Bus Insurance Overview

Comprehensive Overview of Passenger Transportation Insurance A Cautionary Tale: Buss's Buses Incident

Bob Buss, owner of Buss’s Buses, operates a charter bus service along the Eastern Seaboard. During a trip to Aqueduct Racetrack with a busload of horse racing enthusiasts, disaster strikes. The bus skids on an icy patch and crashes into a ditch. Although no lives are lost, nearly everyone onboard sustains injuries ranging from bruises and broken bones to a heart attack. All passengers are rushed to the hospital for medical attention.

Even though the driver is absolved of any blame, the passengers attribute their injuries to Buss’s Buses. The insurance policy that Bob holds covers the damage to other vehicles via the property damage clause, the damage to his bus through collision coverage, and the passengers’ medical expenses under the liability section. Without sufficient liability coverage, Bob and his business could have faced crippling financial liabilities, including exorbitant medical bills and potential legal actions.

The Ins and Outs of Bus Insurance

Bus insurance is a specialized subset of commercial auto insurance specifically designed to cater to the needs of businesses involved in the transportation of groups of people. This is analogous to Taxi, Limousine, and Livery (TLC) insurance or even ride-sharing insurance platforms like Lyft and Uber.

Vehicles like charter buses, school buses, tour buses, party buses, shuttles, ambulances, and ambulettes (vehicles designed for non-emergency medical transport of individuals with mobility issues) all fall under this category. Given that these vehicles often transport larger groups, the liability coverage requirements are considerably higher.

Regulatory Requirements and Variances

As per the Federal Motor Carrier Safety Administration, vehicles designed to transport 16 or more passengers, including the driver, must maintain at least $5 million in liability insurance coverage. For those vehicles that carry fewer than 16 passengers, a different, albeit still high, insurance limit applies, as determined by each state’s regulations. Some local governments and educational institutions may enforce even higher liability limits for school buses, considering the invaluable cargo they carry—children.

Coverage Types and Limitations

Bus insurance operates similarly to conventional commercial auto insurance but is tailored for the complexities of mass passenger transport. It comprises different elements, such as:

  • Bodily Injury Liability: This covers medical costs for individuals injured due to an accident caused by you or your employee.

  • Property Damage Liability: This is designed to cover expenses associated with damage to other vehicles or other types of property, such as buildings, fences, or streetlights, involved in an accident.

However, it’s critical to understand that even a liability limit of $5 million may not be sufficient in certain situations. If the costs associated with bodily injury and property damage surpass this limit, the business owner is directly liable for the deficit.

For example, in the Buss’s Buses incident, had the total costs amounted to $10 million, the business would have to bear the extra $5 million themselves. In such scenarios, consulting with an insurance specialist to explore options for Umbrella or Excess Liability Insurance can be beneficial.

In addition, specialized vehicles like ambulances and ambulettes often require unique insurance endorsements to cover both third-party accidents and the medical condition-related risks of their passengers.

Additional Considerations

Bus insurance does not generally cover business personal property damaged during an accident. For that, you’ll need additional property insurance to protect assets like GPS devices, radios, and specialized equipment like wheelchair lifts.

Key Takeaway

If you’re in the business of transporting people, standard commercial auto insurance won’t suffice. You’ll require a specialized policy that takes into account the complexities inherent to transporting groups of people, like higher liability limits and various additional coverages.

Final Thoughts

Selecting the right bus insurance is an intricate process involving numerous variables, such as vehicle size, passenger capacity, and extra onboard equipment. Therefore, it’s crucial to consult with insurance specialists to ensure you are fully covered for every scenario your passenger transport business might encounter.

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