**Potential Applicability of Financial Responsibility Requirements to
Private Motor Carriers**

**Final Report**

![](media/image1.png){width="2.6638888888888888in"
height="0.8638888888888889in"}

Foreword

The primary benefit associated with the expanded insurance requirements
examined in this study stems from avoiding the high costs of crashes
involving unsafe private carriers that would find it difficult or
impossible to obtain public liability coverage at the new, higher
levels. Estimated costs for insurance and reporting exceed estimated
benefits in 26 of the 27 scenarios considered in this study, indicating
that extending the current minimum financial responsibility requirements
for for-hire motor carriers to private motor carriers is not
cost-beneficial under the assumptions used. However, the financial
responsibility requirements examined within this study may be
justifiable given equity considerations.

[]{.mark}

Although the report can be helpful to the general public in
understanding brake inspection and certification, the report is
primarily targeted towards private motor carriers.

This publication is considered a final report and does not supersede
another publication.

[]{.mark}

Notice

This document is disseminated under the sponsorship of the Department of
Transportation in the interest of information exchange. The United
States Government assumes no liability for its contents or use thereof.

The contents of this report reflect the views of the contractor who is
responsible for the accuracy of the data presented herein. The contents
do not necessarily reflect the official policy of the Department of
Transportation.

This report does not constitute a standard, specification, or
regulation.

The United States Government does not endorse products or manufacturers
named herein. Trade or manufacturers' names appear herein only because
they are considered essential to the object of this document.

+---------------------+---+----------------------+---------+------------+
| **1. Report No.**   | * |                      | **3.    |            |
|                     | * |                      | Recip   |            |
| FMCSA-PSV-07-001    | 2 |                      | ient\'s |            |
|                     | . |                      | Catalog |            |
|                     | G |                      | No.**   |            |
|                     | o |                      |         |            |
|                     | v |                      |         |            |
|                     | e |                      |         |            |
|                     | r |                      |         |            |
|                     | n |                      |         |            |
|                     | m |                      |         |            |
|                     | e |                      |         |            |
|                     | n |                      |         |            |
|                     | t |                      |         |            |
|                     | A |                      |         |            |
|                     | c |                      |         |            |
|                     | c |                      |         |            |
|                     | e |                      |         |            |
|                     | s |                      |         |            |
|                     | s |                      |         |            |
|                     | i |                      |         |            |
|                     | o |                      |         |            |
|                     | n |                      |         |            |
|                     | N |                      |         |            |
|                     | o |                      |         |            |
|                     | . |                      |         |            |
|                     | * |                      |         |            |
|                     | * |                      |         |            |
+---------------------+---+----------------------+---------+------------+
| **4. Title and      |   |                      | **5.    |            |
| Subtitle:**         |   |                      | Report  |            |
|                     |   |                      | Date:** |            |
| Potential           |   |                      |         |            |
| Applicability of    |   |                      | March   |            |
| Financial           |   |                      | 2007    |            |
| Responsibility      |   |                      |         |            |
| Requirements to     |   |                      |         |            |
| Private Motor       |   |                      |         |            |
| Carriers            |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
| **7. Author(s):**   |   |                      | **6.    |            |
|                     |   |                      | Per     |            |
| Mark Lepofsky,      |   |                      | forming |            |
| Patrick Balducci,   |   |                      | Organ   |            |
| Arthur Greenberg    |   |                      | ization |            |
|                     |   |                      | Code**  |            |
| Contributors: Aftab |   |                      |         |            |
| Ahmed, David Kall,  |   |                      |         |            |
| Thomas McSweeney,   |   |                      |         |            |
| Jodi Rizek, and     |   |                      |         |            |
| Erik Wik            |   |                      |         |            |
| (Battelle); Daniel  |   |                      |         |            |
| Murray (American    |   |                      |         |            |
| Transportation      |   |                      |         |            |
| Research            |   |                      |         |            |
| Institute); David   |   |                      |         |            |
| Hershey (National   |   |                      |         |            |
| Accounting and      |   |                      |         |            |
| Finance Council);   |   |                      |         |            |
| Steve Keppler and   |   |                      |         |            |
| Paul Bomgardner     |   |                      |         |            |
| (Commercial Vehicle |   |                      |         |            |
| Safety Alliance)    |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
|                     |   |                      | **8.    |            |
|                     |   |                      | Per     |            |
|                     |   |                      | forming |            |
|                     |   |                      | Organ   |            |
|                     |   |                      | ization |            |
|                     |   |                      | Report  |            |
|                     |   |                      | No.**   |            |
+---------------------+---+----------------------+---------+------------+
| **9. Performing     |   |                      | **10.   |            |
| Organization Name   |   |                      | Work    |            |
| and Address:**      |   |                      | Unit    |            |
|                     |   |                      | No.**   |            |
| Battelle Memorial   |   |                      |         |            |
| Institute           |   |                      |         |            |
|                     |   |                      |         |            |
| 505 King Avenue     |   |                      |         |            |
|                     |   |                      |         |            |
| Columbus, OH 43201  |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
|                     |   |                      | **11.   |            |
|                     |   |                      | C       |            |
|                     |   |                      | ontract |            |
|                     |   |                      | or      |            |
|                     |   |                      | Grant   |            |
|                     |   |                      | No.**   |            |
|                     |   |                      |         |            |
|                     |   |                      | GS-2    |            |
|                     |   |                      | 3F-8167 |            |
|                     |   |                      | H/ORDER |            |
|                     |   |                      | 1406-   |            |
|                     |   |                      | 04-06-D |            |
|                     |   |                      | O-60197 |            |
+---------------------+---+----------------------+---------+------------+
| **12. Sponsoring    |   |                      | **13.   |            |
| Agency Name and     |   |                      | Type of |            |
| Address:**          |   |                      | Report  |            |
|                     |   |                      | and     |            |
| Department of       |   |                      | Period  |            |
| Transportation      |   |                      | Co      |            |
|                     |   |                      | vered** |            |
| Federal Motor       |   |                      |         |            |
| Carrier Safety      |   |                      | Final   |            |
| Administration      |   |                      | Report  |            |
|                     |   |                      |         |            |
| 400 Seventh Street, |   |                      | Se      |            |
| SW                  |   |                      | ptember |            |
|                     |   |                      | 2005 -- |            |
| Washington, DC      |   |                      | April   |            |
| 20590               |   |                      | 2006    |            |
+---------------------+---+----------------------+---------+------------+
|                     |   |                      | **14.   |            |
|                     |   |                      | Spo     |            |
|                     |   |                      | nsoring |            |
|                     |   |                      | Agency  |            |
|                     |   |                      | Code**  |            |
|                     |   |                      |         |            |
|                     |   |                      | FMCSA   |            |
+---------------------+---+----------------------+---------+------------+
| **15. Supplementary |   |                      |         |            |
| Notes:**            |   |                      |         |            |
|                     |   |                      |         |            |
| Contracting         |   |                      |         |            |
| Officer's Technical |   |                      |         |            |
| Representative:     |   |                      |         |            |
| Deborah M. Freund   |   |                      |         |            |
|                     |   |                      |         |            |
| Task Manager:       |   |                      |         |            |
| Richard F. Clemente |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
| **16. Abstract:**   |   |                      |         |            |
|                     |   |                      |         |            |
| This report         |   |                      |         |            |
| presents the        |   |                      |         |            |
| results of a study  |   |                      |         |            |
| to assist the U.S.  |   |                      |         |            |
| Department of       |   |                      |         |            |
| Transportation's    |   |                      |         |            |
| Federal Motor       |   |                      |         |            |
| Carrier Safety      |   |                      |         |            |
| Administration      |   |                      |         |            |
| assess the          |   |                      |         |            |
| potential benefits  |   |                      |         |            |
| and costs of        |   |                      |         |            |
| implementing        |   |                      |         |            |
| provisions of       |   |                      |         |            |
| Section 4120 of the |   |                      |         |            |
| Safe, Accountable,  |   |                      |         |            |
| Flexible, Efficient |   |                      |         |            |
| Transportation      |   |                      |         |            |
| Equity Act: A       |   |                      |         |            |
| Legacy for Users    |   |                      |         |            |
| (SAFETEA-LU)        |   |                      |         |            |
| regarding private   |   |                      |         |            |
| motor carrier       |   |                      |         |            |
| public liability    |   |                      |         |            |
| insurance. These    |   |                      |         |            |
| provisions would    |   |                      |         |            |
| require private     |   |                      |         |            |
| passenger and       |   |                      |         |            |
| property carriers   |   |                      |         |            |
| to have financial   |   |                      |         |            |
| responsibility in   |   |                      |         |            |
| the same amounts as |   |                      |         |            |
| are currently       |   |                      |         |            |
| required by         |   |                      |         |            |
| sections 31138 and  |   |                      |         |            |
| 31139 of the United |   |                      |         |            |
| States Code.        |   |                      |         |            |
|                     |   |                      |         |            |
| The work performed  |   |                      |         |            |
| for the study       |   |                      |         |            |
| involved conducting |   |                      |         |            |
| a literature        |   |                      |         |            |
| review, collecting  |   |                      |         |            |
| data, and           |   |                      |         |            |
| developing a plan   |   |                      |         |            |
| to interview and    |   |                      |         |            |
| collect data and    |   |                      |         |            |
| information from    |   |                      |         |            |
| state agencies and  |   |                      |         |            |
| stakeholders. All   |   |                      |         |            |
| information         |   |                      |         |            |
| obtained was        |   |                      |         |            |
| examined and fed    |   |                      |         |            |
| into safety and     |   |                      |         |            |
| economic models to  |   |                      |         |            |
| determine the       |   |                      |         |            |
| benefits and costs  |   |                      |         |            |
| that could be       |   |                      |         |            |
| expected from       |   |                      |         |            |
| implementation of   |   |                      |         |            |
| the new private     |   |                      |         |            |
| motor carrier       |   |                      |         |            |
| financial           |   |                      |         |            |
| responsibility      |   |                      |         |            |
| requirements.       |   |                      |         |            |
|                     |   |                      |         |            |
| The primary benefit |   |                      |         |            |
| associated with the |   |                      |         |            |
| expanded insurance  |   |                      |         |            |
| requirements        |   |                      |         |            |
| examined in this    |   |                      |         |            |
| study stems from    |   |                      |         |            |
| avoiding the high   |   |                      |         |            |
| costs of crashes    |   |                      |         |            |
| involving unsafe    |   |                      |         |            |
| private carriers    |   |                      |         |            |
| that would find it  |   |                      |         |            |
| difficult or        |   |                      |         |            |
| impossible to       |   |                      |         |            |
| obtain public       |   |                      |         |            |
| liability coverage  |   |                      |         |            |
| at the new, higher  |   |                      |         |            |
| levels. Estimated   |   |                      |         |            |
| costs for insurance |   |                      |         |            |
| and reporting       |   |                      |         |            |
| exceed estimated    |   |                      |         |            |
| benefits in 26 of   |   |                      |         |            |
| the 27 scenarios    |   |                      |         |            |
| considered in this  |   |                      |         |            |
| study, indicating   |   |                      |         |            |
| that extending the  |   |                      |         |            |
| current minimum     |   |                      |         |            |
| financial           |   |                      |         |            |
| responsibility      |   |                      |         |            |
| requirements for    |   |                      |         |            |
| for-hire motor      |   |                      |         |            |
| carriers to private |   |                      |         |            |
| motor carriers is   |   |                      |         |            |
| not cost-beneficial |   |                      |         |            |
| under the           |   |                      |         |            |
| assumptions used.   |   |                      |         |            |
| However, the        |   |                      |         |            |
| financial           |   |                      |         |            |
| responsibility      |   |                      |         |            |
| requirements        |   |                      |         |            |
| examined within     |   |                      |         |            |
| this study may be   |   |                      |         |            |
| justifiable given   |   |                      |         |            |
| equity              |   |                      |         |            |
| considerations.     |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
| **17. Key Words:**  |   |                      | **18.   |            |
|                     |   |                      | Distr   |            |
| Commercial Motor    |   |                      | ibution |            |
| Carriers, Financial |   |                      | Stat    |            |
| Responsibility,     |   |                      | ement** |            |
| Insurance, Private  |   |                      |         |            |
| Motor Carriers      |   |                      |         |            |
+---------------------+---+----------------------+---------+------------+
| **19. Security      |   | **20. Security       | **21.   | **22.      |
| Classif. (of this   |   | Classif. (of this    | No. of  | Price**    |
| report)**           |   | page)**              | P       |            |
|                     |   |                      | ages**: | N/A        |
| Unclassified        |   | Unclassified         |         |            |
|                     |   |                      | 84      |            |
+---------------------+---+----------------------+---------+------------+

**Technical Report Documentation Page**

**Form DOT F 1700.7**

<table style="width:100%;">
<colgroup>
<col style="width: 6%" />
<col style="width: 13%" />
<col style="width: 10%" />
<col style="width: 13%" />
<col style="width: 6%" />
<col style="width: 7%" />
<col style="width: 0%" />
<col style="width: 11%" />
<col style="width: 1%" />
<col style="width: 9%" />
<col style="width: 3%" />
<col style="width: 10%" />
<col style="width: 0%" />
<col style="width: 6%" />
</colgroup>
<tbody>
<tr class="odd">
<td colspan="14"><strong>SI* (Modern Metric) Conversion
Factors</strong></td>
</tr>
<tr class="even">
<td colspan="5"><span class="smallcaps">Approximate Conversions to SI
Units</span></td>
<td colspan="9"><span class="smallcaps">Approximate Conversions from SI
Units</span></td>
</tr>
<tr class="odd">
<td>Symbol</td>
<td>When You Know</td>
<td>Multiply By</td>
<td>To Find</td>
<td>Symbol</td>
<td>Symbol</td>
<td colspan="3">When You Know</td>
<td>Multiply By</td>
<td colspan="2">To Find</td>
<td colspan="2">Symbol</td>
</tr>
<tr class="even">
<td colspan="5">LENGTH</td>
<td colspan="9">LENGTH</td>
</tr>
<tr class="odd">
<td>in</td>
<td>inches</td>
<td>25.4</td>
<td>millimeters</td>
<td>mm</td>
<td>mm</td>
<td colspan="3">millimeters</td>
<td>0.039</td>
<td colspan="2">inches</td>
<td colspan="2">in</td>
</tr>
<tr class="even">
<td>ft</td>
<td>feet</td>
<td>0.305</td>
<td>meters</td>
<td>m</td>
<td>m</td>
<td colspan="3">meters</td>
<td>3.28</td>
<td colspan="2">feet</td>
<td colspan="2">ft</td>
</tr>
<tr class="odd">
<td>yd</td>
<td>yards</td>
<td>0.914</td>
<td>meters</td>
<td>m</td>
<td>m</td>
<td colspan="3">meters</td>
<td>1.09</td>
<td colspan="2">Yards</td>
<td colspan="2">yd</td>
</tr>
<tr class="even">
<td>mi</td>
<td>miles</td>
<td>1.61</td>
<td>kilometers</td>
<td>km</td>
<td>km</td>
<td colspan="3">kilometers</td>
<td>0.621</td>
<td colspan="2">miles</td>
<td colspan="2">mi</td>
</tr>
<tr class="odd">
<td colspan="5">AREA</td>
<td colspan="9">AREA</td>
</tr>
<tr class="even">
<td>in<sup>2</sup></td>
<td>square inches</td>
<td>645.2</td>
<td>square millimeters</td>
<td>mm<sup>2</sup></td>
<td>mm<sup>2</sup></td>
<td colspan="3">square millimeters</td>
<td>0.0016</td>
<td colspan="2">square inches</td>
<td colspan="2">in<sup>2</sup></td>
</tr>
<tr class="odd">
<td>ft<sup>2</sup></td>
<td>square feet</td>
<td>0.093</td>
<td>square meters</td>
<td>m<sup>2</sup></td>
<td>m<sup>2</sup></td>
<td colspan="3">square meters</td>
<td>10.764</td>
<td colspan="2">square feet</td>
<td colspan="2">ft<sup>2</sup></td>
</tr>
<tr class="even">
<td>yd<sup>2</sup></td>
<td>square yards</td>
<td>0.836</td>
<td>square meters</td>
<td>m<sup>2</sup></td>
<td>m<sup>2</sup></td>
<td colspan="3">square meters</td>
<td>1.195</td>
<td colspan="2">square yards</td>
<td colspan="2">yd<sup>2</sup></td>
</tr>
<tr class="odd">
<td>ac</td>
<td>acres</td>
<td>0.405</td>
<td>hectares</td>
<td>ha</td>
<td>ha</td>
<td colspan="3">hectares</td>
<td>2.47</td>
<td colspan="2">acres</td>
<td colspan="2">ac</td>
</tr>
<tr class="even">
<td>mi<sup>2</sup></td>
<td>square miles</td>
<td>2.59</td>
<td>square kilometers</td>
<td>km<sup>2</sup></td>
<td>km<sup>2</sup></td>
<td colspan="3">square kilometers</td>
<td>0.386</td>
<td colspan="2">square miles</td>
<td colspan="2">mi<sup>2</sup></td>
</tr>
<tr class="odd">
<td colspan="5">VOLUME</td>
<td colspan="9">VOLUME</td>
</tr>
<tr class="even">
<td>fl oz</td>
<td>fluid ounces</td>
<td>29.57</td>
<td>milliliters</td>
<td>ml</td>
<td>ml</td>
<td colspan="3">milliliters</td>
<td>0.034</td>
<td colspan="2">fluid ounces</td>
<td colspan="2">fl oz</td>
</tr>
<tr class="odd">
<td>gal</td>
<td>gallons</td>
<td>3.785</td>
<td>liters</td>
<td>l</td>
<td>l</td>
<td colspan="3">liters</td>
<td>0.264</td>
<td colspan="2">gallons</td>
<td colspan="2">gal</td>
</tr>
<tr class="even">
<td>ft<sup>3</sup></td>
<td>cubic feet</td>
<td>0.028</td>
<td>cubic meters</td>
<td>m<sup>3</sup></td>
<td>m<sup>3</sup></td>
<td colspan="3">cubic meters</td>
<td>35.71</td>
<td colspan="2">cubic feet</td>
<td colspan="2">ft<sup>3</sup></td>
</tr>
<tr class="odd">
<td>yd<sup>3</sup></td>
<td>cubic yards</td>
<td>0.765</td>
<td>cubic meters</td>
<td>m<sup>3</sup></td>
<td>m<sup>3</sup></td>
<td colspan="3">cubic meters</td>
<td>1.307</td>
<td colspan="2">cubic yards</td>
<td colspan="2">yd<sup>3</sup></td>
</tr>
<tr class="even">
<td colspan="5">MASS</td>
<td colspan="9">MASS</td>
</tr>
<tr class="odd">
<td>oz</td>
<td>ounces</td>
<td>28.35</td>
<td>grams</td>
<td>g</td>
<td>g</td>
<td colspan="3">grams</td>
<td>0.035</td>
<td colspan="2">ounces</td>
<td colspan="2">oz</td>
</tr>
<tr class="even">
<td>lb</td>
<td>pounds</td>
<td>0.454</td>
<td>kilograms</td>
<td>kg</td>
<td>kg</td>
<td colspan="3">kilograms</td>
<td>2.202</td>
<td colspan="2">pounds</td>
<td colspan="2">lb</td>
</tr>
<tr class="odd">
<td>T</td>
<td>short tons (2000 lbs)</td>
<td>0.907</td>
<td>megagrams</td>
<td>Mg</td>
<td>Mg</td>
<td colspan="3">megagrams</td>
<td>1.103</td>
<td colspan="2">short tons (2000 lbs)</td>
<td colspan="2">T</td>
</tr>
<tr class="even">
<td colspan="5">TEMPERATURE (exact)</td>
<td colspan="9">TEMPERATURE (exact)</td>
</tr>
<tr class="odd">
<td>°F</td>
<td>Fahrenheit</td>
<td>5(F-32)/9</td>
<td>Celsius</td>
<td>°C</td>
<td>°C</td>
<td colspan="2">Celsius</td>
<td colspan="3">1.8 C + 32</td>
<td>Fahrenheit</td>
<td colspan="2">°F</td>
</tr>
<tr class="even">
<td></td>
<td>temperature</td>
<td>or (F-32)/1.8</td>
<td>temperature</td>
<td></td>
<td></td>
<td colspan="2">temperature</td>
<td colspan="3"></td>
<td>temperature</td>
<td colspan="2"></td>
</tr>
<tr class="odd">
<td colspan="5">ILLUMINATION</td>
<td colspan="9">ILLUMINATION</td>
</tr>
<tr class="even">
<td>fc</td>
<td>foot-candles</td>
<td>10.76</td>
<td>lux</td>
<td>lx</td>
<td>lx</td>
<td colspan="2">lux</td>
<td colspan="3">0.0929</td>
<td>foot-candles</td>
<td colspan="2">fc</td>
</tr>
<tr class="odd">
<td>fl</td>
<td>foot-Lamberts</td>
<td>3.426</td>
<td>candela/m2</td>
<td>cd/m2</td>
<td>cd/m2</td>
<td colspan="2">candela/m2</td>
<td colspan="3">0.2919</td>
<td>foot-Lamberts</td>
<td colspan="2">fl</td>
</tr>
<tr class="even">
<td colspan="5">FORCE and PRESSURE or STRESS</td>
<td colspan="9">FORCE and PRESSURE or STRESS</td>
</tr>
<tr class="odd">
<td>lbf</td>
<td>pound-force</td>
<td>4.45</td>
<td>newtons</td>
<td>N</td>
<td colspan="2">N</td>
<td>newtons</td>
<td colspan="3">0.225</td>
<td colspan="2">pound-force</td>
<td>lbf</td>
</tr>
<tr class="even">
<td>psi</td>
<td><p>pound-force</p>
<p>per square inch</p></td>
<td>6.89</td>
<td>kilopascals</td>
<td>kPa</td>
<td colspan="2">kPa</td>
<td>kilopascals</td>
<td colspan="3">0.145</td>
<td colspan="2"><p>pound-force</p>
<p>per square inch</p></td>
<td>psi</td>
</tr>
</tbody>
</table>

\* SI is the symbol for the International System of Units. Appropriate
rounding should be made to comply with Section 4 of ASTM E380.

> **Table of Contents**

Page

[Executive Summary ES-1](#executive-summary)

[1.0 Introduction 1-1](#introduction)

[1.1 Background 1-1](#background)

[1.2 Project Methodology 1-3](#project-methodology)

[1.2.1 Literature Search and Data Gathering
1-3](#literature-search-and-data-gathering)

[1.2.2 Interviews with State Agencies
1-3](#interviews-with-state-agencies)

[1.2.3 Interviews with Stakeholders 1-4](#interviews-with-stakeholders)

[1.2.4 Safety and Economic Analyses 1-4](#safety-and-economic-analyses)

[2.0 Literature Search and Data Gathering
2-1](#literature-search-and-data-gathering-1)

[2.1 Safety of Private Motor Carriers
2-1](#safety-of-private-motor-carriers)

[2.2 Insurance Requirements and Costs
2-6](#insurance-requirements-and-costs)

[2.2.1 Reports and Documents 2-6](#reports-and-documents)

[2.2.2 State Private Motor Carrier Insurance Requirements
2-8](#state-private-motor-carrier-insurance-requirements)

[2.2.3 Cost of Insurance 2-9](#cost-of-insurance)

[2.3 Economic Analysis 2-16](#economic-analysis)

[3.0 Interviews with State Agencies
3-1](#interviews-with-state-agencies-1)

[3.1 Safety Issues 3-2](#safety-issues)

[3.1.1 Private versus For-hire Carriers
3-3](#private-versus-for-hire-carriers)

[3.2 Insurance Requirements and Insurability
3-3](#insurance-requirements-and-insurability)

[3.2.1 Insurance Requirements 3-3](#insurance-requirements)

[3.2.2 Insurability 3-5](#insurability)

[4.0 Interviews with Stakeholders 4-1](#interviews-with-stakeholders-1)

[4.1 Safety of Private Motor Carriers
4-1](#safety-of-private-motor-carriers-1)

[4.2 Pricing of Insurance for Private Motor Carriers
4-2](#pricing-of-insurance-for-private-motor-carriers)

[4.3 Insurability of Private Motor Carriers
4-3](#insurability-of-private-motor-carriers)

[4.4 Acquisition of Insurance 4-4](#acquisition-of-insurance)

[4.5 Affects of Increased Insurance Requirements on Operations
4-4](#affects-of-increased-insurance-requirements-on-operations)

[4.6 Industry Growth and Driver Turnover
4-5](#industry-growth-and-driver-turnover)

[4.7 Costs to Explore Obtaining Public Liability Insurance
4-5](#costs-to-explore-obtaining-public-liability-insurance)

**Table of Contents (continued)**

**Page**

[5.0 Analyses 5-1](#analyses)

[5.1 Baseline 5-1](#baseline)

[5.1.1 Potentially Affected Private Carriers
5-1](#potentially-affected-private-carriers)

[5.1.2 Affected Private Carriers Accounting for Existing Insurance
Coverage
5-3](#affected-private-carriers-accounting-for-existing-insurance-coverage)

[5.1.3 Number of Vehicles for Which Insurance is Required
5-4](#number-of-vehicles-for-which-insurance-is-required)

[5.2 Costs to Private Motor Carriers
5-5](#costs-to-private-motor-carriers)

[5.2.1 Costs to Explore Obtaining Public Liability Insurance
5-5](#costs-to-explore-obtaining-public-liability-insurance-1)

[5.2.2 Costs for Public Liability Insurance
5-5](#costs-for-public-liability-insurance)

[5.2.3 Costs to File Proof of Insurance
5-7](#costs-to-file-proof-of-insurance)

[5.2.4 Impacts on Small Businesses 5-8](#impacts-on-small-businesses)

[5.2.5 Summary of Costs 5-10](#summary-of-costs)

[5.3 Benefits 5-11](#benefits)

[5.3.1 Safety Benefits from Crash Reduction
5-11](#safety-benefits-from-crash-reduction)

[5.3.2 Summary of Benefits 5-15](#summary-of-benefits)

[5.4 Benefit-cost Ratios 5-15](#benefit-cost-ratios)

[6.0 Conclusions and Recommendations
6-1](#conclusions-and-recommendations)

[6.1 Conclusions 6-1](#conclusions)

[6.2 Recommendations 6-2](#recommendations)

**APPENDIX A. REFERENCES**

**APPENDIX B. ADDITIONAL ANNOTATED REFERENCES**

**APPENDIX C. STATE-SPECIFIC DETAIL**

**[List of Figures]{.underline} Page**

[Figure 5‑1. Insurance Cost Curves for 9-15 Passenger Vehicles, Buses,
and Heavy Trucks 5-6](#__RefHeading___Toc131257298)

