Yes, rates are rising in what Paul Zizzo calls a “hard market.” Zizzo, the CEO of Melbourne, Fla.-based RRL Insurance-Acrisure Partners, says such a market is characterized by premium increases from all carriers. Further, Zizzo and other insurance brokers say the market is stiffening for party buses, notably those configured with perimeter seating, and especially those equipped with entertainment poles.
“When it comes to shuttle and party buses, perimeter seating and a dancing pole are becoming liability issues,” Zizzo says. “Party buses are top heavy and if 10 people in a 15-passenger bus are sitting on the left side and the driver makes a sharp left coming off an exit ramp, the bus could roll over. When you add in a pole, it becomes a red flag to insurers because you now have passengers dancing and moving around the bus.”
One interesting point Zizzo says causes insurance underwriters to scrutinize operators with multiple party buses is analytics. “The data has finally caught up to the industry. I remember my first LCT limo show back in 2000 when all you saw were stretches and sedans.
Today, the shows are full of shuttle vans, party buses and Sprinters. So now after 10 years, there is enough data and insurance carriers have all the tools and databases to examine party bus incidents and claims. In fact, one of the first questions I am asked by a carrier when seeking quotes for a party bus is, ‘Does it have a pole?’ That’s a red flag today.”
Diagnosis On The Medical Transport Business
Getting into the non-emergency medical transportation business may appear to be a steady source of revenue, but it may not be the right remedy for those who don’t know what they are getting into.
“That industry is very specific about insurance and not all carriers write it because it is a different class of transportation,” Zizzo says. “Because drivers are transporting people who are hurt, in wheelchairs, or stretchers, the driver has more liability because he must perform more tasks and ensure passengers are properly secured.
“There’s a lot more going on in the medical transport business than the traditional chauffeur business that requires drivers to help people who can’t help themselves, which can mean a lot more facets to a claim,” Zizzo says. He advises operators looking to get into the business to keep it separate from their limousine business, and start a separate company that only deals with medical transportation.
Adds St. Clair, “It’s tempting to want to get into the business because operators can see it as steady income, but the costs could outweigh the risks. Loading and unloading handicapped people requires another level of driver training and care. And Medicare, for example, doesn’t pay a lot.”
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Size Matters
Zizzo notes that the difference could widen between insurance rates for party buses with forward-facing seating and no pole versus a party bus with perimeter seating and a pole. “And if you can’t even get that from a carrier, you would have to go to the hard-to-place market, and that could cost upwards of $20,000.”
Overall, the most important factor that dictates insurance rates is a company’s loss history. Again, because of the access to multiple sources of data, if your company has an “unsatisfactory” SAFER rating (see Safer Ratings sidebar), “you’re going to get kicked out by the insurance company and have to go to the high-risk carriers,” Zizzo says. “Yes, small operators have gone out of business in the last couple of years because they either could not obtain party bus insurance, or the cost outweighed the revenue.”
In addition, operators with party buses (or not) could see their insurance costs skyrocket if they have a history of filing multiple claims. A company that files numerous claims is also a red flag. “The bottom line is if you have multiple claims, that’s a signal you’re not a good operator,” Zizzo says. “It’s not a problem if say you have 15 units and two claims a year. But if you have 15 units and 10 claims a year, that’s going to hurt you. What the industry has to realize is insurance isn’t putting an operator out of business. It’s their history.”
Scott St. Clair, regional manager of Protective Insurance Company, says, “If party buses are a small percentage of a fleet, there’s usually no problem. However, alcohol combined with passengers standing around does concern us from a liability standpoint. It’s the entry-level guy who goes out and buys one or two party buses [from whom] carriers are backing away. My advice is to first check with your insurance company before writing that check.”
Zizzo and St. Claire concur the bigger, safer operators usually do not have an insurance problem with party buses because they are true transportation companies. “It’s the guy entering the market who buys a couple of buses and thinks he’s going to make a lot of money on weekends,” St. Clair says.
In addition to perimeter seating and entertainment poles, insurance underwriters also consider party buses make numerous unscheduled stops. “It’s not like a point A to Point B ride. Party buses can often make four to five stops and that adds to the liability as well.”
St. Clair said operators can help reduce their liability when chartering party buses by having passengers sign the company’s alcohol policy. They also should empower chauffeurs to stop the charter if passengers are intoxicated, creating an unsafe environment. “If something goes wrong and you end up in court, the release and your safety policies at least show good intent,” he advises.
Know Your Safer Ratings
The U.S. Department of Transportation Federal Motor Carrier Safety Administration (FMCSA) Safety and Fitness Electronic Records (SAFER) system offers company safety data and related services to industry and the public over the Internet.
Users can search FMCSA databases, register for a USDOT number, pay fines online, order company safety profiles, challenge FMCSA data using the DataQs system, access the Hazardous Material Route registry, obtain National Crash and Out of Service rates for Hazmat Permit Registration, get printable registration forms, and find information about other FMCSA Information Systems.
SAFER is developed, maintained and hosted by the John A. Volpe National Transportation Systems Center. SAFER uses carrier information from government motor carrier safety databases. It consists of interstate carrier data, several states’ intrastate data, and interstate vehicle registration data. Operational data such as inspections and crashes are generally only presented for interstate carriers, but plans are to include them later for the intrastate carriers.
The Company Profile service provides access to the Company Safety Profile for a fee. Information: safer.fmcsa.dot.gov/
Keywords
drunk passengers Entertainment how to insurance policies insurance rates medical transportation party buses party poles Safety & Insurance
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