A bill that would limit liability for trucking companies involved in serious accidents was recently advanced by the Iowa House of Representatives. Under House Study Bill 114, a trucking company facing a civil lawsuit over an accident that caused injury or death would not pay more than $1 million in noneconomic damages, Iowa Capital Dispatch reported. The bill would also prohibit certain claims alleging direct negligence in a trucking company’s hiring, training or supervision practices for employees, except in cases involving drug or alcohol use by the driver, according to The Gazette.
“It strikes me as a reasonable attempt to limit noneconomic damages, but I can also certainly see the point of view that some might look at it as placing a cap on the value of a human life,” said Mark Mills, Manager, Transportation, Burns & Wilcox, Salt Lake City, Utah. “My initial reaction is it looks like a pretty reasonable attempt to combat those nuclear verdicts that hurt so many across the board.”
Nuclear verdicts are becoming more of an issue currently because of our litigious environment, and unfortunately, that just puts a bigger target on motor carriers’ backs.
As nuclear verdicts become more common, rates are increasing for Truckers’ Auto Liability Insurance, Excess Liability Insurance and other lines of coverage, said Andrew Weinberg, Underwriter, Transportation, Burns & Wilcox, Indianapolis, Indiana.
“Nuclear verdicts are becoming more of an issue currently because of our litigious environment, and unfortunately, that just puts a bigger target on motor carriers’ backs,” Weinberg said. “The proposed bill in Iowa poses a position of slight relief to the motor carriers that are doing their due diligence and making sure their companies, drivers and equipment are up to requirements set by the government in order to run. All of that revolves around safety.”
Nuclear verdicts not slowing down
While the legislation being considered in Iowa would not limit economic damages, which include medical bills and lost wages, the $1 million cap on noneconomic damages would include amounts awarded for things like pain and suffering, emotional trauma, or the loss of a spouse, Land Line Magazine reported Feb. 9. According to reports, a similar bill failed to pass in Iowa last year.
“There are a lot of variables that come into play when bills like this are talked about,” Weinberg said, but limiting noneconomic damages in some way could be a “good start.”
Whether or not this particular bill moves forward, there is no doubt that nuclear verdicts are a pressing challenge in the transportation industry, Weinberg said. In 2021, a record-setting $1 billion verdict was reached in Jacksonville, Florida, over a 2017 trucking accident that killed an 18-year-old college student. According to an August 2021 report from First Coast News, two trucking companies were found responsible for the death of the teen, who was stopped on the highway due to a semi accident caused by a distracted trucker when another distracted trucker crashed into the line of stopped vehicles.
That case involved “multiple violations,” Weinberg said. “That brings up the point that we cannot place all of the protection on the motor carrier,” he said. “While nuclear verdicts are bad, motor carriers have a due diligence and responsibility per law to require that their authority is up to government standards and regulations. Insurance needs to be put in place, whether they are running in their own state or crossing state lines, and safety obviously comes into play.”
When somebody is injured or killed, how do you place a value on that? It is so important that truckers and trucking companies are putting a stronger emphasis on safety to prevent individuals from getting hurt in the first place.
Another nuclear verdict in 2021 was in the amount of $730 million, which was awarded to the family of a 73-year-old woman who was killed near Mount Pleasant, Texas, when a vehicle escorting a 200,000-pound “superload” ran her vehicle off the road, CBS 19 reported.
Nuclear verdicts do not appear to be slowing down, Mills said, and if anything “seem to be getting a bit worse.”
“When somebody is injured or killed, how do you place a value on that? It is so important that truckers and trucking companies are putting a stronger emphasis on safety to prevent individuals from getting hurt in the first place,” Mills said. “There are certainly times when juries hand down these verdicts and it is damaging to our society as well. It is a fine line you have to walk to determine what their restoration is versus what is excessive.”
Large awards have ‘ripple effects’ on all Transportation Insurance policies
Average verdict size and the number of cases with verdicts over $1 million have both been on the rise in recent years, increasing the cost of insurance policies at a time when trucking companies already face inflation and high gas prices, supply chain issues and other challenges, FleetOwner reported in November of 2022. It is a trend that may impact all trucking companies, Mills said.
“The insurance companies have to pay out the policy limit more and more often when there are these large verdicts, and that drives rates up for everybody, including those that are not bad actors,” he said.
This makes it more costly to obtain Truckers Auto Liability Insurance, which can cover third-party property damage and bodily injury expenses, and Excess Liability Insurance, which provides higher liability limits beyond standard policies. Beyond liability policies, rising verdicts can also have an effect on policies like Auto Physical Damage Insurance, which can cover damage to the truck itself in the event of an accident, and Motor Truck Cargo Insurance, which can respond to damage to goods being hauled by the trucker.
“It has a ripple effect across all the lines of business these truckers need,” Mills noted.
Between rising verdicts and increasing costs, smaller trucking companies could be at risk of closure, Mills said. “Generally, though, the costs will end up getting passed down to the consumer as insurance gets more expensive, it becomes more costly to haul things down the road and the products being hauled have to cost more,” he said. “This affects not just the industry and the truckers being able to stay in business, but it passes those costs along to every consumer.”
Prioritizing safety can prevent accidents, cut costs
According to a 2022 report from the Federal Motor Carrier Safety Administration, large truck and bus injury crashes increased 62% between 2009 to 2015 and rose 13% from 2016 to 2019. In Ontario, Canada, officials reported in mid-2022 that careless and aggressive driving caused or contributed to a majority of the 4,274 accidents the province saw involving large commercial vehicles, representing 22% of fatal collisions and a 40% rise in transport vehicle crashes compared to 2021, CTV News reported in July of 2022. Sources told the news outlet at the time that many trucks on the road also have serious defects.
From driver training practices to vehicle maintenance, safety should always be the top priority for trucking companies, Weinberg and Mills agreed. Efforts to prioritize safety may include installing telematics and event monitors in vehicles, which can be used to monitor driver behavior, assist with vehicle maintenance and diagnostics, and more.
There may or may not be protection from liability, but there is certainly a lot more that can be done upfront today along the lines of keeping the vehicle safe.
“Telematics and event recorders are really helpful for the industry,” Mills explained. “Insurance companies look at them positively and even offer some rate decreases when truckers are willing to share the data that they have. It certainly makes for better drivers, as well, because the loss control individual for the fleet can see what is going on with their drivers and work to make it better in the future.”
According to Mills, “the most important thing that any trucker could do is safety and prevention.” Companies should “make sure they are doing all of their safety inspections, keeping their vehicles maintained, and having sound hiring practices in place, because those are the things that — if they are not done — can lead to a nuclear verdict,” he said.
If a motor carrier improves its overall performance, that will trickle down to lower insurance costs.
Government regulations on the state and national level are set for a reason, Weinberg added. “It is not to punish the motor carriers but to make sure they are held accountable before they travel on the road,” he said. “It requires us all to work as a team to be able to help move our freight across this country safely so that our economy does not waver.”
Many trucking accidents are preventable, Weinberg said. “A lot of it boils down to maintenance,” he said, adding that insurance carriers are increasingly setting maintenance requirements for trucking companies. Taking additional steps toward accident prevention can also benefit the trucking company from an insurance standpoint. “If a motor carrier improves its overall performance, that will trickle down to lower insurance costs,” he said.
These precautions are critical and ultimately benefit everyone, Mills agreed — with or without any future legislation affecting trucking company liability. “There may or may not be protection from liability, but there is certainly a lot more that can be done upfront today along the lines of keeping the vehicle safe,” he said.