**[List of Tables]{.underline}**

[Table ES‑1. Benefit-Cost Analysis Findings
4](#__RefHeading___Toc166050302)

[Table 1‑1. Insurance Requirements for For-hire Carriers of Property
1-2](#__RefHeading___Toc166050303)

[Table 1‑2. Insurance Requirements for For-hire Carriers of Passengers
1-2](#__RefHeading___Toc166050304)

[Table 2‑1. Number of Carriers in Each Category
2-1](#__RefHeading___Toc166050305)

[Table 2‑2. State Insurance Requirements for Private Motor Carriers
2-10](#__RefHeading___Toc166050306)

[Table 2‑3. State Insurance Requirements for all Vehicles
2-12](#__RefHeading___Toc166050307)

[Table 2‑4. Effective State Insurance Requirements for Private Motor
Carriers 2-14](#__RefHeading___Toc166050308)

[Table 2‑5. Insurance Cost Data from Private Motor Carriers
2-15](#__RefHeading___Toc166050309)

[Table 2‑6. Insurance Cost Data from Insurance Companies
2-16](#__RefHeading___Toc166050310)

[Table 3‑1. State Agencies Interviewed
3-1](#__RefHeading___Toc166050311)

[Table 3‑2. State Private Carrier Insurance Requirements
3-4](#__RefHeading___Toc166050312)

[Table 3‑3. State Private versus For-hire Carrier Financial
Responsibility Requirements 3-5](#__RefHeading___Toc166050313)

[Table 5‑1. MCMIS Fields Used to Identify Private Carriers
5-1](#__RefHeading___Toc166050314)

[Table 5‑2. MCMIS Fields Used to Assign Carriers to Categories
5-2](#__RefHeading___Toc166050315)

[Table 5‑3. Number of Carriers in Each Category
5-3](#__RefHeading___Toc166050316)

[Table 5‑4. Estimates of Carriers with Adequate Insurance Coverage by
Fleet Size 5-4](#__RefHeading___Toc166050317)

[Table 5‑5. Number of Carriers in Each Category Requiring Additional
Insurance 5-4](#__RefHeading___Toc166050318)

[Table 5‑6. Number of Vehicles in Each Category Requiring Additional
Insurance 5-5](#__RefHeading___Toc166050319)

[Table 5‑7. Insurance Costs per Vehicle per Year
5-6](#__RefHeading___Toc166050320)

[Table 5‑8. Filing Costs 5-8](#__RefHeading___Toc166050321)

[Table 5-9. Impacted NAICS Codes 5-9](#__RefHeading___Toc166050322)

[Table 5-10. Small Business Share of Establishments, Employees, Annual
Pay, and Estimated Receipts in Impacted NAICS Codes
5-9](#__RefHeading___Toc166050323)

[Table 5-11. Small Business Cost Analysis
5-10](#__RefHeading___Toc166050324)

[Table 5‑12. Summary of Costs 5-10](#__RefHeading___Toc166050325)

[Table 5‑13. Results of Cost Sensitivity Analysis
5-11](#__RefHeading___Toc166050326)

[Table 5‑14. Crash Costs by Vehicle Type and Crash Severity
5-12](#__RefHeading___Toc166050327)

[Table 5‑15. Crash Rates by Carrier Category
5-12](#__RefHeading___Toc166050328)

[Table 5‑16. Annual Reductions in Crashes, Fatalities, and Injuries
5-13](#__RefHeading___Toc166050329)

[Table 5‑17. MCMIS Underreporting Correction Factors
5-13](#__RefHeading___Toc166050330)

[Table 5‑18. Annual Reductions in Crashes, Fatalities, and Injuries
Corrected for Underreporting 5-14](#__RefHeading___Toc166050331)

[Table 5‑19. Annual Reductions in Crashes, Fatalities, and Injuries
Corrected for Carriers Already Meeting the Insurance Requirements
5-14](#__RefHeading___Toc166050332)

[Table 5‑20. Annual Reductions in Crashes, Fatalities, and Injuries
Corrected for Carriers Meeting the Insurance Requirements Assuming a 60
Percent Ratio of Effectiveness 5-14](#__RefHeading___Toc166050333)

[Table 5‑21. Summary of Benefits 5-15](#__RefHeading___Toc166050334)

[Table 5‑22. Benefit-cost Analysis Findings
5-16](#__RefHeading___Toc166050335)

[Table C-1. Carriers and Vehicles Requiring Additional Insurance by
State C-2](#__RefHeading___Toc166050336)

[Table C-2. NAICS Codes, SBA Size Threshold, and Annual Revenue for
Selected Trucking Industries C-4](#__RefHeading___Toc166050337)

[Table C-3. NAICS Codes, SBA Size Threshold, and Number of Employees for
Additional Selected Trucking Industries
C-6](#__RefHeading___Toc166050338)

[Table C-4. Number of Small and Large Business in Selected Trucking
Industries C-7](#__RefHeading___Toc166050339)

[Table C-5. NAICS Codes, SBA Size Threshold, and Annual Revenue for
Selected Passenger-carrying Industries
C-9](#__RefHeading___Toc166050340)

[Table C-6. Number of Small and Large Business in Selected
Passenger-carrying Industries C-10](#__RefHeading___Toc166050341)

List of Abbreviations and Acronyms

  ----------- -----------------------------------------------------------
  ABA         American Bus Association

  ANOVA       Analysis of Variance

  AIA         American Insurance Association

  ATA         American Trucking Associations

  ATRI        American Transportation Research Institute

  BCR         Benefit-Cost Ratio

  BI&PD       Bodily Injury and Property Damage

  BLS         Bureau of Labor Statistics

  BTS         Bureau of Transportation Statistics

  CFR         Code of Federal Regulations

  CHP         California Highway Patrol

  CMV         Commercial Motor Vehicle

  CR          Compliance Review

  CVSA        Commercial Vehicle Safety Alliance

  DII         Driver Inspection Indicator

  DRM         Driver Review Measure

  ECM         Engine Control Module

  ESM         Enforcement Severity Measure

  FACT        Fatal Accident Complaint Team

  FARS        Fatality Analysis Reporting System

  FHWA        Federal Highway Administration

  FMCSA       Federal Motor Carrier Safety Administration

  FMCSR       Federal Motor Carrier Safety Regulations

  GES         General Estimates System

  NHTSA       National Highway Traffic Safety Administration

  LTCCS       Large Truck Crash Causation Study

  LTL         Less Than Truckload

  MCMIS       Motor Carrier Management Information System

  MISTER      Management Information System of Terminal Evaluation
              Records

  NAS         North American Standard

  NASS        National Automotive Sampling System

  NAICS       North American Industry Classification System

  NATEF       National Automotive Technicians Education Foundation

  NIOSH       National Institute for Occupational Safety and Health

  NITL        National Industrial Transportation League

  NTS         National Transportation Statistics

  NPTC        National Private Truck Council

  NTSB        National Transportation Safety Board

  OES         Occupational Employment Statistics

  OMB         Office of Management and Budget

  OOS         Out of Service

  RCCC        Regular Common Carriers Conference
  ----------- -----------------------------------------------------------

**List of Abbreviations and Acronyms (continued)**

  ------------- ---------------------------------------------------------
  ROE           Ratio of Effectiveness

  SAFER         Safety and Fitness Electronic Records

  SAFETEA-LU    Safe, Accountable, Flexible, Efficient Transportation
                Equity Act: A Legacy for Users

  SBA           Small Business Administration

  SEA           Safety Evaluation Area

  TIFA          Trucks Involved in Fatal Accidents

  UMTRI         University of Michigan Transportation Research Institute

  USDOT         U.S. Department of Transportation

  VIUS          Vehicle Inventory and Use Survey

  VMT           Vehicle Miles Traveled
  ------------- ---------------------------------------------------------

# Executive Summary {#executive-summary .unnumbered}

Part 387 of the Federal Motor Carrier Safety Regulations (FMCSRs)
requires specified motor carriers of property and passengers to meet
certain financial responsibility requirements. These requirements apply,
with some exceptions, to:

-   For-hire motor carriers operating commercial motor vehicles
    transporting property in interstate or foreign commerce (49 CFR
    387.3(a))

-   Any motor carrier operating commercial motor vehicles transporting
    hazardous materials, hazardous substances, or hazardous wastes in
    interstate, foreign, or intrastate commerce (49 CFR 387.3(b))

-   For-hire carriers of passengers operating in interstate or foreign
    commerce (49 CFR 387.27)

Financial responsibility means having financial reserves, such as
insurance policies or surety bonds, sufficient to satisfy the minimum
public liability requirements. *Public liability* is liability for
bodily injury, property damage, and environmental restoration.
*Environmental restoration* means restitution for the loss, damage, or
destruction of natural resources arising out of an accidental discharge
of toxic or other environmentally harmful materials or liquids.

There are currently no Federal financial responsibility requirements for
private motor carriers of non-hazardous commodities operating in
interstate commerce, or for private motor carriers of passengers
operating in interstate commerce. Current regulations exempts these
private motor carriers of property and private motor carriers of
passengers from the requirement to have financial responsibility
covering public liability, property damage, and environmental
restoration resulting from crashes involving their vehicles.

Although these carriers may be subject to state insurance requirements,
it is important to consider the ramifications of establishing uniform
national requirements. Section 4120 of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
would require private passenger and property carriers to have financial
responsibility in the same amounts as are currently required by sections
31138 and 31139 of the United States Code. This section would also
authorize the Secretary of Transportation to require private carriers of
non-hazardous property and private motor carriers of passengers to file
evidence of financial responsibility with the Department, as for-hire
carriers already do.

This project was designed to assist the U.S. Department of
Transportation's (USDOT) Federal Motor Carrier Safety Administration
(FMCSA) to assess the potential benefits and costs of implementing
provisions of SAFETEA-LU regarding private motor carrier public
liability insurance.

Battelle assembled and led a project team that included the American
Transportation Research Institute (ATRI), the Commercial Vehicle Safety
Alliance (CVSA), and Daecher Consulting. The work performed for the
study involved conducting a literature review, collecting data, and
developing a plan to interview and collect data and information from
state agencies and stakeholders. All information obtained was examined
and fed into safety and economic models to determine the benefits and
costs that could be expected from implementation of the new private
motor carrier financial responsibility requirements.

Costs for expanding the minimum financial responsibility requirements to
private motor carriers would include staff time to become familiar with
a new regulation and to assess their operation to determine their need
for additional insurance, and obtain it. This process would include
obtaining insurance quotes and determining the most appropriate
insurance option. These total industry costs are estimated at \$306,890
to \$460,334 for private carriers operating 9-15 passenger vehicles,
\$567,992 to \$851,988 for private carriers operating buses designed or
used to transport 16 or more passengers, and \$54,981,077 to
\$82,471,615 for motor carriers of non-hazardous property. These are
considered one-time costs, necessary for performing assessments
necessary to obtain insurance commensurate with the FMCSA standards
presently applied to for-hire carriers. These costs are assumed to be
incurred in the first year of the 10-year analysis timeframe.

The vast majority of the costs considered in this study, however, are
those that would be tied to the expanded insurance requirements. The
total insurance costs borne by private carriers is estimated at \$22.3
to \$33.4 million for 9-15 passenger vehicle operators, \$56.4 to \$84.6
million for 16 or more passenger vehicle operators, and \$3.4 to \$5.1
billion for motor carriers of non-hazardous property over the 10-year
analysis time frame.

Under the insurance requirements outlined in SAFETEA-LU and evaluated in
this study, private carriers would be required to file forms that
provide evidence of required bodily injury and property damage (BI&PD)
insurance coverage (Forms BMC-91, 91x, or 82), and endorsements that
must be attached to BI&PD policies (Forms BMC-90 and 32). Thus, private
carriers would, at a minimum, be required to file two forms with FMCSA
if they were subject to the agency's insurance requirements. The total
insurance filing costs borne by private carriers is estimated at
\$11,835 to \$17,753 for 9-15 passenger vehicle operators, \$27,258 to
\$40,888 for 16 or more passenger vehicle operators, and \$2,595,748 to
\$3,893,622 for motor carriers of non-hazardous property over the
10-year analysis time frame.

The primary benefit associated with the expanded insurance requirements
examined in this study stem from avoiding the high costs of crashes
involving unsafe private carriers that would find it difficult or
impossible to obtain public liability coverage at the new, higher
levels. Expanding Federal public liability insurance requirements to
private carriers would not be expected to completely eliminate the
discrepancy between private and for-hire accident rates. Thus, this
analysis considers a ratio of effectiveness (ROE), where the proposed
regulation change would reduce but not eliminate the gap in accident
rates between private and for-hire carriers. ROEs of 60, 80, and 100
percent were used in the low-, mid-, and high-end estimates. The cost
savings associated with avoided crashes for 9-15 passenger vehicles are
estimated at \$3.2 to \$5.3 million over the 10-year analysis time
horizon. The avoided crash costs for 16 or more passenger vehicles are
estimated at \$9.5 to \$15.8 million. The crash costs avoided due to a
reduction in the number of crashes involving motor carriers of
non-hazardous property is estimated at \$2.3 to \$3.8 billion.

The benefits and costs over the ten-year analysis period associated with
the expanded insurance requirements are highlighted in ES-1 and are
shown in present value terms, discounted at 7 percent. The BCA considers
27 scenarios, with varying combinations of benefits and costs ranging
from low-end to high-end estimates, with mid-point estimates also
included. As noted previously, the benefits estimates vary based on the
ROE, ranging from 60 percent (low-end) to 100 percent (high-end) with a
mid-point estimate of 80 percent. The cost estimate includes a mid-point
estimate and low- and high-end estimates that represent ± 20 percent of
the mid-point. The scenarios also differ based on the vehicle fleet
considered: 9-15 passenger vehicles, 16+ passenger vehicles, and trucks
carrying non-hazardous property.

Table ES-1 shows that estimated costs exceed estimated benefits in 26 of
the 27 scenarios considered in this study. Net costs (costs minus
benefits) are estimated at \$16.9 to \$30.2 million for 9-15 passenger
vehicles, \$40.6 to 75.1 million for 16+ passenger vehicles, and
-\$428.4[^1] to \$2.8 billion for trucks carrying non-hazardous
property. In all cases except Scenario 21 (highlighted in Table ES-1)
where low-end costs and high-end benefits are considered for
non-hazardous property-carrying trucks, costs exceed benefits and the
benefit-cost ratios (BCRs) fall below 1.0. The lowest BCRs are
attributed to the 9-15 passenger vehicles, while trucks achieve the
highest BCRs.

[]{#__RefHeading___Toc166050302 .anchor}Table ES‑1. Benefit-Cost
Analysis Findings

  ---------- ---------- ------- ------------- ----------------- ----------------- -------
  Scenario   Benefits   Costs   Vehicle Type  Benefits          Costs             BCR

  1          Low        Low     9-15          \$3,195,125       \$22,274,703      0.14
                                Passenger                                         

  2          Low        Low     16+ Passenger \$9,497,027       \$56,415,901      0.17

  3          Low        Low     Trucks        \$2,284,724,636   \$3,379,486,082   0.68

  4          Low        Mid     9-15          \$3,195,125       \$27,843,379      0.11
                                Passenger                                         

  5          Low        Mid     16+ Passenger \$9,497,027       \$70,519,876      0.13

  6          Low        Mid     Trucks        \$2,284,724,636   \$4,224,357,602   0.54

  7          Low        High    9-15          \$3,195,125       \$33,412,055      0.10
                                Passenger                                         

  8          Low        High    16+ Passenger \$9,497,027       \$84,623,851      0.11

  9          Low        High    Trucks        \$2,284,724,636   \$5,069,229,123   0.45

  10         Mid        Low     9-15          \$4,260,167       \$22,274,703      0.19
                                Passenger                                         

  11         Mid        Low     16+ Passenger \$12,662,703      \$56,415,901      0.22

  12         Mid        Low     Trucks        \$3,046,299,515   \$3,379,486,082   0.90

  13         Mid        Mid     9-15          \$4,260,167       \$27,843,379      0.15
                                Passenger                                         

  14         Mid        Mid     16+ Passenger \$12,662,703      \$70,519,876      0.18

  15         Mid        Mid     Trucks        \$3,046,299,515   \$4,224,357,602   0.72

  16         Mid        High    9-15          \$4,260,167       \$33,412,055      0.13
                                Passenger                                         

  17         Mid        High    16+ Passenger \$12,662,703      \$84,623,851      0.15

  18         Mid        High    Trucks        \$3,046,299,515   \$5,069,229,123   0.60

  19         High       Low     9-15          \$5,325,208       \$22,274,703      0.24
                                Passenger                                         

  20         High       Low     16+ Passenger \$15,828,379      \$56,415,901      0.28

  21         High       Low     Trucks        \$3,807,874,394   \$3,379,486,082   1.13

  22         High       Mid     9-15          \$5,325,208       \$27,843,379      0.19
                                Passenger                                         

  23         High       Mid     16+ Passenger \$15,828,379      \$70,519,876      0.22

  24         High       Mid     Trucks        \$3,807,874,394   \$4,224,357,602   0.90

  25         High       High    9-15          \$5,325,208       \$33,412,055      0.16
                                Passenger                                         

  26         High       High    16+ Passenger \$15,828,379      \$84,623,851      0.19

  27         High       High    Trucks        \$3,807,874,394   \$5,069,229,123   0.75
  ---------- ---------- ------- ------------- ----------------- ----------------- -------

While some individuals interviewed for this research believe that
private motor carriers are generally safer than for-hire motor carriers,
no studies were identified that indicated that private carriers, as a
whole, were safer than for-hire carriers. The FMCSA data analyzed for
this project indicate the opposite is true: for-hire carriers in all
three carrier categories examined have lower overall crash rates per
vehicle miles traveled than private carriers. However, data examined on
fatal truck and bus crashes showed that private carriers had lower
fatality crash involvements than for-hire carriers.

Based on the results of the analyses conducted for this project, it
appears that extending the current minimum financial responsibility
requirements for for-hire motor carriers to private motor carriers
is not cost-beneficial under the assumptions used in this analysis. The
BCRs for the two passenger carrier categories are both significantly
less than one. The BCR for non-hazardous property motor carriers is
closer to one, but still indicates that the costs outweigh the benefits
for this much larger group of private carriers. However, the financial
responsibility requirements examined within this study may be
justifiable given equity considerations.

# Introduction

## Background

Part 387 of the Federal Motor Carrier Safety Regulations (FMCSRs)
requires specified motor carriers of property and passengers to meet
certain financial responsibility requirements. These requirements apply,
with some exceptions, to:

-   For-hire motor carriers operating commercial motor vehicles (CMVs)
    transporting property in interstate or foreign commerce (49 CFR
    387.3(a))

-   Any motor carrier operating commercial motor vehicles transporting
    hazardous materials, hazardous substances, or hazardous wastes in
    interstate, foreign, or intrastate commerce (49 CFR 387.3(b))

-   For-hire carriers of passengers operating in interstate or foreign
    commerce (49 CFR 387.27)

Financial responsibility means having financial reserves, such as
insurance policies or surety bonds, sufficient to satisfy the minimum
public liability requirements. *Public liability* is liability for
bodily injury, property damage, and environmental restoration.
*Environmental restoration* means restitution for the loss, damage, or
destruction of natural resources arising out of an accidental discharge
of toxic or other environmentally harmful materials or liquids.

These motor carriers must have at least the minimum amount of insurance
required by law (United States Code, Title 49, Sections 31138 and
31139). For motor carriers of property, the schedule of limits is shown
in Table 1-2.

[]{#__RefHeading___Toc166050303 .anchor}Table 1‑2. Insurance
Requirements for For-hire Carriers of Property

+-----------------------+--------------------------------+-------------+
| **Type of Carriage**  | **Commodity Transported**      | **Effective |
|                       |                                | Date:**     |
|                       |                                |             |
|                       |                                | *           |
|                       |                                | *1/1/1985** |
+-----------------------+--------------------------------+-------------+
| \(1\) For-hire (in    | Property (non-hazardous).      | \$750,000   |
| interstate or foreign |                                |             |
| commerce, with a      |                                |             |
| gross vehicle weight  |                                |             |
| rating of 10,001 or   |                                |             |
| more pounds).         |                                |             |
+-----------------------+--------------------------------+-------------+
| \(2\) For-hire and    | Hazardous substances, as       | \$5,000,000 |
| Private (in           | defined in 49 CFR 171.8,       |             |
| interstate, foreign,  | transported in cargo tanks,    |             |
| or intrastate         | portable tanks, or hopper-type |             |
| commerce, with a      | vehicles with capacities in    |             |
| gross vehicle weight  | excess of 3,500 water gallons; |             |
| rating of 10,001 or   | or in bulk Division 1.1, 1.2,  |             |
| more pounds).         | and 1.3 materials, Division    |             |
|                       | 2.3, Hazard Zone A, or         |             |
|                       | Division 6.1, Packing Group I, |             |
|                       | Hazard Zone A material; in     |             |
|                       | bulk Division 2.1 or 2.2; or   |             |
|                       | highway route controlled       |             |
|                       | quantities of a Class 7        |             |
|                       | material, as defined in 49 CFR |             |
|                       | 173.403.                       |             |
+-----------------------+--------------------------------+-------------+
| \(3\) For-hire and    | Oil listed in 49 CFR 172.101;  | \$1,000,000 |
| Private (in           | hazardous waste, hazardous     |             |
| interstate or foreign | materials and hazardous        |             |
| commerce, in any      | substances defined in 49 CFR   |             |
| quantity; or in       | 171.8 and listed in 49 CFR     |             |
| intrastate commerce,  | 172.101, but not mentioned in  |             |
| in bulk only; with a  | (2) above or (4) below.        |             |
| gross vehicle weight  |                                |             |
| rating of 10,001 or   |                                |             |
| more pounds).         |                                |             |
+-----------------------+--------------------------------+-------------+
| \(4\) For-hire and    | Any quantity of Division 1.1,  | \$5,000,000 |
| Private (in           | 1.2, or 1.3 material; any      |             |
| interstate or foreign | quantity of a Division 2.3,    |             |
| commerce, with a      | Hazard Zone A, or Division     |             |
| gross vehicle weight  | 6.1, Packing Group I, Hazard   |             |
| rating of less than   | Zone A material; or highway    |             |
| 10,001 pounds).       | route controlled quantities of |             |
|                       | a Class 7 material as defined  |             |
|                       | in 49 CFR 173.403              |             |
+-----------------------+--------------------------------+-------------+

For for-hire motor carriers of passengers, the requirements are shown in
Table 1-3.

[]{#__RefHeading___Toc166050304 .anchor}Table 1‑3. Insurance
Requirements for For-hire Carriers of Passengers

+---------------------------------------------+------------------------+
| **Vehicle Seating Capacity**                | **Effective Date:**    |
|                                             |                        |
|                                             | **11/19/1985**         |
+---------------------------------------------+------------------------+
| \(1\) Any vehicle with a seating capacity   | \$5,000,000            |
| of 16 passengers or more                    |                        |
+---------------------------------------------+------------------------+
| \(2\) Any vehicle with a seating capacity   | \$1,500,000            |
| of 15 passengers or less (see exceptions    |                        |
| listed below)                               |                        |
+---------------------------------------------+------------------------+

Exceptions to these requirements for vehicles with a seating capacity of
15 passengers or less, as provided in 49 CFR 387.27(b), are:

1.  A motor vehicle transporting only school children and teachers to or
    from school

2.  A motor vehicle providing taxicab service and having a seating
    capacity of less than 7 passengers and not operated on a regular
    route or between specified points

3.  A motor vehicle carrying less than 16 individuals in a single daily
    round trip to commute to and from work and

4.  A motor vehicle operated by a motor carrier under contract providing
    transportation of preprimary, primary, and secondary students for
    extracurricular trips organized, sponsored, and paid by a school
    district.

There are currently no Federal financial responsibility requirements for
private motor carriers of non-hazardous commodities operating in
interstate commerce, or for private motor carriers of passengers
operating in interstate commerce. Current regulations exempt these
private motor carriers of property and private motor carriers of
passengers from the requirement to have financial responsibility
covering public liability, property damage, and environmental
restoration resulting from crashes involving their vehicles.

Although these carriers may be subject to state insurance requirements,
it is important to consider the ramifications of establishing uniform
national requirements. Section 4120 of the Safe, Accountable, Flexible,
Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU)
would require private passenger and property carriers to have financial
responsibility in the same amounts as are currently required by sections
31138 and 31139 of the United States Code. This section would also
authorize the Secretary of Transportation to require private carriers of
property (that is, non-hazardous cargoes) and private motor carriers of
passengers to file evidence of financial responsibility with the
Department, as for-hire carriers already do.

## Project Methodology

Battelle assembled and led a project team that included the American
Transportation Research Institute (ATRI), the Commercial Vehicle Safety
Alliance (CVSA), and Daecher Consulting. The work performed for the
study involved conducting a literature review, collecting data, and
developing a plan to interview and collect data and information from
state agencies and stakeholders. All information obtained was examined
and fed into safety and economic models to determine the benefits and
costs that could be expected from implementation of the new private
motor carrier financial responsibility requirements.

### Literature Search and Data Gathering

The literature search for this project focused on gathering literature,
data, and sources related to (a) the safety of transportation, and (b)
insurance requirements and costs of insurance for private motor carriers
operating CMVs designed to seat 9-15 passengers (including the driver),
CMVs designed to seat 16 or more passengers (including the driver), and
CMVs transporting non-hazardous property.

### Interviews with State Agencies

In an attempt to corroborate and/or gather information not available in
the literature that quantified the safety of private motor carriers and
state insurance requirements, survey/interview questions were developed
and administered to state officials. It was expected that individuals in
state agencies (both safety- and insurance-related agencies) would have
data or insight on the safety of transportation involving private motor
carriers that they could share with the project team. A list of
questions was e-mailed in advance to a previously developed list of
state officials and subsequent surveys were administered by phone or by
return of the e-mail questionnaire. Follow-up calls were required in
some cases to clarify any ambiguities.

### Interviews with Stakeholders

A similar activity sought to obtain additional information on private
motor carrier safety and insurance issues that was not available from
the literature search. This material included carrier safety;
insurability; insurance pricing, coverage, and acquisition; and certain
crash cost information. The targeted groups for these interviews
included representative industry associations; however, it became
apparent that the detailed information sought was more readily available
from insurance companies and private motor carriers and it was these
groups that were the focus of the interviews. As with the state agency
interviews, these interviews were conducted with the help of questions
e-mailed to the respondents in order to facilitate responses.

### Safety and Economic Analyses

The data and information obtained in earlier stages of the project were
used to develop the safety and economic models needed to determine the
potential benefit-cost ratio for implementing new financial
responsibility requirements for private motor carriers. The primary
benefits are the safety impacts of crash prevention and the primary
costs are those to purchase and file proof of the required public
liability coverage.

