Rising Costs and Strategies in Commercial Auto Liability Insurance

The cost of commercial auto liability insurance has surged significantly over the past decade, reaching an unprecedented rate of 10.2 cents per mile by 2024. This 37.8% increase outpaces general inflation, according to the American Transportation Research Institute (ATRI). Highlighted in ATRI's annual Top Industry Issues report, insurance costs and availability now rank as the third most pressing concern for industry stakeholders.

Despite a decline in crash rates among heavy-duty trucks since the onset of the pandemic—with injury crashes decreasing by 15.3% and fatal crashes by 13.9% from 2019 levels—the cost of claims has escalated. ATRI attributes this to increased severity and associated expenses, compounded by the impact of social inflation and significant verdicts. As a result, per-mile liability losses have grown by 33.1% between 2021 and 2024.

Larger insurance claims and associated legal costs have driven up premiums, especially for excess coverage. Many fleets have responded by purchasing additional policy layers to maintain adequate coverage. Approximately one-third of fleets have adjusted their insurance strategies since 2021, with smaller fleets particularly affected, paying more than double the premiums of mid-sized operators.

Carriers, such as flatbed and oversized, are facing elevated premiums at 13.2 cents per mile, while larger less-than-truckload carriers benefit from lower premiums due to their fleet size. To combat rising costs, many fleets are opting to alter their insurance policies by increasing deductibles and retaining more risk, aligning with strategies from personal auto insurance policies.

Fleets that choose self-insurance have reported decreased risk costs, with motor carriers adopting this approach experiencing a 2.4% inflation-adjusted reduction in total risk costs. Larger fleets, in particular, find self-insurance a viable option to manage expenses effectively, supported by strong safety protocols and financial stability.

To further mitigate liability, motor carriers are enhancing cab safety technology. The installation of collision warning systems and adaptive cruise control not only improves safety but also reduces per-mile liability losses, potentially lowering overall insurance expenses and offering a strategic advantage in managing risks.