Motor CarriersThe Availability of Environmental Restoration Insurance Gao ID: RCED-86-150BR May 19, 1986
In response to a congressional request, GAO provided information relating to problems confronting the insurance and trucking industries in complying with the requirements of the Motor Carrier Act of 1980.
The act requires trucking firms that haul hazardous cargo and all interstate for-hire trucking firms to have minimum levels of liability coverage for bodily injury, property damage, and environmental restoration. To comply with the act, most trucking firms purchase a commercial auto liability insurance policy which provides the traditional bodily injury and property damage coverage, as well as the environmental restoration coverage. GAO found that: (1) in 1986, some trucking firms would have problems obtaining insurance at the $750,000- and $1-million coverage levels in the voluntary markets; and (2) obtaining the $5-million coverage level would be extremely difficult, particularly for new trucking firms, because most insurers intend to decrease the number of policies they issue or not offer that coverage level. GAO also found that insurers object to writing environmental restoration coverage, particularly at the $5-million level, because there are too many unknown risks involved and they are unable to obtain reinsurance. To address their concerns, many insurers advocated amending the act to: (1) lower the minimum financial responsibility required or give the Secretary of Transportation authority to determine it; and (2) eliminate the environmental restoration clause or define the scope of the clause so it clearly describes what is being insured.