# Literature Search and Data Gathering

The literature search for this project focused on gathering literature,
data, and sources related to (a) the safety of transportation, and (b)
insurance requirements and costs of insurance for private motor carriers
operating CMVs designed to seat 9-15 passengers (including the driver),
CMVs designed to seat 16 or more passengers (including the driver), and
CMVs transporting non-hazardous property. The information provided in
this section has been organized into three sections, based on the
primary focus of each information source:

-   Safety of private motor carriers

-   Insurance requirements and costs

-   Economic analysis techniques

Most of the literature did not specifically address private carriers or
differentiate between them and for-hire carriers; however, some of the
overall information presented can be related to general differences
between these two types of carriers.

## Safety of Private Motor Carriers

#### Databases {#databases .unnumbered}

During the literature review, several databases were examined in detail
to determine if they could support a comparison of the safety of private
motor carriers to the safety of for-hire motor carriers. These databases
included the Trucks Involved in Fatal Accidents (TIFA) and Buses
Involved in Fatal Accidents (BIFA) databases maintained by the
University of Michigan Transportation Research Institute (UMTRI). Data
from FMCSA's Motor Carrier Management Information System (MCMIS) was
received during the analysis phase of the project and is discussed in
Section 5.0. The distribution of active domestic interstate carriers in
the MCMIS database among the different types of operations is summarized
in Table 2-4.

[]{#__RefHeading___Toc166050305 .anchor}Table 2‑4. Number of Carriers in
Each Category

  ----------------------------------- -------------- -------------- ------------
                                      **Carriers**                  

  **Category**                        **Private**    **For-hire**   **Both\***

  9-15 passenger vehicles only        536            493            239

  16+ passenger vehicles only         1,606          652            286

  non-hazardous property vehicles     239,912        141,147        21,918
  only                                                              

  more than one type of vehicle       1,265          384            213

  not assigned                        17,860         7,867          968

  **Total**                           **261,179**    **150,543**    **23,624**

  *Percentage*                        60.0%          34.6%          5.4%
  ----------------------------------- -------------- -------------- ------------

> \*These are private carriers that also have for-hire authority and,
> therefore, already have the required minimum levels of financial
> responsibility and would not need to obtain additional insurance.

TIFA data for 2002 analyzed by UMTRI show that 33.7 percent of trucks
involved in fatal accidents were operated by private carriers, 54.8
percent by for-hire carriers, 1.3 percent were government owned, 0.8
percent were daily rentals, and 9.4 percent were for carrier type that
could not be determined (Blower, 2005). These figures include fatal
crashes involving vehicles operated by hazardous materials carriers, but
those percentages were very low. Only 4.6 percent of the trucks operated
by private carriers in the TIFA data carried hazardous materials; the
figure for the for-hire carriers was 3.1 percent. As private carriers
operate more vehicles than for-hire carriers according to current MCMIS
data (1.4 million trucks for private carriers and 0.58 million trucks
for for-hire carriers), the TIFA data indicate that private carriers
have significantly lower fatality crash involvements per vehicle than
for-hire carriers.

BIFA data analyzed by UMTRI show that of buses involved in fatal
accidents between 1999 and 2002, 6.1 percent were operated by private
carriers while 30.7 percent were operated by for-hire carriers (Blower,
2005). MCMIS data include approximately 16,000 buses for private
carriers and approximately 57,000 buses for for-hire carriers,
indicating a lower fatality crash involvement per vehicle for private
carriers (20 percent of the fatal crashes and 28 percent of the
vehicles).

#### Literature -- Property Carriers {#literature-property-carriers .unnumbered}

Petty (2005) cites a National Private Truck Council (NPTC) survey of 63
private fleets in early 2005 that indicated that the recordable accident
rate per million vehicle miles for these companies was 0.424 for 2003
and 2004. This was compared to the rate for all large trucks of 0.763, a
45 percent difference. However, the industry-wide rate was determined
from FMCSA data for 2001, so the rates are not directly comparable.

According to a recent article (Bradley, 2005), the current trucking
environment is making in-house, private fleets more attractive to some
businesses, including businesses with regular routes, backhaul
opportunities, and time-sensitive customers. Driver pay is reported to
be higher and working conditions are reported to be better at private
fleets. The article also cites a survey conducted by the NPTC of 200
companies that indicated annual driver turnover rates in private fleets
of 11 to 16 percent, as compared to rates in excess of 100 percent for
for-hire fleets. Additional details were provided in a separate article
that compared these figures to those for the trucking industry overall,
which was 125 to 135 percent. A more recent survey of NPTC membership
(McFain, 2005) reports an annual driver turnover rate of private
carriers of 16.9 percent, based on 199 responses. Data provided at a
recent industry association meeting placed private carrier driver
turnover at 6 percent; the rate was reported to be 115 percent for
for-hire truckload drivers and 15 percent for for-hire
less-than-truckload drivers (Fisher, 2005). Finally, another article
quotes Peter Vroom, President of the Truck Renting and Leasing
Association, who reported that some private fleets have annual driver
turnover rates of 3 to 5 percent, as compared to a for-hire industry
driver turnover rate of 121 percent in the third quarter of 2004
(PACCAR, 2005).

Other data indicate that private fleets are losing ground to for-hire
fleets. Data reported in *American Trucking Trends* shows that private
carriers account for 48.1 percent of all registered fleets in 2005, but
this figure was 50.6 percent in 2004 and 68 percent in 1992 (although
the definition for 1992 was "not for hire" rather than "private") (ATA,
2005). The more recent NPTC survey (McFain, 2005) found that the primary
reason to operate a private fleet cited by 58.3 percent of respondents
is to provide better customer service to key customers. Cost advantages
were cited as the primary reason by 15.1 percent of the respondents.

A National Institute for Occupational Safety and Health (NIOSH) report
(2003) cited a 2002 study on fatigue-related crashes based on TIFA data
that examined private versus for-hire carriers, single-unit trucks
versus tractor-semitrailers, and length of trip (local, 50 to 200 miles,
and more than 200 miles). This study identified private carriers as
having the second highest fatigue-related fatal crash rate per vehicle
mile traveled (2.47), following for-hire, single-unit truck drivers
(3.41), although the sample sizes for these groups were small. They
reported that for-hire carrier drivers had a "substantially higher risk"
of fatal, fatigue-related crashes than private carrier drivers. The
group with the highest relative risk was for-hire tractor-semitrailer
drivers on one-way trips of over 200 miles.

#### Literature -- Passenger Carriers {#literature-passenger-carriers .unnumbered}

One study focused on the safety of passenger motor carriers (Corsi,
2002b) based on an examination of Motor Carrier Safety Status (SafeStat)
Measurement in four Safety Evaluation Areas (SEAs): driver, vehicle,
accident, and safety management.[^2] It utilized data compiled in
September 2000 from SafeStat and all available data on passenger
carriers in the MCMIS Census File. Data were based on the results of
carrier's roadside inspections, compliance reviews, enforcement cases,
and crashes. The report was divided into two parts. One part compared
the safety performance of carriers transporting passengers with that of
carriers in other key industry segments (building materials, bulk
freight, general freight, moving/household goods, intermodal freight,
large machinery, tank truck operations, and passenger transport) and was
broken down by for-hire and private carriers. The other part represented
the same summary statistics for subsections of passenger carriers based
on carrier size. The data included 2,826 for-hire and 114 private motor
carriers of passengers. The for-hire passenger carriers had no
unsatisfactory ratings on their most recent compliance review and 5
percent of private passenger carriers had unsatisfactory ratings.
Passenger motor carriers received the highest levels of compliance based
on overall safety performance; they had a recordable accident rate
(number of crashes per million miles traveled) of less than 1 and had
enforcement severity scores of 1.39 and 2.5 for private and for-hire
carriers, respectively. While for-hire carriers generally outperformed
the private carriers from a safety perspective, both types of passenger
carriers achieved very high levels of compliance.

The second part of the SafeStat analysis of passenger motor carriers
examined how safety performance differs between passenger carriers based
on size. Subgroups were established based on different numbers of power
units: only 1, 2 to 3, 4 to 8, 9 to 25, and 26 or more. Based on the
data, conditional evaluations decreased as the size of the carrier
increased. The study concluded that size seems to matter with respect to
an overall evaluation of carrier safety using compliance reviews.
Carriers with the largest number of power units (26+) had the lowest
average recordable crash rate, but overall, the smaller the fleet size,
the lower the recordable crash rate. The largest fleet size group had
the lowest driver review measure. Also, as carrier size increased,
out-of-service (OOS) rates decreased. In general, for-hire carriers with
the largest-sized fleets outperformed the smaller fleets. Due to
insufficient data on private passenger motor carriers, they were unable
to examine the influence of carrier size on performance. Overall,
passenger carriers are the safest industry segment, the authors
reported.

#### Literature -- Both Property and Passenger Carriers {#literature-both-property-and-passenger-carriers .unnumbered}

Corsi (2000) examined the safety performance of motor carriers,
primarily among numerous industry segments, including both passenger
carriers and property carriers in a number of different commodity-based
segments.[^3] The study distinguished between private and for-hire
carriers and concluded that private carriers have significantly better
performance than do for-hire carriers on the driver SEA. Eight segments
had no driver violations in 80 percent of the reviewed carriers and
seven of them were private segments. The two lower-performing segments
in the driver safety area were both for-hire segments. The for-hire
carriers performed better on the compliance review, vehicle safety
review, safety management review, and recordable crash rate measures. In
eight segments, more than 30 percent of private carriers rated during a
compliance review received a conditional rating; whereas, for for-hire
carriers it was true in only one segment. Only two segments had higher
scores for the vehicle safety review measure, and both of these involved
private carriers. Four out of five segments with 60 percent or more of
the firms with no safety management violations involved for-hire
carriers. While the study reported a wide variation in recordable crash
rates among the segments, they identified a concentration of high rates
among private firms (there were five segments with average private
carrier recordable crash rates of 1.5 per million vehicle miles traveled
or more).

The Corsi (2000) study examined passenger motor carriers and determined
that a higher percentage of for-hire carriers received a satisfactory
rating upon their most recent compliance review (82.2 versus 70.0
percent). The unsatisfactory ratings went to 10 percent of the private
carriers and only 1.6 percent of the for-hire carriers. The recordable
crash rate for private carriers was 0.13 per million vehicle miles
traveled (VMT); whereas, it was 0.91 for for-hire carriers.[^4] Private
carriers had a higher percentage of acute or critical driver violations
as well, 33.3 versus 6.0 percent. The data show that for-hire fleets
have lower vehicle SEAs (28.6 versus 64.0), lower driver SEAs (23.0
versus 55.7), and lower driver safety review measures (1.8 versus 14.7)
than private fleets.

A more recent examination of SafeStat and MCMIS data by Corsi (2004)
used data compiled in September 2000, September 2001, September 2002,
and September 2003. More than 400,000 individual motor carriers, both
private and for-hire, were included in each of the four compilations.
The same 20 industry segments used in Corsi's earlier study (2000) were
used here, with the for-hire, general freight segment broken into
truckload and less-than-truckload components, for a total of 21
segments. As with the earlier study, private carriers had better driver
SEA scores and for-hire carriers had better records on compliance review
and safety management review measures. There was little difference
observed between the groups on driver out-of-service rates,
hours-of-service violation rates, vehicle out-of-service rates, and
vehicle SEA values. Unlike in the 2000 report, the 2004 study determined
crash rates and fatal crash rates on a per-power-unit basis rather than
on a per-vehicle-mile-traveled basis. The private carriers had
significantly lower crash- and fatal crash-to-power unit rates (0.0436
versus 0.823 for all crashes and 0.0020 versus 0.0044 for fatal
crashes). However, the authors did not report the average annual mileage
per power unit for private and for-hire carriers. Analysis of MCMIS data
used for the present study show that the average mileage per power unit
is more than five times greater for those in for-hire fleets than for
those in private fleets.

#### Literature -- General Safety Performance {#literature-general-safety-performance .unnumbered}

The literature cited in this section does not distinguish between
private and for-hire fleets, but provides some insight into key issues
that may differ between the two types of fleets, such as carrier
financial performance and driver characteristics and their influence on
safety. For example, Gary Petty, of the National Private Truck Council
(NPTC) believes that "the pay is usually better in private fleets and
working conditions are better" (Bradley 2005).

A study examined the connection between motor carriers' safety
performance and financial performance from several key for-hire industry
segments (Corsi, 2002a). Private carriers were not included in the
analysis. Financial data were collected from the reports filed with the
Bureau of Transportation Statistics (BTS) for 1999 by large, for-hire
motor carriers with adjusted annual operating revenues of \$3 million or
more. Safety performance data were collected from MCMIS data for 2000.

Compliance review results were compared to the financial variables to
determine if fleets with satisfactory ratings had better financial
performance. Safety variables were examined to determine if they were
correlated with financial performance measures. The research showed that
firms with higher gross revenues were likely to have lower driver
inspection indicator (DII) scores and lower driver SEA scores,
indicating better driver safety performance. Carriers with higher
average hauls were likely to have higher DII scores and higher driver
SEA scores, indicating poorer driver safety performance. Driver wages
tended to be negatively linked with DII scores and driver SEA scores.

In addition to Corsi (2002a), a number of papers illustrate that the
firms having the most crashes also seem to be the ones in the most
financial peril (Beard, 1992 and Rodriguez, 2004). More successful
trucking companies have the financial ability to ensure that equipment
is up to date and up to standards. Rodriguez also tied safety to driver
hiring and training. The most successful trucking companies, in terms of
safety, have a more stringent screening process in hiring, emphasizing
pre-service and in-service training for drivers, and using a variety of
different rewards to encourage safe driving performance (Mejza, 2003).

Since insurers are dedicated to recognizing and reducing risk for their
clients, they have helpful insights on how to improve fleet safety for
higher bottom-line revenues. Since 1996, Liberty Mutual has conducted
benchmark evaluations and studied best practices to identify the safest
fleets. Their work looks at the effects of training, monitoring, and
feedback; incentives; driver selection management policies and
practices; and private vs. for-hire operations (Leavitt, 2005).

Leavitt indicates that good training is essential. However, those
carriers that focused their safety program entirely on training did not
see positive results, because many accidents are caused by drivers'
habits and practices rather than lack of knowledge. The best fleets set
clear performance expectations and continuously monitor driver
performance. They encouraged fleets to download engine control module
(ECM) data at every service. Companies that did this had 34 percent
better crash frequency rates and 50 percent lower crash costs. Driver
monitoring is as important as training. According to Leavitt, driver
selection, training, and management commitment to safety, monitoring
driver performance and following-up have the greatest impact on safety.

A study by the ATRI statistically proved, based on an analysis of
540,000 driver records, that there is a strong relationship between
prior driving history and future crash likelihood. For example, for
drivers that have been convicted of (a) improper or erratic lane change,
(b) failure to yield right of way, (c) improper turn, or (d) failure to
maintain proper lane, the likelihood of a future crash increases between
91 and 100 percent. A reckless driving *violation* increases the risk of
a future crash by 325 percent (ATRI, 2005).

However, offering drivers incentives does not reduce accidents or
encourage safe driving. According to insurers, it is better to do
without than to hire a high-risk driver. Fleets whose road tests were 2
hours or longer as part of their driver selection process had a 45
percent lower crash frequency and 23 percent lower crash costs. Carriers
that used planned routes had 38 percent lower crash costs. Furthermore,
insurance companies view private fleets as a better risk than for-hire
carriers, because insurers do not see private fleets as trucking
companies. Private fleets also tend to carry only their own goods, have
more regular routes and far fewer long, over-the-road trips, and a more
stable driver work force (Leavitt, 2005).

Finally, the NIOSH report (2003) cited numerous strategies that all
carriers (and other employers) can implement for preventing crashes.
Some of the strategies discussed include comprehensive vehicle
maintenance programs, delivery schedules and operations that allow for
preventative maintenance, delivery schedules and operations that allow
for drivers to maintain safe speeds and follow the hours-of-service
regulations, communicating the importance of safety, mandated defensive
driving instruction, and compensation for time spent conducting safety
inspections.

## Insurance Requirements and Costs

### Reports and Documents

This subsection describes the information obtained on the costs and
issues involved in insuring commercial motor carriers. None of this
information distinguished between for-hire and private motor carriers.
In the 1980s, insurance companies were realizing high stock returns and
were able to keep premiums low. However, high loss ratios are no longer
tolerable. Larger carriers can be rated independently because their size
allows a more accurate determination of their loss profile, while
smaller trucking companies bear a heavier burden because they do not
have the power to negotiate as well for lower premiums. Smaller carrier
rates are often based on their specific loss profile, if they have had
high losses. (Shepard, 2001). This implies that small carriers without
significant losses must pay going market rates.

In the past decade, insurance prices have risen at a steady rate that is
typical of the insurance industry's cyclical nature; however, over a
three-year period between 2000 and 2003, insurance costs rose
dramatically, which could include the direct and indirect effects of the
September 11, 2001 terrorist attacks. According to an ATA insurance
survey conducted in 2002, average insurance costs rose 17 percent for
those carriers renewing their policies in 2000 and 32 percent for those
carriers renewing in 2001[^5] (ATA, 2002).

Jenks (2005) discusses why insurers are charging such high premiums and
how the transit and private motor coach industry can best address these
high costs. One reason for the very high prices is the State Regulatory
Commissions that have an assigned risk program. A consumer unable to get
coverage will go through the state, which will assign them to a licensed
group. This group must then provide insurance to the consumer. A
consumer who cannot obtain coverage alone certainly represents a higher
risk, to the point where no insurer is willing to take a chance on this
company.

Another factor in higher prices is the business cycle itself. Businesses
inevitably go into a period of recession and insurance prices typically
will rise. Jenks states that the transit industry, which is typically
funded by the public and usually has enough money to self-insure, will
generally accept very high deductibles. However, for-hire contractors
providing transit services are not financially secure enough to
self-insure, probably are not large enough to enter a risk retention
pool that is funded by a group of transporters, and, unlike government
providers, can be sued. Therefore, these companies are almost required
to buy from a third party.

Jenks also states that the Federal government's regulations on minimum
financial responsibility were used as a barrier to entry. The
requirement for maintaining financial responsibility as used as a safety
measure, based on the belief that with such high minimums, companies
that operated on a shoe-string budget would be forced out of the market.
However, beginning in the 1980s, even high-risk operators usually have
been able to find insurance.

Still referring to passenger transportation, Jenks reports that
recently, insurance premiums have increased significantly, not because
of higher risk, but simply because judgments[^6] have been rising.
Reaction to this rise in prices for the companies that survived was
simply to raise fare prices for passengers, but some companies could not
endure the price change and simply went out of business. A reduction of
services also has occurred; to lower liability, many door-to-door
passenger services have recently gone to curb-to-curb.

The high cost of insurance led large trucking companies to explore other
insurance methods, which is a typical response when the market hardens
and premiums rise. Captives and risk retention have become appealing
insurance situations for trucking companies (Vise, 2003). A captive is
an arrangement in which several companies join forces to create an
entity that acts as an insurance company and share in the risks of all
the companies. This method has become popular because of the high cost
of insurance, but also because the companies receive interest from costs
not expended on accident payments.

Another similar method is risk-retention groups, which feature some
advantages, such as avoiding the law prohibiting a volume discount on
insurance, but also has some drawbacks such as covering only third-party
liability and not shielding all group members from joint liability
(Vise, 2003).

A number of sources provided insights into the costs for insurance for
different groups of private motor carriers. The minutes from a meeting
of the school board for a private school in Indiana indicated their cost
to insure a school bus (with an unspecified seating capacity) was
approximately \$660 per year as compared to \$500 per year to insure a
van (Clear Creek, 2002).

One insurance company website provides an estimate of \$4,600 to \$6,000
per truck for annual primary liability coverage
([InsureMyRig.com](http://www.insuremyrig.com/), 2006). An online
article reported that truck insurance premiums rose to \$5,500 to
\$6,000 per truck in 2002, with increased deductibles of \$25,000 to
\$50,000 (Memphis Business Journal, 2003). The article reports that one
for-hire company with 350 trucks was quoted a cost of \$350,000 to
obtain \$2 million in excess insurance coverage, which the carrier felt
was insufficient coverage, although it well exceeds the Federal
financial responsibility requirements. This equates to \$1,000 per truck
for \$2 million in excess coverage. Another article quotes an
underwriter indicating truck insurance rates of \$4,500 to \$5,500 per
power unit, depending on the deductible. The underwriter expected these
costs to reach \$6,000 per power unit by the end of 2002 (France, 2002).

### State Private Motor Carrier Insurance Requirements

The project team attempted to contact the appropriate agencies in all 50
states and the District of Columbia regarding sources of information on
insurance requirements for private motor carriers of passengers and
private motor carriers of non-hazardous property. In some cases,
information was supplemented with searches of official state internet
websites. Table 2-5 shows the results of this data collection.

Additionally, the minimum auto liability requirements for each state
were determined and assumed to apply for all vehicles registered in that
state. These requirements are shown in Table 2-6. The sum of the
per-accident and property damage requirements was taken as the combined
minimum---a comparable number to the single value reported in Table 2-5.
Therefore, the assumed minimum liability requirements for each state was
computed as the maximum of the values in Tables 2-5 and 2-6 for each
type of operation and are shown in Table 2-7. For example, the minimum
requirements for passenger vehicles carrying 9 to 15 passengers in
Alabama in Table 2-7 is \$50,000 (\$40,000 + \$10,000, from Table 2-6)
and the minimum requirements for non-hazardous property carriers in
Arizona is \$750,000 (from Table 2-5).

### Cost of Insurance

Data also were desired on the cost of insurance for private motor
carriers. A matrix that would allow insurance costs or rates to be
provided for up to 12 scenarios for each type of motor carrier operation
was developed. This matrix included the following fields:

-   driver type: full-time, professional, or part-time

-   for-profit or not-for-profit

-   operating range: 50 miles or less, 51 to 200 miles, or more than 200
    miles.

Insurers were asked to estimate costs for the equivalent levels of
coverage as interstate for-hire carriers and use fleet sizes of 10
vehicles for passenger carriers and 6 vehicles for non-hazardous
property carriers. Alternatively, insurers were asked to provide a
single per-power unit estimated average nationwide cost for each type of
motor carrier if it was not possible to provide more detailed estimates.

No insurance company contacted for this initial data collection effort
was willing to provide any such data. In addition, the Property Casualty
Insurers Association of America asked their membership if they would be
willing to provide assistance, and if so, to contact the project team.
No data were received. However, several insurance companies that
participated in stakeholder interviews were able to provide some
high-level data and this input is described in Section 4.2.

To augment the limited information collected through the stakeholder
interviews, the project team solicited insurance cost data from private
motor carriers. A sample of about 100 private motor carriers were
randomly selected from the MCMIS Census File and then manually
stratified to ensure representation across the various categories and
fleet sizes of the carriers. For carriers with missing contact
information in MCMIS, the Safety and Fitness Electronic Records (SAFER)
System was used to obtain the contact information.

[]{#__RefHeading___Toc166050306 .anchor}Table 2‑5. State Insurance
Requirements for Private Motor Carriers

  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
              **Type of                                               **Private vs. For-hire**                                                                                                      **Notes**
              Operation**                                                                                                                                                                           
  ----------- ---------------- -------------------- ----------------- ----------------------------------------- ----------------------------------------- ----------------------------------------- -----------
              **Passenger (by                       **Property\                                                                                                                                     
              max. vehicle                          (non-hazardous)                                                                                                                                 
              capacity)**                           (C)**                                                                                                                                           

  **State**   **9 to 15 Pass.  **16 or more Pass.                     **A**                                     **B**                                     **C**                                     
              Veh. (A)**       Veh. (B)**                                                                                                                                                           

  AL                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  AK                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  AZ                                                \$750,000         ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   1
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  AR                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  CA                                                \$750,000         ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   2
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  CO          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  CT          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  DE                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  DC                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  FL          \$350,000        \$350,000            \$300,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   3
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  GA                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  HI                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  ID                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  IL                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  IN                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  IA          \$1,500,000      \$5,000,000          \$300,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  KS          \$350,000        \$350,000            \$350,000         ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  KY                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  LA          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  ME                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MD          \$250,000        \$500,000            \$750,000         ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   4
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MA                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MI          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MN                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MS          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MO                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  MT                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NE          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NV                                                \$1,000,000       ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NH                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NJ                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NM                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NY                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  NC          \$1,500,000      \$5,000,000          \$1,000,000       ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   5
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  ND                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  OH                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  OK          \$1,000,000      \$5,000,000          \$750,000         ![](media/image4.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   5
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  OR                                                \$750,000         ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   5
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  PA                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  RI                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  SC                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       
  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 2-5. State Insurance Requirements for Private Motor Carriers
(continued)

  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
              **Type of                                               **Private vs. For-hire**                                                                                                      **Notes**
              Operation**                                                                                                                                                                           
  ----------- ---------------- -------------------- ----------------- ----------------------------------------- ----------------------------------------- ----------------------------------------- -----------
              **Passenger (by                       **Property\                                                                                                                                     
              max. vehicle                          (non-hazardous)                                                                                                                                 
              capacity)**                           (C)**                                                                                                                                           

  **State**   **9 to 15 Pass.  **16 or more Pass.                     **A**                                     **B**                                     **C**                                     
              Veh. (A)**       Veh. (B)**                                                                                                                                                           

  SD                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  TN          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  TX                           \$5,000,000          \$500,000         ![](media/image2.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   5,6
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  UT                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  VT          \$300,000        \$400,000            \$50,000          ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   7
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  VA          \$1,500,000      \$5,000,000          \$750,000         ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   ![](media/image3.png){width="0.15625in"   8
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  WA                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  WV                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  WI                                                                  ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"   ![](media/image2.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       

  WY          \$500,000        \$500,000            \$500,000         ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"   ![](media/image4.png){width="0.15625in"    
                                                                      height="0.15625in"}                       height="0.15625in"}                       height="0.15625in"}                       
  -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

> Key:
>
> ![](media/image2.png){width="0.15625in" height="0.15625in"} = private
> carriers have no specific insurance requirements
>
> ![](media/image4.png){width="0.15625in" height="0.15625in"} = private
> carriers have lower insurance requirements than interstate for-hire
> carriers
>
> ![](media/image3.png){width="0.15625in" height="0.15625in"} = private
> carriers have the same insurance requirements as interstate for-hire
> carriers
>
> ![](media/image5.png){width="0.15625in" height="0.15625in"} = private
> carriers have higher insurance requirements than interstate for-hire
> carriers
>
> ^1^ \$300,000 for property-carrying vehicles weighing between 20,001
> and 26,000 lbs.
>
> ^2^ Limits are higher for passenger operations if they are youth-camp
> related.
>
> ^3^ \$50,000 for property-carrying vehicles from 26,000 to 35,000 lbs;
> \$100,000 for vehicles up to 44,000 lbs; \$300,000 for vehicles over
> 44,000 lbs.
>
> ^4^ The passenger vehicle categories are 8-14 passengers and 15 or
> more passengers.
>
> ^5^ For property-carrying vehicles weighing over 26,000 lbs.
>
> ^6^ \$500,000 for 16-25 passenger buses.
>
> ^7^ \$300,000 for 8-12 passenger vehicles; \$350,000 for 13-20
> passenger vehicles; \$400,000 for vehicles that can carry 21 or more
> passengers.
>
> ^8^ Lower threshold is 7 passengers.

