Recent Horrific Crash Highlights Dramatic Increase in Transportation Settlement Costs

Posted on June 20, 2016

by Andrew in Transportation News, Trucking Insurance, Trucking Safety | 0 comments

shutterstock_2826279sm - CopyYet another fatal and tragic trucking incident has brought into focus the staggering settlement costs growing increasingly common in industry litigation. Five nursing students from Georgia Southern University died in a recent tractor-trailer incident that has the country and the industry asking a lot of questions, not least of which is how settlement costs could total more than $70 million.

The details of the case are as follows: The driver (John Wayne Johnson) has admitted fault in the accident. Though he has a record of falling asleep at the wheel, he insists he was awake at the time of the crash, and that systems in place to prevent these incidents were not functioning properly (including proximity warning sounds). Johnson and his employer, Total Transportation of Mississippi, have been indicted on numerous counts.

Johnson will be facing five counts of homicide by vehicle in the first degree and serious injury by vehicle, and one count each of reckless driving, failure to exercise due care, and following too closely. These are substantial charges that could keep Johnson behind bars for many years.

Total Transportation is indicted separately, as it is a corporate entity. The charges include one count of serious injury by vehicle in the first degree and one count of criminal responsibility of corporations. A statement from the attorney representing one of the victims’ family members has indicated that said family alone would receive $14 million in a settlement with Total Transportation. Extrapolating this settlement across all five victim families would bring the total cost of legal fees and settlements to over $70 million.

These costs are representative of a dramatic trend in the industry. But are they justified? Insurers and industry experts largely say no – the implications of which are significant. Most transportation businesses don’t have the cash reserves to cover such a settlement, which makes plain the importance of liability coverage. Yet insurers are equally concerned. Several transportation insurance carriers are reducing coverage limits, raising rates, or dropping clients entirely. Many freight carriers will now need two or three insurance policies to procure $10 Million or more in liability coverage. What will the future of trucking legal settlements and damages look like? And how can safety and risk management practices reduce insurance premiums and the likelihood of such tragic and costly events? Contact the trucking insurance experts to learn more.

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