Bus Insurance Overview

Collectively, Bus Insurance Refers to Charter Busses, Tour Busses, School Busses, Party Busses, Shuttle Busses, Ambulances, and Ambulettes

Bob Buss owns a charter bus company, Buss’s Buses. They provide charter buses to different special events and tourist sites around the Eastern Seaboard. One day, one of his drivers is taking a load of horse racing fans to the Aqueduct Racetrack when the bus hits a patch of ice and slides off the highway into a ditch.

Several people are injured with broken bones, bruises, and someone even has a heart attack. No one is killed, but nearly everyone has some sort of injury that needs to be checked and cleared medically. Everyone is taken to the hospital, where they receive treatment. A couple of people need to stay overnight, including the person who had a heart attack.

The driver is cleared of any wrongdoing, but the passengers hold Buss’s Buses responsible for their injuries.

Bob’s insurance company will cover the damages to any other vehicle through the property damage section of his insurance policy. The bus’s damage is covered through the collision section of his physical damage coverage. And because they were transporting people, the combined single limit of the liability section will provide coverage for the injuries that the people sustained.

With a low limit of liability or worse yet, without it, Bob and Buss’s Buses could have had to pay millions of dollars out-of-pocket. This is to cover the various medical bills, ambulance transportation, and any other related costs along with possible legal action.

What is Bus Insurance?

Insurance for any type of bus is similar to commercial auto insurance, but it specifically allows for the transportation of a group of people. It’s similar to TLC insurance (taxis, limousines, black cars) or ride-sharing insurance (Lyft, Uber).

Charter buses, tour buses, school buses, party buses, shuttle buses, and even ambulance and ambulettes* are passenger transportation vehicles. A higher limit of liability is required to cover the potential injuries of a larger group of people.

*An ambulette is a vehicle that transports people with disabilities or mobility issues in non-emergency medical treatment. Someone who needs transportation to a kidney dialysis appointment or a doctor’s appointment might use an ambulette.

Who Needs Bus Insurance?

According to the Federal Motor Carrier Safety Administration, vehicles that carry 16 or more passengers (including the driver) must have $5 million in liability insurance. If you have fewer than 16 people on board, a higher limit will still be required. This will be subject to your state’s laws and regulations. Vehicles that carry 15 or fewer passengers (including the driver) must have $1.5 million in insurance and will also be subject to your state’s laws and regulations.

There may be state and city governments that require higher amounts, as well as some school systems. School boards may decide they want to carry much higher coverage for their buses, given the number of children they transport each day. Private schools may even be required to carry much higher insurance.

Band tour buses, for example, can also purchase property insurance for the high value musical equipment and gear.

Be sure to talk to your business insurance agent to make sure you get the right amount of coverage. They can also help you consider any unusual circumstances you might not have thought of.

What Does Bus Insurance Cover and Not Cover?

Bus insurance is a lot like regular commercial auto insurance. The difference exists in that not only are people being transported but there are more than a few. That’s why the liability amounts need to be so much higher. (See above.)

Just like commercial auto, you need liability insurance to protect other drivers when you cause an accident with your vehicle. It covers both bodily injury to other people and property damage. (You can also get physical damage coverage, which has two parts to it, comprehensive and collision, similar to personal auto insurance.)

Bodily Injury

Bodily injury covers medical expenses for people injured in an accident when you or your employees are at fault. 

Property Damage

Property damage covers the cost of repairing other vehicles involved in the accident. This can include any other property besides the vehicle that is damage, such as the city’s light pole, a building, or a fence.

It’s important to note that while $5 million might seem like a lot of coverage, there have been plenty of instances where a person’s coverage was not enough. The bodily injury and property damage exceeded the coverage. In that case, the business owner is directly responsible for those overages.

In our story above, let’s say the injuries sustained and the property damage were $10 million, which would exceed the bus company’s limit of liability ($5 million). The bus company will be responsible for the other $5 million themselves. This is why you should speak with a business insurance specialist. They can recommend and quote an Umbrella or Excess Liability Insurance Policy, which would prevent this problem.

Ambulances and ambulettes are also required to carry a higher liability limit, not only for 3rd party accidents but for the passengers who have medical conditions that they are transporting. In our example above, this would cover the injured passengers who were taken to the hospital, including the person who had a heart attack. For example, if that ambulance was in an accident, and the heart attack victim died, the family could sue the ambulance owner as well.

Your bus insurance policy can also cover the costs of towing due to the bus being inoperable in the event of an accident (towing buses is not cheap). Bus insurance will not cover business personal property damaged in an accident. For this, an additional property insurance policy would be necessary to cover things such as GPS units, radios, and wheelchair lifts.

The Big Takeaway

Every business that operates a commercial vehicle is required to have commercial auto insurance. But if you are in the passenger transport business — whether you operate school or charter buses, shuttles, ambulances, or ambulettes — you need a policy that allows for the transportation of people. While bus insurance is technically commercial auto insurance, policies created for the insuring of buses and their passengers are very specific.

Conclusion

Bus insurance can be complicated just because of the sheer number of variables and possibilities you have to consider: the number of passengers, the size of the vehicle, and even the extra equipment and accessories on your vehicle.