[]{#__RefHeading___Toc166050307 .anchor}Table 2‑6. State Insurance
Requirements for all Vehicles

  ----------------------------------------------------------------------------
              **General Motor                           
              Vehicle Insurance                         
              Requirements\***                          
  ----------- ------------------- --------------------- ----------------------
  **State**   **Per-person**      **Per-accident**      **Property Damage**

  AL          \$20,000            \$40,000              \$10,000

  AK          \$50,000            \$100,000             \$25,000

  AZ          \$15,000            \$30,000              \$10,000

  AR          \$25,000            \$50,000              \$25,000

  CA          \$15,000            \$30,000              \$5,000

  CO          \$25,000            \$50,000              \$15,000

  CT          \$20,000            \$40,000              \$10,000

  DE          \$15,000            \$30,000              \$10,000

  DC          \$25,000            \$50,000              \$10,000

  FL          \$10,000            \$20,000              \$10,000

  GA          \$25,000            \$50,000              \$25,000

  HI          \$20,000            \$40,000              \$10,000

  ID          \$25,000            \$50,000              \$15,000

  IL          \$20,000            \$40,000              \$15,000

  IN          \$25,000            \$50,000              \$10,000

  IA          \$20,000            \$40,000              \$15,000

  KS          \$25,000            \$50,000              \$10,000

  KY          \$25,000            \$50,000              \$10,000

  LA          \$10,000            \$20,000              \$10,000

  ME          \$50,000            \$100,000             \$25,000

  MD          \$20,000            \$40,000              \$15,000

  MA          \$20,000            \$40,000              \$5,000

  MI          \$20,000            \$40,000              \$10,000

  MN          \$30,000            \$60,000              \$10,000

  MS          \$10,000            \$20,000              \$5,000

  MO          \$25,000            \$50,000              \$10,000

  MT          \$25,000            \$50,000              \$10,000

  NE          \$25,000            \$50,000              \$25,000

  NV          \$15,000            \$30,000              \$10,000

  NH          \$25,000            \$50,000              \$25,000

  NJ          \$15,000            \$30,000              \$5,000

  NM          \$25,000            \$50,000              \$10,000

  NY          \$25,000            \$50,000              \$10,000

  NC          \$30,000            \$60,000              \$25,000

  ND          \$25,000            \$50,000              \$25,000

  OH          \$12,500            \$25,000              \$7,500

  OK          \$10,000            \$20,000              \$10,000

  OR          \$25,000            \$50,000              \$10,000

  PA          \$15,000            \$30,000              \$5,000

  RI          \$25,000            \$50,000              \$25,000

  SC          \$15,000            \$30,000              \$10,000
  ----------------------------------------------------------------------------

Table 2-6. State Insurance Requirements for all Vehicles (continued)

  ----------------------------------------------------------------------------
              **General Motor                           
              Vehicle Insurance                         
              Requirements\***                          
  ----------- ------------------- --------------------- ----------------------
  **State**   **Per-person**      **Per-accident**      **Property Damage**

  SD          \$25,000            \$50,000              \$25,000

  TN          \$25,000            \$50,000              \$10,000

  TX          \$20,000            \$40,000              \$15,000

  UT          \$25,000            \$50,000              \$15,000

  VT          \$25,000            \$50,000              \$10,000

  VA          \$25,000            \$50,000              \$20,000

  WA          \$25,000            \$50,000              \$10,000

  WV          \$20,000            \$40,000              \$10,000

  WI          \$25,000            \$50,000              \$10,000

  WY          \$25,000            \$50,000              \$20,000
  ----------------------------------------------------------------------------

> \*Obtained from <http://info.insure.com/auto/minimum.html>.

The research team was ultimately successful in reaching two insurance
companies willing to discuss rates. These insurance companies provided
rates for private carriers under the assumptions that the 9-15 passenger
vehicle and bus operators would be either a school or church group and
that the truck operator would be a private, for-profit company. In each
case, average conditions (e.g., annual miles traveled, accident history,
and other risk factors) were assumed. The insurance companies provided
quotes for varying public liability coverage levels from \$50,000 to
\$2,000,000. Rates quoted are shown in Table 2-9. Note that the rates
quoted for 9-15 passenger vehicles and buses are identical. When pressed
on the quoted rates, one insurance agent noted that his company offered
lower rates for passenger vehicles with a capacity of less than 15
passengers but that a 9-15 passenger vehicle would receive the same
rates as those paid for 16+ passenger buses. Another agent noted that
the rates for 9-15 passenger vehicles would be relatively higher than
those for buses due to the historical performance and accident rates for
these vehicles.

[]{#__RefHeading___Toc166050308 .anchor}Table 2‑7. Effective State
Insurance Requirements for Private Motor Carriers

  ----------------------------------------------------------------------------
              **General Motor                           
              Vehicle Insurance                         
              Requirements\***                          
  ----------- ------------------- --------------------- ----------------------
  **State**   **Per-person**      **Per-accident**      **Property Damage**

  AL          \$50,000            \$50,000              \$50,000

  AK          \$125,000           \$125,000             \$125,000

  AZ          \$40,000            \$40,000              \$750,000

  AR          \$75,000            \$75,000              \$75,000

  CA          \$35,000            \$35,000              \$750,000

  CO          \$1,500,000         \$5,000,000           \$750,000

  CT          \$1,500,000         \$5,000,000           \$750,000

  DE          \$40,000            \$40,000              \$40,000

  DC          \$60,000            \$60,000              \$60,000

  FL          \$350,000           \$350,000             \$300,000

  GA          \$75,000            \$75,000              \$75,000

  HI          \$50,000            \$50,000              \$50,000

  ID          \$65,000            \$65,000              \$65,000

  IL          \$55,000            \$55,000              \$55,000

  IN          \$60,000            \$60,000              \$60,000

  IA          \$1,500,000         \$5,000,000           \$300,000

  KS          \$350,000           \$350,000             \$350,000

  KY          \$60,000            \$60,000              \$60,000

  LA          \$1,500,000         \$5,000,000           \$750,000

  ME          \$125,000           \$125,000             \$125,000

  MD          \$250,000           \$500,000             \$750,000

  MA          \$45,000            \$45,000              \$45,000

  MI          \$1,500,000         \$5,000,000           \$750,000

  MN          \$70,000            \$70,000              \$70,000

  MS          \$1,500,000         \$5,000,000           \$750,000

  MO          \$60,000            \$60,000              \$60,000

  MT          \$60,000            \$60,000              \$60,000

  NE          \$1,500,000         \$5,000,000           \$750,000

  NV          \$40,000            \$40,000              \$1,000,000

  NH          \$75,000            \$75,000              \$75,000

  NJ          \$35,000            \$35,000              \$35,000

  NM          \$60,000            \$60,000              \$60,000

  NY          \$60,000            \$60,000              \$60,000

  NC          \$1,500,000         \$5,000,000           \$1,000,000

  ND          \$75,000            \$75,000              \$75,000

  OH          \$32,500            \$32,500              \$32,500

  OK          \$1,000,000         \$5,000,000           \$750,000

  OR          \$60,000            \$60,000              \$750,000

  PA          \$35,000            \$35,000              \$35,000

  RI          \$75,000            \$75,000              \$75,000

  SC          \$40,000            \$40,000              \$40,000
  ----------------------------------------------------------------------------

Table 2-7. Effective State Insurance Requirements for Private Motor
Carriers\
(continued)

  ----------------------------------------------------------------------------
              **General Motor                           
              Vehicle Insurance                         
              Requirements\***                          
  ----------- ------------------- --------------------- ----------------------
  **State**   **Per-person**      **Per-accident**      **Property Damage**

  SD          \$75,000            \$75,000              \$75,000

  TN          \$1,500,000         \$5,000,000           \$750,000

  TX          \$55,000            \$5,000,000           \$500,000

  UT          \$65,000            \$65,000              \$65,000

  VT          \$300,000           \$400,000             \$60,000

  VA          \$1,500,000         \$5,000,000           \$750,000

  WA          \$60,000            \$60,000              \$60,000

  WV          \$50,000            \$50,000              \$50,000

  WI          \$60,000            \$60,000              \$60,000

  WY          \$500,000           \$500,000             \$500,000
  ----------------------------------------------------------------------------

[]{#__RefHeading___Toc166050309 .anchor}Table 2‑8. Insurance Cost Data
from Private Motor Carriers

+-------------+---------+---------+---------+---------+--------------+
| **Type**    | **Fleet | **Insu  | **Cov   | **O     | **Cost of    |
|             | S       | rance** | erage** | btained | Insurance    |
|             | ize\*** |         |         | from**  | (per vehicle |
|             |         | *       | *       |         | per year)**  |
|             |         | *Type** | *(\$)** |         |              |
+=============+=========+=========+=========+=========+==============+
| 9-15        |         |         |         |         |              |
| passenger   |         |         |         |         |              |
| vehicle     |         |         |         |         |              |
| operators   |         |         |         |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Private     | 12 to   | Vehicle | \$1,    | Ins.    | \$1,000      |
| Group       | 14      |         | 000,000 | Co.     |              |
+-------------+---------+---------+---------+---------+--------------+
| School      | 1       | U       | \$1,    | Ins.    | \$3,100      |
|             |         | mbrella | 500,000 | Co.     |              |
+-------------+---------+---------+---------+---------+--------------+
| 16+         |         |         |         |         |              |
| passenger   |         |         |         |         |              |
| vehicle     |         |         |         |         |              |
| operators   |         |         |         |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Church      | 4 to 6  | Vehicle | \$5,    | Ins.    | \$1,000      |
|             |         |         | 000,000 | Co.     |              |
+-------------+---------+---------+---------+---------+--------------+
| Church      | 1       | Vehicle | \       | Ins.    | \$800        |
|             |         |         | $60,000 | Co.     |              |
+-------------+---------+---------+---------+---------+--------------+
| School      | 12 to   | U       | \       | Ins.    | \            |
|             | 14      | mbrella | $60,000 | Co.     | $800-\$1,200 |
+-------------+---------+---------+---------+---------+--------------+
| no          |         |         |         |         |              |
| n-hazardous |         |         |         |         |              |
| property    |         |         |         |         |              |
| carriers    |         |         |         |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Manufacturi | 1       | Not     | \       | Ins.    | \$1,600      |
| ng-oriented |         | av      | $50,000 | Co.     |              |
| Business    |         | ailable |         |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Reta        | 7 to 8  | Vehicle | Not     | Ins.    | \$800        |
| il-oriented |         |         | Av      | Co.     |              |
| Business    |         |         | ailable |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Reta        | 201 to  | U       | \$      | Self-   | No monthly   |
| il-oriented | 300     | mbrella | 850,000 | Insured | or yearly    |
| Business    |         |         | --      |         | cost         |
|             |         |         | \$1,0   |         |              |
|             |         |         | 00,0000 |         |              |
+-------------+---------+---------+---------+---------+--------------+
| Servi       | 4 to 6  | U       | \       | Ins.    | \$1,500      |
| ce-oriented |         | mbrella | $55,000 | Co.     |              |
| Business    |         |         |         |         |              |
+-------------+---------+---------+---------+---------+--------------+

> \* Based on the Fleet Size Codes used in MCMIS; used to help preserve
> carrier anonymity.

[]{#__RefHeading___Toc166050310 .anchor}Table 2‑9. Insurance Cost Data
from Insurance Companies

  -----------------------------------------------------------------------
  **Coverage        **9-15 Passenger  **Buses**         **Trucks**
  Level**           Vehicles**                          
  ----------------- ----------------- ----------------- -----------------
  \$50,000          \$1,847           \$1,847           \$4,600

  \$100,000         \$2,067           \$2,067           

  \$200,000                                             \$5,031

  \$300,000         \$2,328           \$2,328           

  \$500,000         \$2,594           \$2,594           \$5,500

  \$1,000,000       \$3,180           \$3,180           \$6,500

  \$2,000,000       \$3,700           \$3,700           
  -----------------------------------------------------------------------

## Economic Analysis

The following subsection briefly describes the few references that were
most important for the economic analysis of the cost and benefits of
extending minimum financial responsibility requirements to private motor
carriers.

"The Economic Cost of Motor Vehicle Crashes, 2000" estimates the
economic cost of all motor vehicle crashes in the United States in 2000
at \$230.6 billion (Blincoe et al, 2002). This study monetizes the costs
associated with 41,821 fatalities, 5.3 million non-fatal injuries, and
28 million damaged vehicles. The study includes a number of cost
elements: (a) productivity losses, (b) property damage, (c) medical
costs, (d) rehabilitation costs, (e) travel delay, (f) legal and court
costs, (g) emergency services, (h) insurance administration costs, and
(i) costs to employers. The costs include those associated with both
police-reported and unreported crashes. The crash costs are stratified
by severity according to the Abbreviated Injury Scale.

"Revised Costs of Large Truck- and Bus-Involved Crashes," prepared by
the Pacific Institute for Research and Evaluation for the Federal Motor
Carrier Safety Administration, documents the costs associated with large
truck- and bus-involved crashes (Zaloshnja, 2002). More specifically,
the report estimates the dollar value cost per crash, victim injured, or
fatality incurred as a result of large truck- and bus-involved crashes.
The cost elements examined in the study includes: medical related (e.g.,
hospital, rehabilitation), emergency services, property damage, lost
productivity (e.g., crash investigation, lost wages, recruiting and
training replacement workers) and lost quality of life (e.g., pain and
suffering). The costs associated with crashes are differentiated based
on crash severity, ranging from no injury to fatality, and by vehicle
class, including straight trucks, truck-tractor combinations, and buses.
The cost of police-reported crashes involving large trucks with a gross
vehicle weight rating in excess of 10,000 pounds averaged \$59,153 (2000
dollars). The cost of police-reported crashes involving buses averaged
\$32,548. These costs are reported from a societal perspective.

In "The Economic Burden of Traffic Crashes on Employers," NHTSA (2003)
found that traffic crashes occurring on the job resulted in 2,100
fatalities and 353,000 injuries annually during the 1998-2000 timeframe.
Further, job-related vehicle crashes accounted for nearly 6.5 percent of
all crash injuries. The study estimates the economic burden of traffic
crashes on employers, including health-related fringe benefits costs,
employer health care costs, sick leave, life, and disability insurance
for employees involved in crashes and wage-risk premiums. These cost
elements amounted to nearly \$60 billion in annual costs to employers in
the United States during the 1998-2000 time frame. This study estimates
costs to employers by state. The costs to employers in California and
New York were highest, topping \$3.5 billion in each state. It also
examines the costs associated with crashes involving an alcohol-impaired
driver and passengers that are not using restraining devices. Finally,
the study breaks down cost by industry, estimating the highest costs in
the land transportation, construction, mining, and agriculture sectors.
This study was examined to understand further the costs associated with
heavy truck and passenger vehicle crashes and to validate some of the
estimates presented in Zaloshnja (2002) but was not directly used to
monetize the cost savings associated with avoiding crashes.

# Interviews with State Agencies

As described in Section 2.0, published literature was sought concerning
the safety, insurance requirements, and costs of transportation provided
by private motor carriers of passengers and by private motor carriers of
non-hazardous property. Since availability of this type of information
in the open literature was expected to be limited, a parallel effort
involving state data collection was undertaken. The intent of the
collection was two-fold: (1) to gather data unavailable from the
literature search or database analysis, and (2) to corroborate the
limited information that was available. The information from the surveys
was then used in the economic and safety analyses. Initial state
contacts were provided by the CVSA, a project team member, and augmented
with contacts identified through state websites.

Nine state agencies were interviewed concerning the safety and current
insurance and insurability situations of private motor carriers
operating in their jurisdictions. The project team sought to conduct
interviews with officials in State Departments of Public Safety or State
Police and State Insurance Commissioners or equivalent state agencies to
represent a cross-section of those with significant numbers of private
motor carriers, geographical diversity, and other parameters.

FMCSA requested that California, Illinois, New York, and Texas be
included in the interview process. Other states were selected to
represent a geographically diverse interview pool that included
Colorado, Florida, Ohio, Virginia, and Washington. The specific
organizations in each state are identified in Table 3-10.

[]{#__RefHeading___Toc166050311 .anchor}Table 3‑10. State Agencies
Interviewed

+-----------------+----------------------------------------------------+
| **State**       | **Agencies Interviewed**                           |
+-----------------+----------------------------------------------------+
| California      | Highway Patrol -- Commercial Vehicle Section       |
+-----------------+----------------------------------------------------+
| Colorado        | Public Utilities Commission                        |
+-----------------+----------------------------------------------------+
| Florida         | Department of Transportation                       |
+-----------------+----------------------------------------------------+
| Illinois        | Department of Transportation                       |
|                 |                                                    |
|                 | Commerce Commission                                |
+-----------------+----------------------------------------------------+
| New York        | Department of Transportation                       |
+-----------------+----------------------------------------------------+
| Ohio            | Department of Public Safety                        |
|                 |                                                    |
|                 | State Highway Patrol                               |
+-----------------+----------------------------------------------------+
| Texas           | Department of Transportation                       |
|                 |                                                    |
|                 | Department of Safety -- Texas Highway Patrol       |
+-----------------+----------------------------------------------------+
| Virginia        | State Police                                       |
+-----------------+----------------------------------------------------+
| Washington      | State Patrol -- Commercial Vehicle Division        |
+-----------------+----------------------------------------------------+

Interviews were conducted by telephone, facilitated by advance
distribution of interview topics and questions, where appropriate. Most
organizations needed time following the interview calls to research
specific safety and insurance data questions posed during the interviews
that could not be adequately answered during the interview call. The
project team then followed-up with these agencies to collect the data
and information.

## Safety Issues

The state agencies participating in the interviews were not able to
distinguish a difference in the safety record for private carriers as
compared to for-hire carriers or private carriers operating interstate
and those operating wholly intrastate. Only two states were able to
provide any specific safety information. The research team had
difficulty in contacting the proper individuals within the correct state
agencies. Each state agency was set up uniquely for that state. Initial
contacts were generally not able to find the requested safety
information. Even when the correct agency and individual were
identified, in many cases, the requested information and data did not
exist or could not be located.

The California Highway Patrol (CHP) reported that it has statewide
authority to inspect all regulated vehicles (with a gross vehicle weight
rating of more than 10,000 pounds) in maintenance facilities or
terminals, as well as any records relating to the dispatch of vehicles
or drivers and the pay of drivers to assure compliance with state laws
and regulations. This authority includes all motor carriers of property
or passengers without regard to the capacity of the bus; the hazardous
nature of the property transported; or whether the motor carrier is a
private motor carrier or for-hire.

While the CHP does not specifically record the type of each vehicle
inspected, the result of each terminal or carrier inspection is entered
into the CHP database (Management Information System of Terminal
Evaluation Records \[MISTER\]). This database includes carrier
information; terminal information; current terminal ratings, current
carrier ratings, and rating history; and emergency contact information.
Provided the operator is using vehicles that seat more than 10
passengers, including the driver, these terminal operations are part of
the CHP's overall inspection program. Because neither the seating
capacity of the vehicle or the for-hire status of the motor carrier is
documented during a terminal inspection, no specific statistical
information is available to identify relational patterns between
different passenger vehicle types or private and for-hire motor
carriers.

The CHP reported that the only operational difference that could be
identified in their records was that approximately 22 percent of motor
carriers transporting non-hazardous commodities were rated
unsatisfactory during the 2005 calendar year versus approximately 13
percent for motor carrier terminals transporting hazardous materials
during that same period. While there are differences between interstate
and California intrastate regulations, those differences are primarily
limited to the compatibility differences permitted by 49 CFR, Parts 350
and 355, allowing commercial motor vehicle drivers to operate on the
road 12 hours a day on intrastate trips in California. Any operational
differences are not considered as a part of industry regulation. The CHP
exercises regulatory oversight based on the type of vehicle being
operated, not necessarily on the operation or range of operation of the
motor carrier.

Commercial vehicle safety in Texas is a high-visibility issue. Travel on
Texas roadways has increased each year, especially since the passage of
the North American Free Trade Act in 1991. Texas state officials
reported that Texas ranked first in the nation with 459 fatal large
truck crashes in 2001---another reason for increased attention on
commercial vehicles. [^7] The Texas state inspection form differentiates
between 9-15 and over 15 passenger vehicles. Detailed crash records are
kept in Texas for trucks over 10,000 lbs and passenger vans with a
seating capacity greater than 15. These data are uploaded to MCMIS and
are, therefore, included in the analysis presented in Section 5.3. The
project team worked with The Texas Department of Public Safety, but was
unable to extract differences for for-hire and private carrier safety
statistics.

### Private versus For-hire Carriers 

There was no noted safety difference between private versus for-hire
carriers, according to the interviewed state agencies. It is possible
that a difference may exist, but no agencies could find or knew of data
that could support such an analysis. State agencies were unable to find
any data or information to identify any documented difference in safety
between for-hire and private carriers.

## Insurance Requirements and Insurability 

### Insurance Requirements

One of the primary objectives of interviewing state agencies was to
determine precise minimum levels of financial responsibility for private
motor carriers. The interviewed state agencies provided the project team
with the minimum levels of insurance required to satisfy state
requirements for private carriers, including passenger carriers. There
is a vast difference in the way that states choose to apply regulations
regarding insurance requirements for private commercial motor carriers
operating in their jurisdiction. Some states had specific requirements
for private carriers such California, Colorado, and Florida. Some had no
state-mandated requirements such Florida, Illinois, and Ohio. Other
states hold private motor carriers to financial responsibility limits
that are identical for all private motor vehicles, such as Texas and
Virginia. This provided a good cross-section of state insurance
requirements.

Table 3-11 shows the minimum financial responsibility state requirements
for private carriers for the nine interviewed states participating in
this research project.

Another objective of interviewing state regulatory agencies was to
characterize the extent to which private carriers are subject to the
same or different state minimum financial responsibility rules as
for-hire carriers. For-hire carriers have mandated minimum levels of
financial responsibility in all states.

[]{#__RefHeading___Toc166050312 .anchor}Table 3‑11. State Private
Carrier Insurance Requirements

  --------------------------------------------------------------------------
  **State**    **9-15 Passengers**  **16 or more         **Non-HAZMAT
                                    Passengers**         Cargo**
  ------------ -------------------- -------------------- -------------------
  California   \$15,000 bodily      \$15,000 bodily      \$300,000 under
               injury per person,   injury per person,   10,000 lbs.,
               \$30,000 bodily      \$30,000 bodily      \$750,000 over
               injury per accident, injury per accident, 10,000 lbs.
               \$5,000 property     \$5,000 property     
               damage per accident. damage per accident. 

  Colorado     \$25,000 because of  \$25,000 because of  \$25,000 because of
               bodily injury to or  bodily injury to or  bodily injury to or
               death of one person  death of one person  death of one person
               in any one accident, in any one accident, in any one
               in the amount of     in the amount of     accident, in the
               \$50,000 because of  \$50,000 because of  amount of \$50,000
               bodily injury to or  bodily injury to or  because of bodily
               death of two or more death of two or more injury to or death
               persons in any one   persons in any one   of two or more
               accident, and in the accident, and in the persons in any one
               amount of \$15,000   amount of \$15,000   accident, and in
               because of injury to because of injury to the amount of
               property of others   property of others   \$15,000 because of
               in any one           in any one           injury to property
               accident.            accident.            of others in any
                                                         one accident. 

  Florida      Non-public sector    Non-public sector    \$50,000 for
               buses: \$100,000     buses: \$100,000     26-35,000 lbs.
               bodily injury per    bodily injury per    \$100,000 for
               person; \$300,000    person; \$300,000    35-44,000 lbs.
               bodily injury per    bodily injury per    \$300,000 for
               accident; \$50,000   accident; \$50,000   44,000+ lbs.
               property damage per  property damage per  
               accident.            accident.            

  Illinois     \$20,000 because of  \$20,000 because of  \$20,000 because of
               bodily injury to or  bodily injury to or  bodily injury to or
               death of one person  death of one person  death of one person
               in any one accident, in any one accident, in any one
               in the amount of     in the amount of     accident, in the
               \$40,000 because of  \$40,000 because of  amount of \$40,000
               bodily injury to or  bodily injury to or  because of bodily
               death of two or more death of two or more injury to or death
               persons in any one   persons in any one   of two or more
               accident, and in the accident, and in the persons in any one
               amount of \$15,000   amount of \$15,000   accident, and in
               because of injury to because of injury to the amount of
               property of others   property of others   \$15,000 because of
               in any one           in any one           injury to property
               accident.            accident.            of others in any
                                                         one accident. 

  New York     \$25,000 bodily      \$25,000 bodily      \$300,000 under
               injury per person,   injury per person,   10,000 lbs.,
               \$50,000 bodily      \$50,000 bodily      \$750,000 over
               injury per accident, injury per accident, 10,000 lbs.
               \$10,000 property    \$10,000 property    
               damage per accident. damage per accident. 

  Ohio         None                 \$12,500 because of  \$12,500 because of
                                    bodily injury to or  bodily injury to or
                                    death of one person  death of one person
                                    in any one accident, in any one
                                    in the amount of     accident, in the
                                    \$25,000 because of  amount of \$25,000
                                    bodily injury to or  because of bodily
                                    death of two or more injury to or death
                                    persons in any one   of two or more
                                    accident, and in the persons in any one
                                    amount of \$7,500    accident, and in
                                    because of injury to the amount of
                                    property of others   \$7,500 because of
                                    in any one           injury to property
                                    accident.            of others in any
                                                         one accident. 
  --------------------------------------------------------------------------

Table 3-11. State Private Carrier Insurance Requirements (continued)

  --------------------------------------------------------------------------
  **State**    **9-15 Passengers**  **16 or more         **Non-HAZMAT
                                    Passengers**         Cargo**
  ------------ -------------------- -------------------- -------------------
  Texas        None                 \$500,000 for 15-25  \$500,000 for
                                    passengers,          commercial motor
                                    \$1,500,000 for      vehicles including
                                    greater than 25      tow trucks with
                                                         gross vehicle
                                                         weight in excess of
                                                         26,000 lbs.

