exposure.
• Insurance minimums often determine the baseline settlement value in truck accident claims.

Summary: Federal law requires trucking companies to maintain substantial insurance coverage, with amounts ranging from $750,000 to $5,000,000 depending on cargo and vehicle type. These minimums ensure financial responsibility, but ongoing debates question whether they remain adequate for modern accident costs.

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