  Virginia     \$1,500,000          \$5,000,000          \$750,000

  Washington   None, 9-15           None, 16 or more     A vehicle under
               Passengers           Passengers           10,000 lbs GVWR is
               Non-Profit:          Non-Profit:          \$300,000 CSL.
               \$100,000 each       \$100,000 each       Vehicles over
               person, \$500,000    person, \$1,000,000  10,000 lbs GVWR are
               each accident,       each accident,       \$750,000 CSL.
               \$50,000 property    \$50,000 property    
               damage or \$500,000  damage or            
               Combined Single      \$1,000,000 CSL.     
               Limit (CSL).                              
  --------------------------------------------------------------------------

Table 3-12 compares the financial responsibility state requirements for
private carriers versus for-hire carriers for the nine interviewed
states.

[]{#__RefHeading___Toc166050313 .anchor}Table 3‑12. State Private versus
For-hire Carrier Financial Responsibility Requirements

  ------------ -------------------------------------------------------------
  **State**    **Private Versus For-Hire Carrier Financial Responsibility
               Requirements**

  California   Private passenger carriers have different requirements than
               for-hire carriers. Private property carriers have the same
               requirements as for-hire carriers.

  Colorado     Private motor carriers have different requirements than
               for-hire carriers.

  Florida      Private carriers have same requirements as for-hire carriers.

  Illinois     Private carriers have no specific minimum financial
               requirements. Private carriers must meet the same minimum
               financial responsibility as passenger automobiles.

  New York     Private passenger carriers have no state financial
               responsibility requirements. For-hire non-hazardous property
               follows the Federal requirements.

  Ohio         Private carriers have no specific minimum financial
               requirements. Private carriers must meet the same minimum
               financial responsibility as passenger automobiles for \>16
               passenger vehicles and non-hazardous property carriers.

  Texas        Private carriers have same requirements as for-hire carriers.

  Virginia     Private carriers have same requirements as for-hire carriers.

  Washington   Private passenger carriers have no state financial
               responsibility requirements except for non-profit passenger
               carriers. For-hire non-hazardous property follows the Federal
               requirements.
  ------------ -------------------------------------------------------------

### Insurability

Based on the surveys conducted with various state agencies, the only
meaningful issues in obtaining insurance for a motor carrier are the
amount of their premium, deductibles built into their policy, and their
level of coverage. Carriers can get insurance coverage; it is just a
question of what a commercial motor carrier will pay for either the
legally required limits or higher levels to further protect their
business.

During most of the previous decade, commercial motor carrier liability
insurance rates increased so much that many trucking companies
implemented or increased deductibles in an effort to keep costs in line.
Some large carriers have aggregate liability deductibles as high as
\$250,000. The insurance market for motor carriers appears to have
become more favorable during recent years. State agencies estimate that
liability rates seem to be taking a slight downward trend of perhaps 5
percent from a year ago for liability coverage.\
\
As the literature shows, motor carrier insurance rates, and even their
insurability, are very dependent on their safety profile. State
officials indicated that most commercial motor carriers are encouraging
a meaningful commitment to safety from all company employees and most
importantly from the drivers. Often, safety-related incentive programs
help to reward the focus on safety. Companies that run safety incentive
programs show a reduction in the incidence of insurance claims, workers'
compensation claims, and crashes. One element to an overall safety
program is thorough and accurate driver employment screening. State
agency safety officials mentioned that commercial motor carriers need to
check the driving records of all potential employees. The commercial
motor carrier must screen out drivers who have poor driving records
since they are most likely to cause problems in the future. The drivers'
motor vehicle records should be reviewed periodically to ensure that
each driver maintains a good driving record. This enables commercial
motor carriers to lower their premium and total expenditures for
obtaining minimum levels of required public liability insurance and may
allow that commercial motor carrier to carry much higher levels of
public liability insurance than the mandated minimum amounts.

# Interviews with Stakeholders

In addition to the interviews with state officials, additional data and
information were sought from other stakeholders to augment or
corroborate the information already obtained. The specific information
desired included carrier safety; insurability; insurance pricing,
coverage and acquisition; and certain crash cost information. The
targeted groups for these interviews included representative industry
associations; however, it became apparent that the detailed information
sought was more readily available from insurance companies and private
motor carriers, and it was these groups that were the focus of the
interviews. As with the state agency interviews, these interviews were
conducted with the help of questions e-mailed to the respondents in
order to facilitate response.

Ultimately, nine interviews were conducted with three insurance
providers, one insurance broker, one industry association (NPTC), the
American Insurance Association (AIA), and three private motor carriers.
The three carriers covered the three types studied in this effort, a
youth organization operating two 15-passenger vans, a private university
operating 26 buses (as well as seven vans), and a retailer operating one
tractor and seven straight trucks.

Other organizations that were considered for interviews included the
Community Transportation Association of America, the National Safety
Council, and the Property Casualty Insurers Association of America.
However, initial discussions with them during the literature search
phase of the project revealed that they would not be able to provide the
specific information sought during the interviews. These organizations
did, however, provide useful information and guidance regarding other
sources of information.

In each of the subsections below, comments that apply to all private
carriers are followed by comments specific to the three types of motor
carrier.

## Safety of Private Motor Carriers

There was some disagreement among the insurers about the relative safety
of private versus for-hire carriers. One insurer stated that there are
no safety differences based solely on whether a motor carrier is
for-hire or private. Another believed that private carriers are
generally safer than for-hire carriers because they have a greater
degree of management control and the transportation aspect is part of a
larger organization. One insurer felt that private carriers are not as
well organized for safety (e.g., policies, procedures) as for-hire
carriers because the transportation function is separate from the
primary business of the organization. The NPTC indicated that there are
no definitive studies showing any evidence that private carriers are
safer than for-hire carriers. The losses experienced by a private
carrier can be more predictable than those for a for-hire carrier. This
variability in loss experienced from one year to the next was the
primary reason an insurer (one not interviewed for this project) chose
to exit the for-hire insurance business, the project team was told. One
insurer indicated that studies by insurance companies have shown that
the healthier the financial condition of the carrier, the safer the
carrier's operations. Insurers consider this as one of their risk
factors. The insurance broker indicated that, for private fleets, the
cost of insurance is what drives their safety efforts.

#### Operating 9-15 passenger vehicles  {#operating-9-15-passenger-vehicles .unnumbered}

Insurance providers have found that safety for 9-15 passenger vehicles
varies based on the company's management and commitment to safety. One
insurer stated that it would no longer cover 9-15 passenger vans because
of their risk levels. Users of small vans are switching to regular
minivans (typically up to eight passengers), vehicles with stability
control systems (such as GMC's Savana), or to buses.

#### Operating 16 or more passenger vehicles {#operating-16-or-more-passenger-vehicles .unnumbered}

One insurance company representative relayed the position of the
American Bus Association (ABA): any organization transporting passengers
should obtain the appropriate levels of insurance and, therefore, the
ABA supports the adoption of consistent financial responsibility
requirements across all motor carriers.

#### Non-hazardous property carriers {#non-hazardous-property-carriers .unnumbered}

One industry representative stated that FMCSA studies have found that
the vast majority of crashes are driver-related. The representative
premised his comments on differences in operating characteristics of
private fleets as compared to for-hire fleets. Since private carrier
drivers return to their point of origin and sleep at home and not on the
road more often than for-hire carriers, they are exposed to less
cumulative fatigue. He felt that since a private carrier's trucking
operations are backed by the larger organization, they do a better job
of maintaining, training, and managing, thereby improving private fleet
safety. The NPTC conducted a survey of their members in 2003-2004. Of
the 67 companies that responded, their reportable accident rates were 45
percent less than the average from FMCSA for the same period.

## Pricing of Insurance for Private Motor Carriers

When setting rates, one insurer did not believe that insurance providers
generally differentiate between for-hire and private motor carriers.
Risk calculations are not based on a private versus for-hire
classification but rates are highly customized for each carrier.
Individual safety records are a very important factor. However, other
insurers felt differently. One indicated that private fleets typically
have less exposure (in terms of miles and routes) and are, therefore,
cheaper to insure than for-hire carriers. One broker estimated that
premiums are approximately 25 percent lower for private fleets.

One project team member reported his understanding that, for carriers
with less than 20 drivers, insurers do not have the same level of
comfort and rates on a per power-unit basis are higher. He also reported
that common self-insurance levels are \$500,000, \$1 million, and \$3
million.

Insurance companies typically price insurance rates based on exposure,
mileage, time constraints (such as tight time windows that might have an
impact on safety), schedule (such as hours of operation), utilization,
cargo value, and presence of safety programs. Excellent safety programs
and records, less exposure, mileage, time constraints, schedule,
utilization, and cargo value translate into less expense. One private
carrier also suggested that rates are dependent on previous claims,
fleet size, and fleet type. Specific costs for the private carriers
interviewed are also included in the data collection summary provided in
Section 2.2.3.

#### Operating 9-15 passenger vehicles  {#operating-9-15-passenger-vehicles-1 .unnumbered}

One carrier revealed that an umbrella contract from a private insurance
company costs approximately \$1,500-\$2,000 per year for two
15-passenger vans and one minivan. Another carrier revealed that an
umbrella contract with liability coverage of \$1 million per accident
for ten 15-passenger vans and 37 cars costs approximately \$40,000 per
year.

#### Non-hazardous property carriers {#non-hazardous-property-carriers-1 .unnumbered}

According to one insurer, average premiums are \$4,000 to \$6,000 per
truck, but this figure may include coverage for vehicle damage. A
project team member, for comparison, reported average for-hire truck
insurance premiums of \$4,800 to \$5,800 per truck with a deductible of
\$1,000 to \$3,000. Well over 70 percent of these premiums can be
attributed to public liability insurance, which is consistent with the
85-percent figure presented in Section 2.2.3. One medium-sized ATA
member employs very high deductibles (as a form of self-insurance), and
therefore, an even greater percentage of its premiums are for public
liability insurance. Larger carriers are more likely to self-insure.

## Insurability of Private Motor Carriers

From the stakeholder responses above, private carriers are often viewed
as better risks than for-hire carriers because they have a greater
extent of management control and are generally part of a larger
organization. An insurer prefers to insure a private carrier because
they generally have more financial backing and a greater ability to pay.
Insurance companies use the financial condition of a carrier as one of
the intrinsic risk factors.

Since excess insurance is now very costly and is an individualized
buying decision in the absence of uniform regulations, the level of
public liability insurance varies by company. Smaller carriers with
lower exposure typically maintain lower coverage levels. Passenger
fleets typically carry higher coverage levels. Since there are no
standard limits for private motor carriers, they purchase a level of
insurance that balances the amount they can afford with the value of the
assets they need to protect.

Most of those interviewed thought that private carriers could generally
obtain the same levels of insurance that is required of for-hire
carriers. The insurance broker thought it would be much easier for
private carriers because of their increased ability to utilize umbrella
coverage. The NPTC has seen no problems with obtaining insurance since
the crisis in availability in the mid-1980s. The NPTC representative
believed that all of their members currently maintain at least

\$1 million in public liability coverage.

One insurer reported that there are twenty times more insurance
companies and ten times more insurance brokers willing to offer a policy
for a private motor carrier than for a for-hire motor carrier. None of
the private motor carriers interviewed expressed any problems with their
ability to obtain insurance.

## Acquisition of Insurance

Most motor carriers use insurance companies since insurance is widely
available, although some carriers self-insure. Passenger carriers have a
higher level of exposure due to civil suits according to one insurer. In
general, the larger the fleet, the larger the deductible required. One
insurance provider gave the following deductible estimates:

-   Less than 100 power units, no deductible

-   200 power units, \$25,000 deductible

-   500 power units, \$50,000 - \$100,000 deductible

-   1,000 power units, \$100,000 - \$250,000 deductible

-   Some sizable carriers have multimillion dollar deductibles.

Underwriters are willing to look at a private fleet as a company with a
different, less risky exposure, such as manufacturing plants, products,
or assets. Therefore, insurance companies and brokers are more willing
to write private carrier insurance policies than for-hire carrier
insurance policies.

The NPTC representative believed it is important to provide the
self-insurance ability that for-hire carriers currently have if new
private carrier financial responsibility requirements are implemented.

At least one insurer stated it will no longer issue new policies for
9-15 passenger vans because they are exceedingly dangerous.

## Affects of Increased Insurance Requirements on Operations

There would likely be minimal changes in operations if private carriers
were required to hold the same level of public liability insurance as
for-hire carriers. One insurer stated that most private carriers are
from large companies and currently buy more than the maximum Federal
for-hire limit for all vehicle types of \$5 million. He stated that
although there is not a required limit, most private carriers carry a
realistic limit because it is a good business decision. As previously
mentioned, the NPTC representative believed that essentially all of
their members currently maintain at least \$1 million in public
liability coverage. The NPTC filed comments to the Unified Registration
System Notice of Proposed Rulemaking stated that new SAFETEA-LU mandates
would require private carriers that do not transport HM to be subject to
Federal minimum financial responsibility requirements for the first
time. The NPTC "accepts this new requirement as virtually all of its
member companies already have in place liability insurance or other
forms of financial responsibility that exceeds the current minimum
requirements of \$750,000 for non-hazmat transportation" (NPTC, 2005).

Motor carriers indicated that if there were an increase in public
liability insurance they would first get competitive quotes from
different insurers. One carrier indicated they currently try to limit
the number of passengers in their 15-passenger vans to ten as a safety
consideration. If the costs went up significantly, they would explore
whether chartered buses would be more economical. Another passenger
carrier indicated that they needed to maintain the same level of service
and would not change their operations. The retailer indicated that they
would not change their operations, but would explore altering their
deductible to keep their annual costs constant.

## Industry Growth and Driver Turnover

None of those interviewed could estimate the annual growth rate of
private motor carriers. Some thought the annual driver turnover rate
would drop if carriers provided consistent hours, same routes, and
allowed the drivers to be home more often. The annual driver turnover
rates for the private carriers were based on the type of operation and
whether they used seasonal or temporary employees. The retailer
indicated a fair amount of turnover, but could not quantify it. Carriers
that used regular employees reported low turnover rates. One insurer
indicated turnover rates for private carriers could be one-third less
than for for-hire carriers. The NPTC provided the results of a recent
membership survey that reported annual driver turnover rates for private
carriers were 16.9 percent. For comparison, the data presented in
Section 2.1 included several other estimates that ranged from 3 to 16
percent, with comparable for-hire rates ranging as high as 135 percent.
The private carrier driver turnover rates are presented in order to
better understand the varying risk characteristics between the private
and for-hire fleets but are not used in any calculation presented in
this study.

## Costs to Explore Obtaining Public Liability Insurance

If private motor carriers were required to maintain a minimum level of
public liability insurance, the amount of time required to comprehend
and comply with the new regulation would vary significantly by company.
Insurance providers estimated it could take as little as 60 to 90 days,
while one broker estimated it could take up one-half year of one
employee's time. A motor carrier estimated the time to complete these
tasks at as little as 30 days, while the NPTC representative estimated
the time at one person-day. Hourly rates for employees to determine the
new requirements, determine their need for new insurance, and obtain it
from the marketplace ranged from \$10.25 at a university and \$20-\$25
and \$20-\$50 from insurers. Some respondents provided annual salary
estimates for the people that would perform these functions: \$30,000
for a clerk, \$50,000 for a safety director, and \$150,000 for a vice
president of distribution. Clearly, some respondents were considering
the period over which they would research the issues and gain necessary
approvals, rather than the actual employee time spent on this task.
Costs could range widely depending on time and level of employee
experience required.

# Analyses

The data and information obtained in earlier stages of the project were
used to develop the safety and economic models needed to determine the
potential benefit-cost ratio for implementing new financial
responsibility requirements for private motor carriers. The primary
benefits are the safety impacts of crash prevention. The primary costs
are those to purchase and file proof of the required public liability
coverage.

## Baseline

### Potentially Affected Private Carriers

The only comprehensive, nationwide source of information on the
population of private motor carriers in the United States is FMCSA's
MCMIS. The MCMIS Census File contains information on motor carriers
primarily submitted on Form MCS-150, which collects general information
on each entity. Other input to MCMIS comes from Form MCS-151, Part A,
which is completed as part of safety, compliance, or educational
reviews, and other sources.

For this effort, the complete Census, Crash, and Inspection Files from
MCMIS were obtained. These data were current as of the end of 2005. The
data were imported into Microsoft Access and SQL Server databases and
further processed to identify carriers and other information relevant to
this project.

To identify the number of private motor carriers potentially affected by
changes in the minimum financial responsibility requirements, the MCMIS
fields listed in Table 5-13 were used.

[]{#__RefHeading___Toc166050314 .anchor}Table 5‑13. MCMIS Fields Used to
Identify Private Carriers

  ---------------- -------------------- ------------ ------------------------------
  **Data Element** **Field Name**       **Values**   **Comments**

  Status           ACC_STAT             A            Only "active" carriers were
                                                     selected

  Classification   CLASS                C,D,E        Only carriers with one of
                                                     these values were selected.
                                                     Some carriers with these
                                                     values also were identified as
                                                     for-hire carriers (codes A and
                                                     B) and would, therefore,
                                                     already have the required
                                                     insurance coverage

  Interstate       CRRINTER             A            Only interstate carriers of
  Carrier                                            non-hazardous property and
  Operation                                          passengers were selected

  Hazmat Indicator HM_IND               all but Y    No hazardous materials
                                                     carriers were selected

  Entity Type      CARSHIP              C            Only entities marked as
                                                     "carriers" were selected

  USDOT Revoked    USDOT_REVOKED_FLAG   all but Y    Only carriers without a
  Flag                                               revoked USDOT number were
                                                     selected
  ---------------- -------------------- ------------ ------------------------------

This resulted in a total of 261,179 private carriers. Carriers were then
assigned to one or more categories corresponding to the types of
**private interstate** carriers of interest for this analysis:

-   carriers operating passenger vehicles with a seating capacity of 9
    to 15 passengers

-   carriers operating passenger vehicles with a seating capacity of 16
    or more passengers

-   carriers transporting non-hazardous property

The assignment was based on the number of owned, term-leased, and
trip-leased vehicles in each of the three categories, as shown in Table
5-14. Some carriers did not fit into any of these categories because
they operated smaller passenger vehicles.

[]{#__RefHeading___Toc166050315 .anchor}Table 5‑14. MCMIS Fields Used to
Assign Carriers to Categories

  ------------------------- ---------------------------------------------
  **Field Names**           **Description**

  9-15 passenger vehicles   

  OWNSCHOOL_9_15            number of owned school buses

  TRMSCHOOL_9_15            number of term-leased school buses

  TRPSCHOOL_9_15            number of trip-leased school buses

  OWNVAN_9_15               number of owned mini-buses and vans

  TRMVAN_9_15               number of term-leased mini-buses and vans

  TRPVAN_9_15               number of trip-leased mini-buses and vans

  OWNLIMO_9_15              number of owned limousines

  TRMLIMO_9_15              number of term-leased limousines

  TRPLIMO_9_15              number of trip-leased limousines

  16+ passenger vehicles    

  OWNSCHOOL_16              number of owned school buses

  TRMSCHOOL_16              number of term-leased school buses

  TRPSCHOOL_16              number of trip-leased school buses

  OWNBUS_16                 number of owned motor coaches

  TRMBUS_16                 number of term-leased motor coaches

  TRPBUS_16                 number of trip-leased motor coaches

  OWNLIMO_16                number of owned limousines

  TRMLIMO_16                number of term-leased limousines

  TRPLIMO_16                number of trip-leased limousines

  non-hazardous property    
  vehicles                  

  OWNTRUCK                  number of owned trucks

  TRMTRUCK                  number of term-leased trucks

  TRPTRUCK                  number of trip-leased trucks

  OWNTRACT                  number of owned tractors

  TRMTRACT                  number of term-leased tractors

  TRPTRACT                  number of trip-leased tractors
  ------------------------- ---------------------------------------------

The 261,179 private motor carriers identified were distributed among the
different categories, as shown in Table 5-15.

[]{#__RefHeading___Toc166050316 .anchor}Table 5‑15. Number of Carriers
in Each Category

  ----------------------------------------------------- -----------------
  **Category**                                          **Carriers**

  9-15 passenger vehicles only                          536

  16+ passenger vehicles only                           1,606

  non-hazardous property vehicles only                  239,912

  more than one type of vehicle                         1,265

  not assigned                                          17,860
  ----------------------------------------------------- -----------------

### Affected Private Carriers Accounting for Existing Insurance Coverage

Using the information in Section 2.2.2, State Private Motor Carrier
Insurance Requirements, and in Tables 2-5 and 2-6, the difference
between the current private motor carrier insurance requirements for
each state and the current insurance requirements for all interstate
for-hire motor carriers can be determined. This is the gap in insurance
that each private carrier *with only the state's minimum requirements*
would need to cover. As some states vary the minimum requirements for
non-hazardous property carriers based on the weight of the vehicle, a
weighted average minimum requirement for all vehicles in those states
was computed using the distribution of trucks by weight class provided
by the Federal Highway Administration (FHWA, 2005). This modified truck
insurance minimum was computed for Arizona, Florida, North Carolina,
Oklahoma, Oregon, and Texas. For states that vary the minimum insurance
required for passenger vehicles based on the passenger capacity, an
average coverage was estimated by the project team and is already
included in Table 2-5.

MCMIS contains complete carrier address information, so the number of
private motor carriers operating each type of vehicle in each state can
be determined. However, many of these carriers may already have
sufficient public liability coverage to meet the proposed new
requirements. The project team developed estimates of the percentage of
carriers, based on fleet size, that would already maintain sufficient
insurance coverage. These estimates are presented in Table 5-16. It is
assumed that some private carriers with small fleet sizes are still
large businesses and would maintain high levels of insurance coverage.
Using these estimates, the number of carriers in each category that
would need to obtain some level of additional insurance is shown in
Table 5-17. The total number of carriers by state is provided in
Appendix C.

[]{#__RefHeading___Toc166050317 .anchor}Table 5‑16. Estimates of
Carriers with Adequate Insurance Coverage by Fleet Size

  ----------------------- ------------ -----------------------------------
  **Category**            **Fleet      **% of Private Carriers with
                          Size**       Indicated Public Liability
                                       Coverage**

  **9-15 passenger                     **\$1,500,000**
  vehicles**                           

                          1            15%

                          2            25%

                          3            33%

                          10           50%

                          20           85%

                          65           100%

  **16+ passenger                      **\$5,000,000**
  vehicles**                           

                          1            15%

                          2            25%

                          5            33%

                          15           50%

                          25           85%

                          45           100%

  **non-hazardous                      **\$750,000**
  property vehicles**                  

                          1            15%

                          9            25%

                          19           33%

                          50           50%

                          145          85%

                          550          100%
  ----------------------- ------------ -----------------------------------

[]{#__RefHeading___Toc166050318 .anchor}Table 5‑17. Number of Carriers
in Each Category Requiring Additional Insurance

  ----------------------------------------------------- -----------------
  **Category**                                          **Carriers**

  9-15 passenger vehicles                               1,059

  16+ passenger vehicles                                1,960

  non-hazardous property vehicles                       189,726
  ----------------------------------------------------- -----------------

### Number of Vehicles for Which Insurance is Required

A similar process is used to determine, at the state level, how many
vehicles in each of the three categories will be affected by new minimum
public liability coverage requirements for interstate private motor
carriers. The same estimates shown in Table 5-16 are applied to the
MCMIS data and the overall results are shown in Table 5-18. The total
number of vehicles by state is provided in Appendix C.

[]{#__RefHeading___Toc166050319 .anchor}Table 5‑18. Number of Vehicles
in Each Category Requiring Additional Insurance

  ----------------------------------------------------- -----------------
  **Category**                                          **Vehicles**

  9-15 passenger vehicles                               2,110

  16+ passenger vehicles                                4,114

  non-hazardous property vehicles                       524,534
  ----------------------------------------------------- -----------------

## Costs to Private Motor Carriers

### Costs to Explore Obtaining Public Liability Insurance

The stakeholders interviewed in support of this study indicated that
they would dedicate roughly 8 to 24 hours of staff time to become
familiar with a new regulation and to assess their operation to
determine their need for additional insurance, and obtain it. This
process would include obtaining insurance quotes and determining the
most appropriate insurance option. Based on the data received from the
stakeholder interviews, the analysis assumes that an average of 16 hours
per company will be spent in the process of obtaining insurance.

To determine the costs to private operators of 9-15 passenger vehicles,
16+ passenger vehicles, and non-hazardous material transporting heavy
trucks, the number of carriers needing coverage in each category (1,059
9-15 passenger vehicle operators, 1,960 16+ passenger vehicle operators
and 189,726 truck operators) was multiplied by the time required to
obtain insurance (16 hours) and the salary plus fringe benefits for
administrative personnel (\$22.64).[^8]

Based on these assumptions, the industry costs associated with
researching any new insurance requirement and obtaining insurance in
compliance with it are estimated at \$383,612 for operators of 9-15
passenger vehicles, \$709,990 for bus operators, and \$68,726,346 for
truck operators. These are considered one-time costs, necessary for
obtaining insurance commensurate with the FMCSA standards presently
applied to for-hire carriers. These costs are assumed to be incurred in
the first year of the 10-year analysis timeframe.

### Costs for Public Liability Insurance

The vast majority of the costs considered in this study are those tied
to the expanded insurance requirements. To determine the insurance costs
to private motor carriers, the insurance rates highlighted in Table 2-9
were used to construct cost curves, as shown in Figure 5-1. State
insurance coverage requirements were then built into the cost equations
shown in Figure 5-1 to estimate the costs currently paid by private
carriers. The average state insurance costs were estimated at \$2,088
for 9-15 passenger vehicles, \$2,325 for buses, and \$4,973 per vehicle
per year. Federal public liability insurance coverage requirements were
also built into the cost equations and compared to the estimated state
costs in order to determine the incremental cost of the expanded
insurance requirements.

![](media/image6.wmf){width="6.510416666666667in"
height="4.385416666666667in"}

[]{#__RefHeading___Toc131257298 .anchor}Figure 5‑1. Insurance Cost
Curves for 9-15 Passenger Vehicles, Buses, and Heavy Trucks

The average costs of state-required insurance, differentiated by vehicle
type, are compared to the estimated costs of the expanded Federal
requirements in Table 5-19. The costs associated with the expanded
insurance requirements range from \$1,010 for trucks to \$2,120 for 16+
passenger vehicles. The 16+ passenger vehicle cost differential is the
greatest because the Federal standards require \$5,000,000 of public
liability coverage, an amount well in excess of the state average of
\$382,000 of coverage.

[]{#__RefHeading___Toc166050320 .anchor}Table 5‑19. Insurance Costs per
Vehicle per Year

  ------------------------ --------------- --------------- ----------------
  **Vehicle Type**         **Federal       **State         **Cost
                           Standard**      Average**       Differential**

  9-15 passenger vehicles  \$3,670         \$2,088         \$1,582

  16+ passenger vehicles   \$4,444         \$2,324         \$2,120

  non-hazardous property   \$5,983         \$4,973         \$1,010
  vehicles                                                 
  ------------------------ --------------- --------------- ----------------

The number of vehicles requiring insurance was computed in Section
5.1.3. The number of vehicles by type requiring insurance was segmented
according to each carrier's state, as determined by their physical
address in the MCMIS Census File. The project team obtained data from
all 50 states and the District of Columbia. The number of vehicles
required to expand their coverage from state to Federal standards by
vehicle type was computed and compared to the insurance cost
differential for each state to determine the insurance costs associated
with the expanded Federal coverage requirements. Based on these
assumptions, the total insurance costs borne by private carriers is
estimated at \$27.4 million for 9-15 passenger vehicle operators, \$69.8
million for 16+ passenger vehicle operators, and \$4.2 billion for
private truck operators over the 10-year analysis time frame. These
costs are presented in present value terms, discounted at 7 percent.

Equation 1 demonstrates how insurance costs were estimated for private
motor carriers carrying non-hazardous property in the State of New York.
Note that these are the costs estimated for only Year 1 of the analysis
time frame.

The insurance cost equation reflects the findings of the insurance rates
analysis presented in Figure 5-1. Based on current requirements of
\$60,000 liability coverage and the expanded Federal requirements of
\$750,000, the cost impact per truck would be estimated at \$1,311,
reflecting an increase in the estimated annual insurance premium from
\$4,672 to \$5,983. The per-vehicle increase in insurance costs is, in
turn, multiplied by the total number of trucks not already in compliance
with Federal standards (estimated at 23,787). Equations 2 and 3 show the
result of the calculation, an estimated cost to private truck operators
in New York of

\$31.2 million in 2006.

*ICT~N\ Y~ = #TR~NY\ ~*x \[(0.0019(*IRT~F~*) + 4558.6) --
(0.0019(*IRT~NY~*) + 4558.6)\] \[1\]

where:

> ICT~NY~ = Insurance cost impacts of expanded Federal requirements to
> private property truck operators in New York
>
> #TR~NY~ = Number of trucks requiring coverage
>
> IRT~F~ = Federal insurance requirements for operators of trucks
> carrying non-hazardous property
>
> IRT~NY~ = New York insurance requirements for trucks carrying
> non-hazardous property.

*ICT~NY~* = 23,787 x \[(0.0019(\$750,000) + \$4558.6) --
(0.0019(\$60,000) + \$4558.6)\] \[2\]

*ICT~NY~* = \$31,184,757 \[3\]

### Costs to File Proof of Insurance

For-hire carriers, who are already required to meet FMCSA insurance
standards, must file numerous forms documenting the possession of
adequate public and cargo liability insurance, as well as forms designed
to verify that the carriers have purchased surety bonds. For-hire
carriers are also required to file notice of cancellations on FMCSA's
prescribed forms. Under the insurance requirements outlined in
SAFETEA‑LU and evaluated in this study, private carriers would be
required to file forms that provide evidence of required bodily injury
and property damage (BI&PD) insurance coverage (Forms BMC-91, 91x, or
82) and endorsements that must be attached to BI&PD policies (Forms
BMC-90 and 32). Thus, private carriers would, at a minimum, be required
to file two forms with FMCSA if they were subject to FMCSA insurance
requirements.

FMCSA has estimated that the time required to complete these forms is 10
minutes per form (FMCSA, 2005). This cost analysis assumes that each
private carrier, including those who would not need to change insurance
coverage levels, would be required to file proof of insurance with FMCSA
and that it would take 20 minutes (10 minutes per form). The cost to
file these forms is estimated at \$7.55 per company, assuming an hourly
rate (salary plus fringe) of \$22.64 for administrative personnel.

Based on the assumptions outlined above, the product of the number of
companies required to file proof of insurance forms (Table 5-20) and the
filing cost per company generates estimates of the initial costs to file
proof of insurance (\$10,980 for operators of 9-15 passenger vehicles,
\$20,006 for bus operators and \$1,815,396 for private truck operators).
When carriers change insurance providers, start, or stop coverage, they
would be required to file additional forms with FMCSA. Based on current
filing rates associated with for-hire carriers, the costs associated
with future years' filings tied to changes in coverage were estimated
(OMB, 2005). Total filing costs are highlighted in Table 5-20.

[]{#__RefHeading___Toc166050321 .anchor}Table 5‑20. Filing Costs\*

  ------------------------------- -------------------- -------------------
  **Vehicle Type**                **Number of          **Total Filing
                                  Carriers**           Costs**

  9-15 passenger vehicles         1,455                \$14,794

  16+ passenger vehicles          2,651                \$34,073

  non-hazardous property vehicles 240,556              \$3,244,685
  ------------------------------- -------------------- -------------------

### Impacts on Small Businesses

The project team evaluated the industries most likely to be impacted by
the expanded insurance requirements and identified corresponding North
American Industry Classification System (NAICS) codes for each industry,
as shown in Table 5-21. Because these requirements would apply to
private carriers, the industries affected by the insurance regulations
span a broad cross-section of the national economy. Broad industry
classifications, such as manufacturing (31-33), retail (44-45), and
wholesale (42) industries and construction (23), would be affected by
the requirement that property carriers meet the expanded insurance
requirements. With respect to the 9-15 and 16+ passenger vehicles, the
project team identified four primary NAICS codes: educational services
(61); nursing and residential care facilities (623); art, entertainment,
and recreation (71); and religious organizations (8131).

[]{#__RefHeading___Toc166050322 .anchor}Table 5-21. Impacted NAICS Codes

  ---------------------- ------------------------------------------------
  **NAICS Code(s)**      **Industry**

  non-hazardous property 
  motor carriers         

  23                     Construction

  562                    Waste Management Services

  44-45                  Retail

  811                    Repair and Maintenance

  113                    Forestry and Logging

  31-33                  Manufacturing

  42                     Wholesale

  passenger motor        
  carriers               

  61                     Educational Services

  623                    Nursing and Residential Care Facilities

  71                     Arts, Entertainment, and Recreation

  8131                   Religious Organizations
  ---------------------- ------------------------------------------------

The research team was unable to determine the percentage of all vehicles
attributable to small businesses operating under each NAICS code
identified in Table 5-21; however, Small Business Administration (SBA)
data were used to determine the number of establishments, employees,
annual pay, and total receipts broken down by firm size (SBA, 2006).
From this dataset, which is provided in Appendix C, the project team was
able to determine the proportion of employees, salaries, receipts, and
establishments attributed to small businesses operating trucks and
passenger vehicles. The resulting shares are shown in Table 5-22. Table
5-22 shows that small businesses comprise 80.6 percent of the
establishments associated with trucks, as identified in Table 5-21.
Further, small businesses account for approximately 29.5 percent of
estimated receipts in industries where private heavy trucks are
operated. Small businesses account for 35.3 percent of total receipts in
industries that operate passenger vehicles.

[]{#__RefHeading___Toc166050323 .anchor}Table 5-22. Small Business Share
of Establishments, Employees, Annual Pay, and Estimated Receipts in
Impacted NAICS Codes

  --------------------- --------------------- ----------------------------
                        **Trucks**            **Passenger Vehicles**

  Establishments        80.6%                 87.8%

  Employees             42.9%                 45.2%

  Annual Pay            39.9%                 35.5%

  Estimated Receipts    29.5%                 35.3%
  --------------------- --------------------- ----------------------------

Table 5-23 presents the estimated costs to small businesses associated
with the expanded insurance requirements. The small business analysis
considers high- and low-cost scenarios. In the low-cost scenario,
estimated receipts are used as a proxy for the burden that small
businesses would bear (29.5 percent for heavy trucks and 35.3 percent
for passenger vehicles). The low-cost scenario considers employees as an
indicator of financial responsibility, and presents a range based on the
assumption that small businesses operating in industries deploying heavy
trucks would shoulder 42.9 percent of the costs while those operating in
industries using passenger vehicles would bear 51.9 percent of the
costs. Based on these assumptions, total costs to small businesses
operating trucks are estimated at \$1.2 to \$1.8 billion. The impact of
the expanded insurance requirements on small businesses operating 9-15
passenger vehicles is estimated at \$11.7 to \$14.5 million, and the
costs to small businesses operating 16+ passenger vehicles is estimated
at \$29.7 to \$36.6 million.

[]{#__RefHeading___Toc166050324 .anchor}Table 5-23. Small Business Cost
Analysis

  -------------------------- ------------------ ----------------- ----------------- -------------
  **Category**               **Total Cost to    **Small Business                    
                             All Businesses**   Costs**                             

                                                **Low**                             **High**

  9-15 passenger vehicles    \$27,843,379       \$11,722,062      \$14,450,714      

  16+ passenger vehicles     \$70,519,876       \$29,688,868      \$36,599,815      

  non-hazardous property     \$4,224,357,602    \$1,246,185,493   \$1,812,249,411   
  vehicles                                                                          
  -------------------------- ------------------ ----------------- ----------------- -------------

### Summary of Costs

The costs associated with the expanded insurance requirements examined
in this study are highlighted in Table 5-24. These costs are summarized
by vehicle type. The vast majority of the costs are tied to insurance
premiums paid by private operators of heavy trucks. In computing these
costs over 10 years, an average annual growth rate of 2.98 percent was
applied to the truck population, an annual growth rate of 1.92 percent
was applied to buses and an average annual growth rate of 2.0 percent
was applied to 9-15 passenger vehicles.[^9] A discount rate of 7 percent
was applied in order to present estimates in current value terms.

As illustrated in Table 5-24, the total costs to operators of 9-15
passenger vehicles is estimated at \$27.8 million over the 10-year
timeframe. Estimated costs to private bus operators are estimated at
\$70.5 million. Finally, the estimated costs borne by private truck
operators are expected to exceed \$4.2 billion over the 10-year
(2006-2015) study time horizon.

[]{#__RefHeading___Toc166050325 .anchor}Table 5‑24. Summary of Costs

  ------------------- ------------------ ----------------- ------------- -----------------
  **Vehicle Type**    **Administrative   **Costs of        **Costs of    **Total Costs**
                      Costs to Obtain    Insurance         Filing**      
                      Insurance**        Premiums**                      

  9-15 passenger      \$383,612          \$27,444,972      \$14,794      \$27,843,379
  vehicles                                                               

  16+ passenger       \$709,990          \$69,775,813      \$34,073      \$70,519,876
  vehicles                                                               

  non-hazardous       \$68,726,346       \$4,152,386,571   \$3,244,685   \$4,224,357,602
  property vehicles                                                      
  ------------------- ------------------ ----------------- ------------- -----------------

Because there is some uncertainty with respect to the estimate of the
number of entities potentially affected by expanded Federal financial
responsibility requirements and the costs that would be incurred,
sensitivity analysis was performed and low-, medium- and high-end ranges
were computed. The sensitivity analysis takes the medium-end or
mid-point estimates provided in Table 5-24 and considers the cases where
costs exceed or fall short of the baseline by 20 percent. The range of
costs is presented in Table 5-25.

[]{#__RefHeading___Toc166050326 .anchor}Table 5‑25. Results of Cost
Sensitivity Analysis

+-----------------+------------+-------------+----------+-------------+
| **Vehicle       | **Admi     | **Costs of  | **Costs  | **Total     |
| Type**          | nistrative | Insurance   | of       | Costs**     |
|                 | Costs to   | Premiums**  | Filing** |             |
|                 | Obtain     |             |          |             |
|                 | I          |             |          |             |
|                 | nsurance** |             |          |             |
+-----------------+------------+-------------+----------+-------------+
| 9-15 passenger  |            |             |          |             |
| vehicles        |            |             |          |             |
+-----------------+------------+-------------+----------+-------------+
| > Low-end       | \$306,890  | \           | \$11,835 | \           |
| > estimate      |            | $21,995,978 |          | $22,274,703 |
+-----------------+------------+-------------+----------+-------------+
| > High-end      | \$460,334  | \           | \$17,753 | \           |
| > estimate      |            | $32,933,966 |          | $33,412,055 |
+-----------------+------------+-------------+----------+-------------+
| 16+ passenger   |            |             |          |             |
| vehicles        |            |             |          |             |
+-----------------+------------+-------------+----------+-------------+
| > Low-end       | \$567,992  | \           | \$27,258 | \           |
| > estimate      |            | $55,820,650 |          | $56,415,901 |
+-----------------+------------+-------------+----------+-------------+
| > High-end      | \$851,988  | \           | \$40,888 | \           |
| > estimate      |            | $83,730,976 |          | $84,623,851 |
+-----------------+------------+-------------+----------+-------------+
| non-hazardous   |            |             |          |             |
| property        |            |             |          |             |
| vehicles        |            |             |          |             |
+-----------------+------------+-------------+----------+-------------+
| > Low-end       | \$         | \$3,        | \$2      | \$3,        |
| > estimate      | 54,981,077 | 321,909,257 | ,595,748 | 379,486,082 |
+-----------------+------------+-------------+----------+-------------+
| > High-end      | \$         | \$4,        | \$3      | \$5,        |
| > estimate      | 82,471,615 | 982,863,885 | ,893,622 | 069,229,122 |
+-----------------+------------+-------------+----------+-------------+

## Benefits

### Safety Benefits from Crash Reduction

#### Per-crash Costs {#per-crash-costs .unnumbered}

The primary benefit associated with the expanded insurance requirements
examined in this study stem from avoiding the high costs of crashes
involving unsafe private carriers that would find it difficult or
impossible to obtain public liability coverage at the new, higher
levels. The costs include those related to: medical costs, emergency
services, property and equipment damage, lost productivity (e.g., wages,
fringe benefits, claims processing costs, litigation costs, crash
investigation costs, recruiting and training replacement for disabled
workers), and monetized quality-adjusted life years. Zaloshnja (2002)
estimated these costs according to non-injury crashes, injury crashes,
and fatal crashes for a broad spectrum of vehicle types, including buses
and heavy trucks.

The estimated costs per accident, differentiated based on vehicle type
and crash severity, are highlighted in Table 5-26. The research team was
unable to identify a study that estimated the costs associated with 9-15
passenger vehicle incidents. Thus, this analysis assumes that there is
no difference between the crash costs attributable to 16+ passenger and
9-15 passenger vehicle crashes due to the similarity in their risk
profile, as noted by two insurance industry representatives contacted
for this study. Zaloshnja (2002), the most recent source of crash cost
information, relies on data obtained in 2000. Thus, the published costs
were inflated to 2006 dollars based on growth in the consumer price
index between 2000 and 2006.

[]{#__RefHeading___Toc166050327 .anchor}Table 5‑26. Crash Costs by
Vehicle Type and Crash Severity

  ---------------------- --------------------------- ---------------------
  **Crash Severity**     **9-15 and 16+ Passenger    **Trucks**
                         Vehicles**                  

  Non-Injury             \$7,058                     \$11,973

  Injury                 \$88,599                    \$189,440

  Fatality               \$3,072,617                 \$3,769,916
  ---------------------- --------------------------- ---------------------

#### Crashes Avoided {#crashes-avoided .unnumbered}

The MCMIS Census File was used to compute overall crash rates for both
private and for-hire carriers in each of the three carrier-type
categories. This was done by using the recordable accident rate
(ACC_RATE) and latest review mileage (MILETOT) fields to determine the
number of crashes attributable to each carrier *that operated vehicles
in only one category*. The overall crash rate was determined by summing
all the crashes and dividing by the sum of all the review mileage
figures for each motor carrier included. For all three carrier types,
the private carrier crash rate was higher than it was for the for-hire
carriers. These values are shown in

Table 5-27.

[]{#__RefHeading___Toc166050328 .anchor}Table 5‑27. Crash Rates by
Carrier Category

  ---------------------------- -------------------- ----------------------
                               **Crash Rates (per   
                               million miles        
                               traveled)**          

  **Category**                 **For-hire           **Private Carriers**
                               Carriers**           

  9-15 passenger vehicle       0.283                0.359
  operators                                         

  16+ passenger vehicle        0.221                0.516
  operators                                         

  non-hazardous property       0.307                0.409
  carriers                                          
  ---------------------------- -------------------- ----------------------

Crashes in the MCMIS Crash File were linked, where possible, to motor
carriers in the MCMIS Census File by their USDOT numbers. This linkage
was not possible for approximately 30 percent of the crashes in the
Crash File as the USDOT number was missing. There are several reasons
why the USDOT number can be blank for a reported crash. While all
reportable crashes are to be entered into MCMIS, not all motor carriers
are required to have a USDOT number. For example, while for all vehicle
configurations only 30 percent of the MCMIS crash records have missing
USDOT numbers, that percentage is 70 percent for 16+ passenger vehicle
operators and 75 percent for 9-15 passenger vehicle operators. It
follows that there are many reportable accidents involving these
categories of vehicles that are not included in the crash rate
calculation shown in Table 5-27. While all motor carriers transporting
hazardous materials must apply for a USDOT number, one study of
hazardous material transport found that the USDOT number was not entered
for 15 percent of the MCMIS crash records. The overall effect of a
missing USDOT number on the estimates shown in Table 5-27 is much less
significant than the inability to include many of the crashes involving
9-15 and 16+ passenger vehicle operators in the crash rate estimates.

For the reportable accidents that had USDOT numbers, crashes were then
identified as involving a private or for-hire carrier and by crash
severity. These crashes were used to determine the probabilities of a
fatality or injury, given a crash, for each carrier category. Finally,
the reduction in crashes, fatal crashes, and injury crashes was
determined for each carrier category. This reduction was based on the
assumption that with the levels of public liability insurance increased
to those for for-hire carriers, private carriers would experience the
same accident rates as for-hire carriers. There are a number of reasons
that would lead one to expect higher insurance requirements to have an
effect upon safe operations. For example, the increased costs should
force private carriers to focus more on safety in order to keep their
rates as low as possible. Furthermore, as long as private carriers must
only comply with part of the FMCSRs, their basis for safe operation will
be more dependent upon the cost of insurance rather than regulatory
compliance. Finally, unsafe operators may not be able to either acquire
or afford the minimum insurance required to comply, thus removing them
from the carrier population. While minimum financial responsibility
requirements may not be the sole reason for the differential in crash
rates between private and for-hire carriers, the baseline analysis
assumes that it is a significant one. Sensitivity analysis is used to
account for other possible reasons behind the crash rate differential
and a smaller percentage of crashes avoided from the new requirements.
These reductions are shown in Table 5-28 and are actual values, not
percentages.

[]{#__RefHeading___Toc166050329 .anchor}Table 5‑28. Annual Reductions in
Crashes, Fatalities, and Injuries

  ------------------------ ------------- ----------- ---------------- ----------- --------------
  **Category**             **Crashes**   **Fatal     **Fatalities**   **Injury    **Injuries**
                                         Crashes**                    Crashes**   

  9-15 passenger vehicle   2.3           0.1         0.2              1.5         3.2
  operators                                                                       

  16+ passenger vehicle    84.9          1.3         1.4              44.7        95.6
  operators                                                                       

  non-hazardous property   2,392.8       86.2        99.4             1,113.4     1,581.8
  carriers                                                                        
  ------------------------ ------------- ----------- ---------------- ----------- --------------

Based on analysis results obtained from UMTRI, crash data are
underreported in MCMIS.[^10] The adjustment factors to account for this
underreporting, taken from UMTRI's analysis, are shown in Table 5-29.

[]{#__RefHeading___Toc166050330 .anchor}Table 5‑29. MCMIS Underreporting
Correction Factors

  ------------------------ ------------- ----------- ---------------- ----------- --------------
  **Category**             **Crashes**   **Fatal     **Fatalities**   **Injury    **Injuries**
                                         Crashes**                    Crashes**   

  9-15 passenger vehicle   0.3           0.7         0.7              0.6         0.6
  operators                                                                       

  16+ passenger vehicle    0.3           0.7         0.7              0.6         0.6
  operators                                                                       

  non-hazardous property   0.6           0.7         0.7              0.6         0.6
  carriers                                                                        
  ------------------------ ------------- ----------- ---------------- ----------- --------------

Next, the values in Tables 5-28 and 5-29 are multiplied to yield the
resulting reductions in crashes, fatalities, and injuries shown in Table
5-30.

[]{#__RefHeading___Toc166050331 .anchor}Table 5‑30. Annual Reductions in
Crashes, Fatalities, and Injuries Corrected for Underreporting

  ------------------------ ------------- ----------- ---------------- ----------- --------------
  **Category**             **Crashes**   **Fatal     **Fatalities**   **Injury    **Injuries**
                                         Crashes**                    Crashes**   

  9-15 passenger vehicle   7.8           0.2         0.2              2.5         5.4
  operators                                                                       

  16+ passenger vehicle    283.0         1.8         2.0              74.5        159.4
  operators                                                                       

  non-hazardous property   3,988.0       123.2       142.0            1,855.7     2,636.3
  carriers                                                                        
  ------------------------ ------------- ----------- ---------------- ----------- --------------

The next step in determining the avoided crashes, fatalities, and
injuries from extending the minimum public liability insurance
requirements to private carriers is to account for those carriers that
already have the minimum levels of coverage. The percentage of VMT
associated with these carriers was determined by using the same
methodology presented in Section 5.1.2 to identify the carriers
themselves. It was assumed that VMT was distributed proportionally
across all the fleet size categories shown in Table 5-16. For 9-15
passenger vehicles, the percentage reduction was 19.8 percent; the
reduction was 85.6 percent for 16+ passenger vehicles and 46.5 percent
for trucks carrying non-hazardous property. The resulting adjusted
annual reductions in crashes, fatalities, and injuries shown in Table
5-31.

[]{#__RefHeading___Toc166050332 .anchor}Table 5‑31. Annual Reductions in
Crashes, Fatalities, and Injuries Corrected for Carriers Already Meeting
the Insurance Requirements

  ------------------------ ------------- ----------- ---------------- ----------- --------------
  **Category**             **Crashes**   **Fatal     **Fatalities**   **Injury    **Injuries**
                                         Crashes**                    Crashes**   

  9-15 passenger vehicle   6.3           0.1         0.2              2.0         4.3
  operators                                                                       

  16+ passenger vehicle    40.7          0.3         0.3              10.7        22.9
  operators                                                                       

  non-hazardous property   2,135.1       66.0        76.0             993.5       1,411.4
  carriers                                                                        
  ------------------------ ------------- ----------- ---------------- ----------- --------------

Expanding Federal public liability insurance requirements to private
carriers would not be expected to completely eliminate the discrepancy
between private and for-hire accident rates. Thus, this analysis
considers a ratio of effectiveness (ROE), where the proposed regulation
change would reduce but not eliminate the gap in accident rates between
private and for-hire carriers. As shown in Table 5-32, a ROE of 60
percent reduces the annual avoided crashes, fatalities, and injuries
highlighted in Table 5-31 by 40 percent. The analysis also considers an
80 percent ROE scenario, which is highlighted in Section 5.4 of this
report.

[]{#__RefHeading___Toc166050333 .anchor}Table 5‑32. Annual Reductions in
Crashes, Fatalities, and Injuries Corrected for Carriers Meeting the
Insurance Requirements Assuming a 60 Percent Ratio of Effectiveness

  ------------------------ ------------- ----------- ---------------- ----------- --------------
  **Category**             **Crashes**   **Fatal     **Fatalities**   **Injury    **Injuries**
                                         Crashes**                    Crashes**   

  9-15 passenger vehicle   3.8           0.1         0.1              1.2         2.6
  operators                                                                       

  16+ passenger vehicle    24.4          0.2         0.2              6.4         13.7
  operators                                                                       

  non-hazardous property   1,281.1       39.6        45.6             596.1       846.8
  carriers                                                                        
  ------------------------ ------------- ----------- ---------------- ----------- --------------

#### Benefits of Crashes Avoided {#benefits-of-crashes-avoided .unnumbered}

By combining these per-crash estimated costs with the crashes shown in
Tables 5-31 and 5-32, the cost savings associated with avoided crashes
for 9-15 passenger vehicles are estimated at \$3.2 to \$5.3 million over
the 10-year analysis time horizon. The avoided crash costs for 16 or
more passenger vehicles are estimated at \$9.5 to \$15.8 million. The
crash costs avoided due to a reduction in the number of crashes
involving motor carriers of non-hazardous property is estimated at \$2.3
to \$3.8 billion.

### Summary of Benefits

This study estimated that the expanded insurance requirements would
eliminate 1,309.3 to 2,182.1 crashes, 45.9 to 76.5 fatalities, and 863.2
to 1,438.6 injuries annually, resulting in benefits associated with
enhanced safety totaling \$2.3 to \$3.8 billion over the 10-year
analysis time horizon. Though these benefits are significant, they were
outweighed by the costs associated with soliciting insurance bids,
paying insurance premiums, and filing necessary reports with FMCSA. The
total costs borne by industry over the 10-year time horizon were
estimated at \$3.4 to \$4.3 billion.

[]{#__RefHeading___Toc166050334 .anchor}Table 5‑33. Summary of Benefits

+-----------------+------------+-------------+----------+--------------+
| **Vehicle       | **Avoided  | **Avoided   | *        | **Total      |
| Type**          | Crashes**  | F           | *Avoided | Benefits**   |
|                 |            | atalities** | In       |              |
|                 |            |             | juries** |              |
+-----------------+------------+-------------+----------+--------------+
| 9-15 passenger  |            |             |          |              |
| vehicles        |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| > Low-end       | 3.8        | 0.1         | 2.6      | \$3,195,125  |
| > estimate      |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| > High-end      | 6.3        | 0.2         | 4.3      | \$5,325,208  |
| > estimate      |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| 16+ passenger   |            |             |          |              |
| vehicles        |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| > Low-end       | 24.4       | 0.2         | 13.7     | \$9,497,027  |
| > estimate      |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| > High-end      | 40.7       | 0.3         | 22.9     | \$15,828,379 |
| > estimate      |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| non-hazardous   |            |             |          |              |
| property        |            |             |          |              |
| vehicles        |            |             |          |              |
+-----------------+------------+-------------+----------+--------------+
| > Low-end       | 1,281.1    | 45.6        | 846.8    | \$2          |
| > estimate      |            |             |          | ,284,724,636 |
+-----------------+------------+-------------+----------+--------------+
| > High-end      | 2,135.1    | 76.0        | 1,411.4  | \$3          |
| > estimate      |            |             |          | ,807,874,394 |
+-----------------+------------+-------------+----------+--------------+

## Benefit-cost Ratios

The benefits and costs over the ten-year analysis period associated with
the expanded insurance requirements are highlighted in Table 5-34 and
are shown in present value terms, discounted at

7 percent. The BCA considers 27 scenarios, with varying combinations of
benefits and costs ranging from low-end to high-end estimates, with
mid-point estimates also included. As noted previously, the benefits
estimates vary based on the ROE, ranging from 60 percent (low-end) to
100 percent (high-end) with a mid-point estimate of 80 percent. The cost
estimate includes a mid-point estimate and low- and high-end estimates
that represent ± 20 percent of the mid-point. The scenarios also differ
based on the vehicle fleet considered: 9-15 passenger vehicles,

16+ passenger vehicles, and trucks carrying non-hazardous property.

Table 5-34 shows that estimated costs exceed estimated benefits in 26 of
the 27 scenarios considered in this study. Net costs (costs minus
benefits) are estimated at \$16.9 to \$30.2 million for 9-15 passenger
vehicles, \$40.6 to \$75.1 million for 16+ passenger vehicles, and
\$-428.4 to \$2.8 billion for trucks carrying non-hazardous property. In
all cases except Scenario 21 (highlighted below) where low-end costs and
high-end benefits are considered for non-hazardous property-carrying
trucks, costs exceed benefits and the benefit-cost ratios (BCRs) fall
below 1.0. The lowest BCRs are attributed to the 9-15 passenger
vehicles, while trucks achieve the highest BCRs.

[]{#__RefHeading___Toc166050335 .anchor}Table 5‑34. Benefit-cost
Analysis Findings

  ---------- ---------- ------- ------------- ----------------- ----------------- -------
  Scenario   Benefits   Costs   Vehicle Type  Benefits          Costs             BCR

  1          Low        Low     9-15          \$3,195,125       \$22,274,703      0.14
                                Passenger                                         

  2          Low        Low     16+ Passenger \$9,497,027       \$56,415,901      0.17

  3          Low        Low     Trucks        \$2,284,724,636   \$3,379,486,082   0.68

  4          Low        Mid     9-15          \$3,195,125       \$27,843,379      0.11
                                Passenger                                         

  5          Low        Mid     16+ Passenger \$9,497,027       \$70,519,876      0.13

  6          Low        Mid     Trucks        \$2,284,724,636   \$4,224,357,602   0.54

  7          Low        High    9-15          \$3,195,125       \$33,412,055      0.10
                                Passenger                                         

  8          Low        High    16+ Passenger \$9,497,027       \$84,623,851      0.11

  9          Low        High    Trucks        \$2,284,724,636   \$5,069,229,123   0.45

  10         Mid        Low     9-15          \$4,260,167       \$22,274,703      0.19
                                Passenger                                         

  11         Mid        Low     16+ Passenger \$12,662,703      \$56,415,901      0.22

  12         Mid        Low     Trucks        \$3,046,299,515   \$3,379,486,082   0.90

  13         Mid        Mid     9-15          \$4,260,167       \$27,843,379      0.15
                                Passenger                                         

  14         Mid        Mid     16+ Passenger \$12,662,703      \$70,519,876      0.18

  15         Mid        Mid     Trucks        \$3,046,299,515   \$4,224,357,602   0.72

  16         Mid        High    9-15          \$4,260,167       \$33,412,055      0.13
                                Passenger                                         

  17         Mid        High    16+ Passenger \$12,662,703      \$84,623,851      0.15

  18         Mid        High    Trucks        \$3,046,299,515   \$5,069,229,123   0.60

  19         High       Low     9-15          \$5,325,208       \$22,274,703      0.24
                                Passenger                                         

  20         High       Low     16+ Passenger \$15,828,379      \$56,415,901      0.28

  21         High       Low     Trucks        \$3,807,874,394   \$3,379,486,082   1.13

  22         High       Mid     9-15          \$5,325,208       \$27,843,379      0.19
                                Passenger                                         

  23         High       Mid     16+ Passenger \$15,828,379      \$70,519,876      0.22

  24         High       Mid     Trucks        \$3,807,874,394   \$4,224,357,602   0.90

  25         High       High    9-15          \$5,325,208       \$33,412,055      0.16
                                Passenger                                         

  26         High       High    16+ Passenger \$15,828,379      \$84,623,851      0.19

  27         High       High    Trucks        \$3,807,874,394   \$5,069,229,123   0.75
  ---------- ---------- ------- ------------- ----------------- ----------------- -------

# Conclusions and Recommendations

## Conclusions

While some individuals interviewed for this research believe that
private motor carriers are generally safer than for-hire motor carriers,
no studies were identified that indicated that private carriers, as a
whole, were safer than for-hire carriers. The FMCSA data analyzed for
this project indicate the opposite is true: for-hire carriers in all
three carrier categories examined have lower overall crash rates per
vehicle mile traveled than private carriers. However, data examined on
fatal truck and bus crashes showed that private carriers had lower
fatality crash involvements than for-hire carriers. While this analysis
links the level of insurance coverage with safety levels and crash
reduction, the project team acknowledges that other variables might be
contributing factors. However, as carriers that experience more crashes
and that are considered to be in a higher claims risk category in
general will pay increased rates for insurance, the insurance
requirements are assumed to have a strong effect in encouraging safe
operating practices. Further, expanded insurance requirements could
remove a number of unsafe carriers from the vehicle population, as these
carriers would be unable to secure public liability coverage at the
higher levels on reasonable financial terms.

Most states have lower or no financial responsibility requirements for
private motor carriers than for for-hire motor carriers, and those that
have similar requirements appear to have done so to apply consistent
rules across all motor carriers within their state. States agencies
demonstrate this regulatory behavior either because they have not
determined that private motor carriers are no less safe than for-hire
motor carriers or there just are not sufficient data on which to
properly address the issue.

This study found that the expanded insurance requirements would
eliminate 1,309 to

2,182 crashes, 46 to 77 fatalities, and 863 to 1,439 injuries annually,
resulting in benefits associated with enhanced safety totaling \$2.3 to
\$3.8 billion over the 10-year analysis time horizon. Though these
benefits are significant, they were outweighed by the costs associated
with soliciting insurance bids, paying insurance premiums, and filing
necessary reports with FMCSA in 26 of 27 benefit-cost analysis
scenarios. The total costs borne by industry over the 10-year time
horizon were estimated at \$3.5 to \$5.2 billion.

The societal costs are the same for a crash involving a motor carrier
with adequate financial resources and insurance coverage and for a crash
involving a motor carrier without adequate financial resources and
insurance coverage. However, there are two equity issues that may
justify the adoption of the new requirements so that they apply to all
motor carriers. First, when a motor carrier is at fault in a crash and
is not able to cover the bodily injury and property and environmental
damage costs resulting from the crash, the injured parties must pay
those costs. These parties may include individuals, businesses, and
public agencies. Second, some for-hire motor carriers argue that some
private carrier operations are essentially competing with for-hire
carriers and that requiring the same level of public liability coverage
for all carriers would remove what they see as an unfair advantage for
private carriers.

## Recommendations

Based on the results of the analyses conducted for this project, it
appears that extending the current minimum financial responsibility
requirements that exist for for-hire motor carriers to private motor
carriers is not cost-beneficial under the assumptions used in this
analysis. The BCRs for the two passenger carrier categories are both
significantly less than one. The BCR for non-hazardous property motor
carriers is closer to one, but still indicates that the costs outweigh
the benefits for this much larger group of private carriers. However,
the financial responsibility requirements examined within this study may
be justifiable given the equity considerations previously described.

**[Appendix A. References]{.smallcaps}**

American Transportation Research Institute (ATRI). "Predicting Truck
Crash Involvement: Developing a Commercial Driver Behavior-Based Model
and Recommended Countermeasures." Alexandria, VA, 2005.

American Trucking Associations (ATA). "American Trucking Trends."
Alexandria, VA. Using data from FMCSA. 2000, 2004-2005, and 2005-2006
editions.

ATA. "Truck Insurance Survey." Alexandria, VA. January 2002.

Beard, T. Randolf. "Financial Aspects of Motor Carrier Safety." Review
of Industrial Organization. Kluwer Academic Publishers. Vol. 7. pp.
51-64. 1992.

Blincoe, L., Seay, A., Zaloshnja, Miller, T., Romano, E., Luchter, S.,
Spicer, R. "The Economic Cost of Motor Vehicle Crashes, 2000." National
Highway Traffic Safety Administration (NHTSA). May 2002.

Blower, Daniel. University of Michigan Transportation Research
Institute. Personal communications. November 8, 2005, February 7, 2006,
and March 9, 2006.

Bradley, Peter. "Taking the Company Private." DC Velocity Magazine.
August 2005.

Clear Creek Christian School. Board Meeting Minutes. Available at
[www.cccschool.com](http://www.cccschool.com/). June 3, 2002.

Corsi, T. and Keane, T. (2002a). "Motor Carrier Industry Profile Study:
Linking Motor Carrier Safety Performance with Financial Performance."
University of Tennessee, Knoxville, Center for Transportation Research.
p. 499. April 2002.

Corsi, T.M., Newhouse, M.L., Shukla, A., and Chandler, P. (2002b).
"Passenger Motor Carriers: A Safety Performance Profile." University of
Tennessee, Knoxville, Center for Transportation Research. pp. 523-548.
April 2002.

Corsi, T.M., Schumann, K.A., and Tanner, W.C. "Motor Carrier Industry
Profile: Safety Performance Differences Among Major Segments."
University of Maryland. May 2000.

Corsi, T. and Stefan, M. "Motor Carrier Safety Performance Profile."
University of Maryland, Supply Chain Management Center, prepared for
FMCSA. February 2004.

Federal Highway Administration. "2005 Freight Facts and Figures," U.S.
Department of Transportation, Washington, DC. Available at
<http://www.ops.fhwa.dot.gov/freight/freight_analysis/nat_freight_stats/docs/05factsfigures/index.htm> .
Table 3-4. November 2005.

Federal Motor Carrier Safety Administration (FMCSA) (2005a). Notice of
Request for Comments on Extension of a Currently Approved Collection of
Information: Financial Responsibility, Trucking and Freight Forwarding.
Federal Register, Docket No. FMCSA-2005022728. Volume 70, Number 217.
November 10, 2005.

FMCSA (2005b). "Trends in Fatal Crash Data by State." Available at
<http://ai.fmcsa.dot.gov/CarrierResearchResults/CarrierResearchContent.asp?p=4>.
Table 1. October 5, 2005.

Fischer, Peggy. Fleet Tire Consulting. Data provided at the American
Trucking Associations' Truck Maintenance Council's 2005 Fall Meeting in
Valley Forge, PA, September 18, 2005.

France, Larry G., "Trucking--Harder with Fewer Players." Specialty Lines
Markets. Available at
[www.roughnotes.com/rnmagazine/2002/august02/08p59.htm](http://www.roughnotes.com/rnmagazine/2002/august02/08p59.htm).
August 2002.

InsureMyRig.com. "Determining Factors in Assessing Truck Insurance
Premiums." Available at
[www.insuremyrig.com](http://www.insuremyrig.com/), March 7, 2006.

Jenks, Christopher. "Availability and Accessibility of Liability and
Excess Insurance for Public Transit and Private Coach Operators."
Research Results Digest 295, NCHRP. March 2005.

Leavitt, Wendy. "Safety and the Bottom Line." The Gale Group. July 1,
2005.

McFain and Associates Research, Inc., "National Private Trucking Council
(NPTC): 2005 Private Fleet Survey Top Line Report." NPTC. 2005.

Mejza, Michael C., Barnard, Richard E., Corsi, Thomas M., and Keane,
Thomas. "Driver Management Practices of Motor Carriers with High
Compliance and Safety Performance." Transportation Journal of the
American Society of Transportation and Logistic/The Gale Group. Summer
2003.

Memphis Business Journal. "Trucker's insurance barrels out of control,
some rates up 120%," Available at
[http://www.memphis.bizjournals.com](../%20http://www.memphis.bizjournals.com),
October 3, 2003.

NHTSA, "The Economic Burden of Traffic Crashes on Employers," December
2003.

National Institute for Occupational Safety and Health (NIOSH).
"Work-Related Roadway Crashes - Challenges and Opportunities for
Prevention." Publication No. 2003-119. September 2003.

NPTC. "Comments to the Notice of Proposed Rulemaking on the Unified
Registration System." U.S. Department of Transportation Docket
Management System. Docket No. FMCSA-97-2349; RIN 2126-AA22. Document No.
FMCSA-1997-2349-160. August 17, 2005.

Office of Management and Budget. "Inventory of Approved Information
Collections," Available at
http://[www.whitehouse.gov/omb/library/OMBINV.STATE.DOT.html#DOT](http://www.whitehouse.gov/omb/library/OMBINV.STATE.DOT.html#DOT)
as of March 9, 2006.

PACCAR Leasing Company. "Transportation: Trends and Outlooks." Volume
12. Issue 2. Available at
<http://www.paclease.com/newsletter/2005DecemberKW_PrivateFleetsWeb.pdf>.
December 2005.

Petty, Gary. "Recognizing the Stars of Safety." Heavy Duty Trucking.
Available at <http://www.heavydutytrucking.com/2005/06/080a0506.asp>.
June 2005.

Rodriguez, D., Belzer, M., Rocha, M. "The Effects of Trucking Firm
Financial Performance on Driver Safety." Transportation and Labor Issues
and Regulatory Reform. Elsevier Science Publishers. 2004.

Shepard, Kathy. "Rising Liability Insurance Rates Add to Trucking
Industry Woes." American City Business Journals. August 24, 2001.

Small Business Administration (SBA). Available at
<http://www.sba.gov/advo/research/us_rec02.txt>, as of March 10, 2006.

Vise, Avery. "Reward for Risk." eTrucker Magazine. May 2003.

Zaloshnja, Edward and Miller, Ted . "Revised Costs of Large Truck- and
Bus-Involved Crashes," Pacific Institute for Research and Evaluation,
prepared for FMCSA. November 18, 2002.

**[Appendix B. Additional Annotated References]{.smallcaps}**

This appendix describes papers, reports, and articles that were
consulted during the study but not discussed directly in Section 2.0,
Literature Search and Data Gathering. Although the annotated references
were not used directly for the report preparation, they served either to
provide background material and information or to validate another
source and indicate its applicability to the project.

**Hornblower, Manning, and Ward. Truck Accident Litigation. Available at
[www.hmwpc.com/truck.htm](http://www.hmwpc.com/truck.htm) as of March 1,
2006.**

This website lists reasons why truck accidents are different from
personal automobile accidents and explains the need to have insurance.
Specific differences between truck and auto accidents include the
following:

-   Greater likelihood of substantial damage claims

-   Juror prejudice against truck drivers and trucking companies

-   Claims of negligence in the areas of driver hiring, qualification,
    and training

-   Claims of negligence in the areas of vehicle maintenance

-   Conflicting or overlapping insurance coverages for leased tractors
    or trailers

-   Claims by co-drivers or unauthorized passengers

-   Claims by employees covered by workers' compensation insurance in a
    different state

-   Subject to more governmental regulations than non-commercial
    vehicles

-   Unique physical limitations on driver and equipment due to the size
    and bulk of vehicles

-   Identification of vehicle operation and ownership in alleged
    bump-and-drive cases

**Forkenbrock, David. "External Costs of Intercity Truck Freight
Transportation." Public Policy Center, The University of Iowa. Iowa
City, IA. 1999.**

This paper estimates that there are four external costs to trucking
operations: accidents, emissions, noise, and un-recovered costs such as
overhead fees. In this study, small carriers were not separated from
large carriers because, in all markets, large carriers are in direct
competition with one- or two-vehicle carriers. In general, trucking has
two main costs, compensation for workers and insurance payments.
Insurance costs are based on accident history. In 1994, general freight
motor carriers were involved in accidents costing society over \$14
million per 100 million vehicle miles traveled; only \$6 million were
paid by the trucking companies, meaning that 0.59 cents per ton mile
were paid by society.

**Selland, Kerri. "Steelmakers gauge truck options for long haul."
American Metal Market. August 20, 1993.**

This article explains the dispute within companies between having their
own trucking group and contracting out the trucking. It explains that
having a group of their own can be very costly and rarely do companies
take into account all the costs including worker's compensation,
insurance, equipment, and other issues.

**Haigh, Susan. "****Blumenthal calls on DMV to Demand Insurance Proof
from Trucking Cos." Boston Globe. September 30, 2005.**

State's Attorney General Richard Blumenthal calls on the Connecticut
Motor Vehicle Administration to demand proof of insurance from trucking
companies following a fiery 20-vehicle crash that killed four people.
The operator of the truck causing the accident had no liability
insurance. Blumenthal states that companies with safety problems are the
most likely not to have insurance. In Connecticut, the Department of
Motor Vehicles is only informed if there is a lapse in coverage on a
car, but not if there is a lapse in coverage on a truck.

**Vise, Avery. "Ticking Away." eTrucker Magazine. April 2003.**

Trucking insurance has skyrocketed since 2001; liability insurance has
gone up 32 percent while umbrella coverage went up 87 percent. Premium
jumps have forced some carriers to reduce their fleet size and others to
leave the market completely. Choosing the proper coverage is the best
way to reduce unnecessary costs. For a motor carrier, the best way to
accomplish this is review their safety background and forecast a future
loss schedule. Determining the loss schedule on a per-power unit or
per-mile basis will allow the company to determine the most
cost-effective coverage. For a company with good financials and a good
safety record, a policy with a higher deductible and a lower premium may
be best. Although many things played a role in the enormous price hike
that has occurred in trucking insurance, one of the main reasons is
multi-million dollar verdicts. Many insurance companies have excluded
punitive damages in their insurance policies. To compensate, trucking
companies have moved to umbrella coverage, but there are few companies
willing to write this type of policy. There are still some hidden costs
to insurance, and with companies moving toward high-deductible,
low-premium policies, there are even more hidden costs. One such cost is
the need for collateral; the insurer is still responsible for claims if
the motor carrier cannot pay their deductible for any reason and will
seek some form of security to protect themselves.

**"Insurance Crisis." edge, Ryder Business Magazine. January 14, 2002.**

This article highlights the fact that insurance rates have gone up.
Shippers will not be able to pass this increased cost on to their
customers due to the heavy competition in the market. Risk management is
the key to reducing insurance costs over time; generating good practices
will lead to a more efficient and safer work environment. Ultimately,
this will better protect the company's employees and products. Companies
should look more closely at their insurance policy. There are many
options that can affect a company's cash flow, such as monthly
invoicing. Oftentimes there are discounts based on driver safety records
and different vehicle types. Using services such as safety training and
accident reporting properly could also reduce costs. If a carrier is
renting vehicles, it may be less expensive to explore obtaining
insurance through the leasing company.

**Mosher, Robert. "****Statutory Insurance Requirements for the MCS-90
Endorsement and other Minimum Coverage Requirements for Motor Carriers."
Committee on Insurance Coverage Litigation, American Bar Association.
Vol. 13. Number 1. January/February 2003.**

This article discusses Federal and state endorsements, the laws behind
them, and the procedures required in order to comply. The MCS-90
endorsement is an obligation to the public that "sits" on top of the
company's insurance. It extends coverage to vehicle(s) involved in a
judgment of operator negligence even if they are not specifically
included or covered under the insurance policy to which the endorsement
is attached.

**BizStats.com. Trucking and Courier Services U.S. National Industry
Profitability Averages**

BizStats reports the profitability averages of the industry. Their data
show that 4.4 percent of costs can be attributed to insurance. It is the
most expensive item, after the costs of goods sold, truck expenses,
depreciation, repairs, and wages.

**RLS & Associates, Inc. "ODOT Guide to Compliance with Interstate
Passenger Transportation Regulations." ODOT Office of Transit. July
2003.**

This guide summarizes the requirements for interstate passenger motor
carriers, highlighting the differences for private and for-hire
operations.

**Schulz, John D. "Carriers Push for Streamlined Insurance Rules;
Circuit Court Hears Intrastate Deregulation Appeal." Journal of
Commerce/Gale Group. 1995/1999.**

A trucking and business interest alliance is supporting a plan for
streamlined motor carrier insurance regulation. ATA, NPTC, AIA, ABA,
National Industrial Transportation League (NITL), and Truck Renting and
Leasing Association and others are supporting the creation of a national
registration and database that would include motor carriers, which are
currently ICC-regulated, at the USDOT. State enforcement agencies,
shippers, insurance carriers, and other interested organizations would
be able to access the database. Carriers failing to comply with motor
carrier standards or financial responsibility requirements would have
their operations suspended, revoked, or denied by the DOT. Plan
supporters believe it would make the Single State Registration System
(SSRS) program unnecessary and obsolete. If passed, 20 percent of the
revenue generated by registration and insurance filing fees would be
passed on to states for motor carrier safety enforcement. The current
program generates approximately \$50 million annually for the states. If
a Federal registry is created with access for state enforcement, the
SSRS program could not be justifiable.

According to the Regular Common Carriers Conference (RCCC), since the
Motor Carrier act of 1980, \$750 million in fees and \$3.5 billion in
administrative costs has been paid to comply with state laws. The RCCC
estimates the cost to be less than \$3 million per year for the DOT to
provide this service, and recommends that the rest of the fees be passed
on to the states for motor carrier safety programs. According to the
RCCC, it would be unbiased to all carriers, cost-effective and would
improve highway safety programs if the DOT was solely responsible for
insurance registration by for-hire and private carriers.

**Corsi, Thomas M. and Michelle Smith. "Motor Carrier Industry Profile
Study: Financial and Operating Performance Profiles by Industry Segment,
2001-2002." Prepared for FMCSA Analysis Division, Office of Information
Management. September 2004.**

This study primarily used information from Annual Reports filed with the
USDOT by Class I (revenues greater than \$10 million) and Class II
(revenues from \$3-10 million) carriers. The study focused on some basic
measures detailing the financial performance of the for-hire carriers
and major industry segments. Some of the segments analyzed include many
private carriers.

The financial profile was divided into the following subsections: firm
size and revenue concentration, profitability, investment profile, and
revenue profile. Based on 2002 annual operating revenues, the average
firm size was \$41 million. Three segments exceeded this:
less-than-truckload (\$129 million); building materials (\$59 million);
and household goods

(\$58 million). Profitability was based on the operating ratio (total
operating expenses/total operating revenue) and net profit margin (net
income or income after taxes). In 2002, the average operating ratio was
98.6, and the net profit margin was 0.99 percent. In 2001, these figures
were 98.3, and 1.16 percent. In 2002, general freight, the largest
industry segment by total revenue, had a net profit margin of 0.79
percent. The only segments with a 2 percent or higher were: building
materials, other specialized, and motor vehicles.

The investment profile was based on three measures: net return on
transportation investment, return on equity, and long-term
debt-to-equity ratio. The median value was more representative and less
influenced by outliers than the average value; therefore, it was a
better measure. Overall, the median net return on transportation
investment was 4.3 percent in 2001 and 5.0 percent in 2002. In 2002, the
following segments exceeded the median: motor vehicles (13.2 percent),
package couriers (12.6 percent), less-than-truckload (7.1 percent),
household goods (7.0 percent), and other specialized (5.5 percent).
Motor vehicles, package couriers, and less-than-truckload experienced
improved median return on transportation investment; while, heavy
machinery and tank experienced sharp declines. Median return on equity
fell from 8 percent in 2001 to 5.4 percent in 2002. Only packaged goods
(7.4 percent) and motor vehicles (8.0 percent) were higher than the
median in 2002.

In 2002, long-term debt-to-equity ratios were 0.18 (18 cents for every
dollar of equity or capital). The motor vehicle segment had the highest
median debt-to-equity ratios, while the household goods segment had the
lowest. The revenue profile was based on revenue per mile and revenue
per ton. In 2002, the average revenue per mile was \$1.98.
Less-than-truckload had \$2.93 and motor vehicles had \$2.55. In 2002,
the median revenue per ton was \$36.15. Household goods had \$486.92
(including loading and unloading) followed by package carriers with
\$148.87.

The operating performance profile productivity measures were average
length of haul, average load, annual miles per driver, and annual miles
per truck. In 2002, the average length of haul was 452 miles. The haul
was much shorter for tank carriers (203 miles) and much longer for
refrigerated carriers. In 2002, the average load was 16.0 tons; bulk had
22.4, tank had 21.2, heavy machinery had 19.2, building material had
18.9, other specialized had 17.3, refrigerated had 17.0 and general
freight had 16.7. The average annual miles per driver was 82,387 miles.
This varied from the lowest of 57,524 to 60,236 for less-than-truckload
and household goods respectively; and highest from 99,635 to 107,380 for
building materials and refrigerated segments respectively. In 2002, the
average annual miles driven per truck was 83,563 miles. This ranged from
a low of 59,925 to 70,145 miles for the household goods and
less-than-truckload segments to a high of 111,455 to 132,577 for the
refrigerated and package couriers segments respectively.

The Annual Report data provided few direct measures of the safety level
of effort made by carriers. One option was to look at the percent of
carrier's operating expenses dedicated to insurance. However, there was
not a way to separate out carriers whose high insurance burdens were due
to poor safety. Additional data would need to be collected for a
successful comparison of safety level of effort.

**Harrington, Lisa. "Can You Justify a Private Fleet?" Transportation &
Distribution V42, n6. June 2001.**

In 1998, Gemini Coating was using for-hire motor carriers to ship its
product. The job was getting completed, but not to their satisfaction.
They decided to use a private fleet to improve their customer service by
having their drivers strengthen their relationships with their
customers. They periodically compare the cost of making these trips to
less-than-truckload (LTL) freight rates to see if the cost of the fleet
is reasonable. Their purpose for running a private fleet was to improve
customer service, eliminate product damage, and give them an added sales
tool. After their second year of operation, 99.9 percent of customer
complaints went away. Gemini's decision to launch a private fleet is far
from unique. Big and small companies operate private fleets for the same
reason.

Private fleets are under more pressure to show that they add economic
value. Top management usually views private fleets negatively, as a
capital-intensive cost center. However, this could not be further from
the truth; private fleets provide excellent customer service and can
compete economically with the best for-hire fleets.

The following are many of the factors that go into the decision to
operate a private fleet:

-   Fleet mission or purpose -- are the costs created balanced out by
    the value created?

-   Labor -- all labor costs must be assessed including benefits

-   Capital investment -- transferring investment costs, leasing, and
    outsourcing must be considered on a regular basis

-   Maintenance -- only larger corporate fleets have in-house
    maintenance, most companies outsource it

-   Internal resources -- management personnel and facilities to
    supplies must be committed

-   Control -- complete control over product delivery, and drivers
    become the company representative and salesperson

-   Corporate philosophy on outsourcing

Full-service leasing is also an option many private fleets use. In this
case, the leasing company takes care of all the vehicle maintenance.
With flexible lease terms, fleets can keep up with technology. It is
also a good insurance policy since depreciation costs have risen
drastically.

**Roberts, J. "Savior or Necessary Evil." Equipment World. September
2003.**

Reducing insurance costs starts with close examination of a company's
policy. Many companies expect certain coverages are included with their
policies until after a claim is filed. Also, companies often pay for
insurance that is of little or no use to them and should be written out
of the policy. As theft is of concern, most insurers are requiring that
trucks have tracking devices installed. Theft prevention insurance costs
are the easiest to lower, by implementing simple measures such as
installing a locked gate, proper lighting, or cameras. The main
insurance cost is collision insurance, which is best reduced by hiring
the right drivers. Checking the driver's motor vehicle report and
quality testing are important.

## B.3 Safety and Insurance-related Information {#b.3-safety-and-insurance-related-information .App2}

**Corsi, Thomas M., Barnard, Richard, and Gibney, James, with Robert H.
Smith School of Business/University of Maryland. "Motor Carrier Industry
Profile: Linkages Between Financial and Safety Performance Among
Carriers in Majority Industry Segments." Prepared for FMCSA Analysis
Division, USDOT. October 23, 2002.**

A multi-year assessment focusing on a carrier's safety performance and
its financial performance was completed by the Supply Chain Management
Center of the Robert H. Smith School of Business. Carriers' reviews (CR)
were used as a basis for this assessment. Researchers used the Annual
Report database from the American Trucking Associations and the SafeStat
database to match carriers' DOT numbers. A new database was created that
contained 656 carrier reviews. Of this, 553 received a satisfactory
rating, and 103 received an unsatisfactory (7) or a conditional (96)
rating. CRs are based on the carriers' recordable crash/accident rates;
its driver safety review (DRM), safety management review measure (SMRM),
and its enforcement severity measure (ESM). These reviews were used to
create two groups: carriers receiving an overall satisfactory CR, and
those receiving an unsatisfactory or conditional review. These two
groups were then compared based on descriptive variables and financial
performance variables. Descriptive variables were: total ton-miles, and
average load, length of haul, driver wage, and driver wage as a
percentage of the operating expense. Financial variables were the
operating ratio (operating expense/operating revenues) and return on
assets. The researchers used ANOVA (analysis of variance) to determine
if there was any statistical significance between the two groups. They
were unable to establish that safety performance is positively
correlated to financial performance for all carriers.

**Ostria, Sergio J. "Evaluation of U.S. Commercial Motor Carrier
Industry Challenges and Opportunities." ICF Consulting with George L.
Edwards and Associates. March 31, 2003.**

According to the trucking industry, the reasons for higher transport
costs are higher insurance rates, cost of fuel, and changes to the
Hours-of-Service rules. Most of the companies believed that the one cost
pushing their respective companies out of the market was the high
insurance costs. The cost has increased 40 percent at a minimum,
especially for small firms. These high insurance costs can be attributed
to the high payouts caused by the events of September 11, 2001 and the
low return on company investments.

Trucking accident rates have been falling but the liability claims for
accidents have been rising, creating the need for higher premiums. In
addition, the cyclical nature of the trucking business and the September
11, 2001 effect also have to be taken into account. The September 11,
2001 effect can be described as risk managers perceiving a very high
level of risk in the United States due to the terrorist attacks and
other seemingly unpredictable events.

The trucking industry's high competition level, along with rising
insurance rates, creates a dilemma. With so many companies, it is
difficult for one to pass their higher overhead costs to the consumer,
forcing small marginally operating companies out of business. Some do
not believe the higher costs are a problem, since owner-operator
trucking operations have always paid a higher insurance rate than larger
firms, but now the larger firms' premiums are merely catching up to that
of the owner-operators.

Some firms looking to reduce costs have gone to self-insurance, but most
firms are not large enough to do that. Most are looking toward curbing
risk as well. Self-insured firms typically have the most extensive
safety requirements, usually having very high requirements to be hired.
In the private market, they are adding new courses, creating better
schedules for drivers, and ensuring that dispatchers understand the
company safety program.

Public safety includes instituting new technology and some groups will
be putting new cameras into the tractor in order to record the drivers'
reactions during unusual driving situations. It is believed that
companies will be rewarded for maintaining higher trucking standards.
Tort reform has also taken shape. Today, most compensation has been
given to plaintiffs in court cases, but recently proposed reform would
place the awards in a public fund that would take care of problems,
therefore reducing the incentives for court cases. Better research is
also needed in order to better insure companies, thereby helping to
motivate better driving techniques and more targeted insurance premiums.

**[Appendix C. State-specific Detail]{.smallcaps}**

This appendix provides state-level detail for data provided at the
national level in the body of the report.

[]{#__RefHeading___Toc166050336 .anchor}Table C-35. Carriers and
Vehicles Requiring Additional Insurance by State

  -----------------------------------------------------------------------------------------
              **Carriers**                           **Vehicles**              
  ----------- -------------- ---------- ------------ -------------- ---------- ------------
  **State**   **9-15 Pass.   **16+      **Trucks**   **9-15 Pass.   **16+      **Trucks**
              Veh.**         Pass.                   Veh.**         Pass.      
                             Veh.**                                 Veh.**     

  AL          3              5          162          6              15         419

  AK          44             80         3,876        81             119        10,793

  AZ          16             30         2,675        28             55         6,808

  AR          7              12         986          18             31         3,327

  CA          41             76         3,976        97             167        13,539

  CO          14             16         1,828        43             35         5,644

  CT          22             58         3,406        29             113        9,369

  DE          1              4          230          2              11         867

  DC          9              19         1,292        16             49         3,626

  FL          31             54         4,361        77             143        11,795

  GA          34             60         6,575        67             120        18,026

  HI          0              0          80           0              0          540

  ID          6              18         4,227        14             35         9,950

  IL          8              19         1,599        12             35         4,519

  IN          45             78         5,882        78             184        18,583

  IA          37             98         8,023        83             184        21,026

  KS          16             26         3,030        28             44         8,487

  KY          62             111        5,241        106            220        12,876

  LA          14             24         3,092        29             47         8,837

  ME          20             33         8,262        43             81         21,769

  MD          30             63         6,981        63             147        18,893

  MA          8              18         1,727        17             42         4,065

  MI          28             55         5,939        46             112        15,037

  MN          21             37         5,955        45             72         16,988

  MS          44             55         5,619        76             107        15,773

  MO          24             43         3,082        35             69         7,561

  MT          2              7          1,146        3              16         2,728

  NE          27             48         6,704        55             102        18,225

  NV          1              4          1,277        5              14         3,774

  NH          15             17         3,443        20             38         8,478

  NJ          7              14         2,951        13             29         6,806

  NM          21             35         6,862        48             66         20,322

  NY          8              10         1,100        14             29         3,089

  NC          6              18         1,134        12             37         3,055

  ND          18             46         8,142        39             120        23,787

  OH          60             110        6,126        127            193        18,837

  OK          25             40         2,341        43             81         6,903

  OR          11             21         2,083        23             37         6,536

  PA          26             79         9,990        60             207        30,453

  PR          0              0          14           0              0          65
  -----------------------------------------------------------------------------------------

Table C-35. Carriers and Vehicles Requiring Additional Insurance by
State (continued)

  ---------------------------------------------------------------------------------------------
              **Carriers**                             **Vehicles**               
  ----------- -------------- ----------- ------------- -------------- ----------- -------------
  **State**   **9-15 Pass.   **16+ Pass. **Trucks**    **9-15 Pass.   **16+ Pass. **Trucks**
              Veh.**         Veh.**                    Veh.**         Veh.**      

  RI          4              16          2,873         12             34          5,717

  SC          31             72          2,941         50             113         7,588

  SD          3              3           1,998         4              4           4,720

  TN          43             79          5,864         76             156         14,603

  TX          44             61          5,892         91             140         18,826

  UT          10             10          1,615         32             26          4,711

  VT          30             46          4,422         58             95          13,412

  VA          2              4           1,349         13             14          2,990

  WA          22             39          2,037         46             101         7,128

  WV          36             66          4,734         75             151         11,953

  WI          14             17          3,474         30             57          7,778

  WY          8              6           1,108         22             17          2,931

  **TOTAL**   **1,059**      **1,960**   **189,726**   **2,110**      **4,114**   **524,532**
  ---------------------------------------------------------------------------------------------

[]{#__RefHeading___Toc166050337 .anchor}Table C-36. NAICS Codes, SBA
Size Threshold, and Annual Revenue for Selected Trucking Industries

  ------------------ ------------- ---------------- ------- -------------- ------------- ------------- ----- ------------------------- --- ------------------------- -- --------------------------- --------------------------- -- ---- ------------------
  **Table C-2**                                                                                                                                                                                                                         

                                                                                                                                                                                                                                        

  **Industry**                                      ** **   **Annual                                                                                                                                                                    
                                                            Revenue**                                                                                                                                                                   

  **NAICS**          **SBA Size                     ** **   **0-99,999**   **100,000-\   **500,000-\         **1,000,000-4,999,999**       **5,000,000-9,999,999**      **10,000,000-49,999,999**   **50,000,000-99,999,999**           **100,000,000+**
                     Threshold**                                           499,999**     999,999**                                                                                                                                      

  **Construction**                                                                                                                                                                                                                       

  23                 \$31 million  Firms                    126,426        309,615       106,563             125,801                       17,063                       13,445                      1,306                               1,230

                                   Establishments           126,427        309,628       106,586             126,115                       17,437                       14,842                      2,172                               7,118

                                   Employment               141,003        836,835       651,896             1,759,968                     659,976                      1,097,965                   266,220                             893,507

                                   Ann. Payroll             2,098,519      19,368,315    18,950,754          64,530,216                    29,068,144                   52,885,698                  13,648,080                          46,752,736

                                   Est. Receipts            6,851,025      77,889,212    75,337,040          264,729,368                   117,124,687                  252,887,590                 78,520,911                          304,203,854

  **Waste management                                                                                                                                                                                                                     
  services**                                                                                                                                                                                                                            

  562                \$6.5 million Firms                    2,257          5,778         2,303               2,904                         461                          343                         35                                  103

                                   Establishments           2,258          5,782         2,319               3,023                         570                          644                         161                                 2,941

                                   Employment               2,796          18,475        17,380              53,916                        22,043                       35,550                      8,591                               141,829

                                   Ann. Payroll             35,253         399,296       469,599             1,809,219                     868,033                      1,463,879                   331,382                             6,258,356

                                   Est. Receipts            113,201        1,511,954     1,618,388           6,082,263                     2,978,308                    5,512,889                   1,393,310                           28,993,431

  **Retail**                                                                                                                                                                                                                             

  44-45              \$6.5 million Firms                    107,685        283,980       127,485             163,988                       22,606                       23,502                      3,770                               3,114

                                   Establishments           107,797        285,503       130,422             187,755                       36,831                       63,340                      22,418                              291,627

                                   Employment               136,834        852,418       731,169             1,916,296                     660,149                      1,445,334                   564,791                             8,512,913

                                   Ann. Payroll             1,202,824      11,789,765    12,982,451          42,574,140                    17,393,136                   44,394,638                  19,119,175                          171,250,897

                                   Est. Receipts            5,564,818      74,831,781    90,260,047          340,343,082                   150,451,271                  470,383,155                 224,870,249                         1,777,748,294

  **Repair and                                                                                                                                                                                                                           
  Maintenance**                                                                                                                                                                                                                         

  811                \$6.5 million Firms                    47,153         113,614       31,480              19,750                        1,258                        1,073                       218                                 537

                                   Establishments           47,179         113,858       31,931              23,539                        2,872                        4,188                       1,372                               8,295

                                   Employment               57,484         359,405       243,985             335,875                       59,816                       87,339                      23,865                              167,106

                                   Ann. Payroll             673,068        7,459,646     6,465,361           10,769,784                    2,192,707                    2,967,684                   945,850                             6,797,651

                                   Est. Receipts            2,484,810      28,541,375    21,619,759          34,982,906                    7,275,987                    10,609,247                  3,172,169                           21,924,266
  ------------------ ------------- ---------------- ------- -------------- ------------- ------------- ----- ------------------------- --- ------------------------- -- --------------------------- --------------------------- -- ---- ------------------

Note that for Table C-36 and all subsequent tables in this Appendix, all
data in any annual revenue or employee category below the SBA size
threshold are considered to apply to small businesses. For categories
that contained the SBA size threshold, a weighted proportion of the data
in that category are considered to apply to small businesses. For
example, for retail firms, the \$6.5 million size threshold falls within
the \$5 to \$10 million annual revenue category. Therefore, all firms in
the first three annual revenue categories and 30 percent
(\[6.5--5\]/\[10--5\] = 1.5 / 5 = 0.3) of the firms in the \$5 to \$10
million annual revenue category are considered small businesses.

[]{#__RefHeading___Toc166050338 .anchor}Table C-37. NAICS Codes, SBA
Size Threshold, and Number of Employees for Additional Selected Trucking
Industries

  ------------------- ------------- ---------------- ------------- ------------ ------------ ------------ ------------ ------------- -------------
  **Table C-3**                                                                                                                      

                                                                                                                                     

  **Industry**                      ** **            **Number of                                                                     
                                                     Employees**                                                                     

  **NAICS**           **SBA Size    ** **            **0**         **1-4**      **5-9**      **10-19**    **20-99**    **100-499**   **500+**
                      Threshold**                                                                                                    

  **Forestry /                                                                                                                        
  Logging**                                                                                                                          

  113                 500 emp       Firms            1,538         5,694        2,476        1,312        617          38            33

                                    Establishments   1,539         5,699        2,477        1,313        633          61            192

                                    Employment       \-            12,377       16,358       17,318       \-           \-            7,399

                                    Ann. Payroll     51,039        282,256      418,104      472,601      \-           \-            382,129

  **Manufacturing**                                                                                                                   

  31-33               500 emp       Firms            20,879        96,067       55,257       46,910       58,246       14,135        4,102

                                    Establishments   20,912        96,102       55,347       47,236       62,457       23,789        36,006

                                    Employment       \-            217,108      369,362      639,999      2,381,283    2,494,258     8,030,010

                                    Ann. Payroll     2,222,484     5,683,675    10,597,229   20,107,400   82,441,414   91,609,702    363,395,993

  **Wholesalers**                                                                                                                     

  42                  100 emp       Firms            35,613        157,159      60,120       40,953       37,798       7,725         3,082

                                    Establishments   35,730        157,555      61,402       44,252       53,597       26,237        53,764

                                    Employment       \-            329,404      396,372      546,730      1,385,840    982,034       2,223,480

                                    Ann. Payroll     1,702,748     11,731,561   14,909,733   21,691,808   57,757,419   43,033,208    121,329,723
  ------------------- ------------- ---------------- ------------- ------------ ------------ ------------ ------------ ------------- -------------

[]{#__RefHeading___Toc166050339 .anchor}Table C-38. Number of Small and
Large Business in Selected Trucking Industries

  ------------------- ------------- ---------------- --------------- --------------- --------------- -----------
  **Table C-4**                                                                                      

                                                                                                     

  **Industry**                                                                                       **Small
                                                                                                     Business
                                                                                                     Percent**

  **NAICS**           **SBA Size                     **Small         **Large         **Total**       
                      Threshold**                    Business        Business                        
                                                     Total**         Total**                         

  **Construction**                                                                                   

  23                  \$31 million  Firms            692,191         9,259           701,449         98.7%

                                    Establishments   693,614         16,711          710,325         97.6%

                                    Employment       4,598,661       1,708,710       6,307,370       72.9%

                                    Ann. Payroll     160,458,797     86,843,665      247,302,462     64.9%

                                    Est. Receipts    668,375,127     509,168,560     1,177,543,687   56.8%

  **Waste management                                                                                 
  services**                                                                                         

  562                 \$6.5 million Firms            13,380          804             14,184          94.3%

                                    Establishments   13,553          4,145           17,698          76.6%

                                    Employment       99,180          201,400         300,580         33.0%

                                    Ann. Payroll     2,973,777       8,661,240       11,635,017      25.6%

                                    Est. Receipts    10,219,298      37,984,446      48,203,744      21.2%

  **Retail**                                                                                         

  44-45               \$6.5 million Firms            689,920         46,210          736,130         93.7%

                                    Establishments   722,526         403,167         1,125,693       64.2%

                                    Employment       3,834,762       10,985,142      14,819,904      25.9%

                                    Ann. Payroll     73,767,121      246,939,905     320,707,026     23.0%

                                    Est. Receipts    556,135,109     2,578,317,588   3,134,452,697   17.7%

  **Repair and                                                                                       
  Maintenance**                                                                                      

  811                 \$6.5 million Firms            212,374         2,709           215,083         98.7%

                                    Establishments   217,369         15,865          233,234         93.2%

                                    Employment       1,014,694       320,181         1,334,875       76.0%

                                    Ann. Payroll     26,025,671      12,246,080      38,271,751      68.0%

                                    Est. Receipts    89,811,646      40,798,873      130,610,519     68.8%

  **Forestry /                                                                                       
  Logging**                                                                                          

  113                 500 emp       Firms            11,675          33              11,708          99.7%

                                    Establishments   11,722          192             11,914          98.4%

                                    Employment       68,419          7,399           75,818          90.2%

                                    Ann. Payroll     1,877,601       382,129         2,259,730       83.1%

  **Manufacturing**                                                                                  

  31-33               500 emp       Firms            291,494         4,102           295,596         98.6%

                                    Establishments   305,843         36,006          341,849         89.5%

                                    Employment       6,102,010       8,030,010       14,132,020      43.2%

                                    Ann. Payroll     212,661,904     363,395,993     576,057,897     36.9%

  **Wholesalers**                                                                                    

  42                  100 emp       Firms            331,643         10,807          342,450         96.8%

                                    Establishments   352,536         80,001          432,537         81.5%

                                    Employment       2,658,346       3,205,514       5,863,860       45.3%

                                    Ann. Payroll     107,793,269     164,362,931     272,156,200     39.6%

  **Truck Totals**                  Firms            2,242,677       73,923          2,316,600       96.8%

                                    Establishments   2,317,163       556,087         2,873,250       80.6%

                                    Employment       18,376,071      24,458,356      42,834,427      42.9%

                                    Ann. Payroll     585,558,140     882,831,943     1,468,390,083   39.9%

                                    Est. Receipts    1,324,541,181   3,166,269,466   4,490,810,647   29.5%
  ------------------- ------------- ---------------- --------------- --------------- --------------- -----------

> Note: numbers may not add to totals due to rounding.

[]{#__RefHeading___Toc166050340 .anchor}Table C-39. NAICS Codes, SBA
Size Threshold, and Annual Revenue for Selected Passenger-carrying
Industries

  ----------------- ------------- ---------------- ------- -------------- ------------- ------------- ------ ------------------------- ----- ------------------------- --- --------------------------- -- -- --------------------------- ------------------
  **Table C-5**                                                                                                                                                                                                                          

                                                                                                                                                                                                                                         

  **Industry**                                     ** **   **Annual                                                                                                                                                                      
                                                           Revenue**                                                                                                                                                                     

  **NAICS**         **SBA Size                     ** **   **0-99,999**   **100,000-\   **500,000-\          **1,000,000-4,999,999**         **5,000,000-9,999,999**       **10,000,000-49,999,999**         **50,000,000-99,999,999**   **100,000,000+**
                    Threshold**                                           499,999**     999,999**                                                                                                                                        

  **Educational                                                                                                                                                                                                                           
  services**                                                                                                                                                                                                                             

  61                \$11.5        Firms                    19,608         23,589        7,389                10,755                          1,991                         1,931                             338                         332
                    million                                                                                                                                                                                                              

                                  Establishments           19,617         23,692        7,590                12,166                          2,986                         4,065                             1,068                       2,517

                                  Employment               73,061         144,228       115,573              444,407                         202,134                       556,528                           320,854                     844,890

                                  Ann. Payroll             1,208,428      2,040,663     2,113,921            10,243,942                      5,446,772                     13,778,014                        7,230,430                   29,899,682

                                  Est. Receipts            908,228        5,647,731     5,235,347            22,698,180                      12,906,215                    35,516,971                        19,314,389                  78,051,778

  **Nursing and                                                                                                                                                                                                                           
  residential care                                                                                                                                                                                                                       
  facilities**                                                                                                                                                                                                                           

  623               \$6.5 million Firms                    5,489          9,646         3,457                8,191                           2,862                         2,420                             252                         403

                                  Establishments           5,497          9,760         3,730                12,978                          7,439                         14,399                            3,810                       10,287

                                  Employment                                            70,830               502,291                         407,644                       700,813                           214,015                     794,422

                                  Ann. Payroll                                          1,159,455            9,440,673                       8,643,781                     16,034,636                        4,657,955                   17,941,616

                                  Est. Receipts                                         2,467,333            19,343,333                      17,773,345                    34,241,886                        10,185,463                  39,638,992

  **Arts,                                                                                                                                                                                                                                 
  entertainment,                                                                                                                                                                                                                         
  and recreation**                                                                                                                                                                                                                       

  71                \$6.5 million Firms                    29,293         42,180        13,741               14,181                          1,797                         1,242                             201                         408

                                  Establishments           29,302         42,249        13,925               15,439                          2,376                         2,858                             716                         3,510

                                  Employment               41,985         194,472       172,425              453,082                         157,817                       240,768                           88,364                      452,078

                                  Ann. Payroll             483,539        3,152,398     3,097,117            10,021,082                      4,094,784                     6,719,833                         4,150,057                   16,005,567

                                  Est. Receipts            1,378,956      10,346,009    9,616,506            28,818,765                      11,461,393                    21,302,762                        10,474,384                  54,155,494

  **Religious                                                                                                                                                                                                                             
  organizations**                                                                                                                                                                                                                        

  8131              \$6.5 million Firms                    68,164         71,962        16,466               13,966                          1,139                         525                               42                          47

                                  Establishments           68,164         71,964        16,469               14,011                          1,168                         671                               53                          62

                                  Employment               232,669        382,634       223,720              487,880                         111,349                       111,878                           21,571                      67,214

                                  Ann. Payroll             2,533,914      4,717,782     3,190,328            7,578,242                       2,102,162                     2,445,679                         550,862                     1,724,775

                                  Est. Receipts            2,774,665      16,732,659    11,480,290           27,360,127                      7,558,585                     8,792,099                         1,983,004                   6,228,956
  ----------------- ------------- ---------------- ------- -------------- ------------- ------------- ------ ------------------------- ----- ------------------------- --- --------------------------- -- -- --------------------------- ------------------

[]{#__RefHeading___Toc166050341 .anchor}Table C-40. Number of Small and
Large Business in Selected Passenger-carrying Industries

  ----------------- ------------- ---------------- ------------- ------------- ------------- -----------
  **Table C-6**                                                                              

                                                                                             

  **Industry**                    ** **            ** **         ** **         ** **         **Small
                                                                                             Business
                                                                                             Percent**

  **NAICS**         **SBA Size    ** **            **Small       **Large       **Total**     
                    Threshold**                    Business      Business                    
                                                   Total**       Total**                     

  **Educational                                                                               
  services**                                                                                 

  61                \$11.5        Firms            63,407        2,526         65,933        96.2%
                    million                                                                  

                                  Establishments   66,163        7,538         73,701        89.8%

                                  Employment       986,983       1,714,692     2,701,675     36.5%

                                  Ann. Payroll     21,257,980    50,703,872    71,961,852    29.5%

                                  Est. Receipts    47,879,684    132,399,155   180,278,839   26.6%

  **Nursing and                                                                               
  residential care                                                                           
  facilities**                                                                               

  623               \$6.5 million Firms            27,642        5,078         32,720        84.5%

                                  Establishments   34,197        33,703        67,900        50.4%

                                  Employment       776,064       1,994,601     2,770,665     28.0%

                                  Ann. Payroll     14,265,637    44,684,854    58,950,491    24.2%

                                  Est. Receipts    29,760,064    96,507,683    126,267,746   23.6%

  **Arts,                                                                                     
  entertainment,                                                                             
  and recreation**                                                                           

  71                \$6.5 million Firms            99,934        3,109         103,043       97.0%

                                  Establishments   101,628       8,747         110,375       92.1%

                                  Employment       909,309       891,682       1,800,991     50.5%

                                  Ann. Payroll     17,982,571    29,741,806    47,724,377    37.7%

                                  Est. Receipts    53,598,654    93,955,615    147,554,269   36.3%

  **Religious                                                                                 
  organizations**                                                                            

  8131              \$6.5 million Firms            170,900       1,411         172,311       99.2%

                                  Establishments   170,958       1,604         172,562       99.1%

                                  Employment       1,360,308     278,607       1,638,915     83.0%

                                  Ann. Payroll     18,650,915    6,192,829     24,843,744    75.1%

                                  Est. Receipts    58,347,741    24,562,644    82,910,385    82.2%

  **Passenger                     Firms            361,882       12,125        374,007       96.8%
  Vehicle Totals**                                                                           

                                  Establishments   372,946       51,592        424,538       87.8%

                                  Employment       4,032,664     4,879,582     8,912,246     45.2%

                                  Ann. Payroll     72,157,103    131,323,361   203,480,464   35.5%

                                  Est. Receipts    189,586,142   347,425,097   537,011,239   35.3%
  ----------------- ------------- ---------------- ------------- ------------- ------------- -----------

> Note: numbers may not add to totals due to rounding.

![](media/image1.png){width="2.6638888888888888in"
height="0.8638888888888889in"}

[^1]: For one of the 27 scenarios, benefits exceeded costs, resulting in
    a negative net cost.

[^2]: Lower SEA values indicate safer performance.

[^3]: The ten industry segments analyzed are building materials,
    moving/household goods, general freight, heavy equipment, produce,
    intermodal, passenger transportation, refrigerated (non-produce),
    tank carriers, and bulk materials (non-tank). Each of these was
    separated into two segments, one for private carriers and one for
    for-hire carriers, bringing the total number of segments analyzed to
    20.

[^4]: The report cautions on the small sample size that was used to
    develop the recordable crash rate figures.

[^5]: The overall average for 2001 was 32 percent; it was 30 percent
    prior to September 11, 2001 and 37 percent after September 11, 2001.

[^6]: The article did not address out-of-court settlements.

[^7]: Texas continued to record more fatal large truck crashes than any
    other state each year through 2004 (FMCSA, 2005b), with 383 fatal
    large truck crashes in 2004.

[^8]: United States Department of Labor, Bureau of Labor Statistics.
    Occupational Employment Statistics. Washington, DC. November 2004.

[^9]: Truck growth rate is based on growth in truck population forecast
    between 1998 and 2008 in American Trucking Associations, U.S.
    Freight Transportation Forecast to 2008. Bus growth rate based on
    historic growth in private commercial buses as published in Federal
    Highway Administration, Federal Highway Statistics, Table MV-10.
    Washington, D.C. The 9-15 passenger vehicle growth rate was computed
    by average annual growth in gross output for the transit and ground
    passenger transportation sector between 1999 and 2004.

[^10]: UMTRI acquired six states' crash files for all motor vehicle
    crashes in the state. UMTRI developed algorithms in each state to
    identify records that qualified for reporting to the MCMIS crash
    file and developed weighted MCMIS reporting rates for crashes, fatal
    crashes, and injury crashes for 9-15 passenger vehicles, 16+
    passenger vehicles, and trucks.