The passenger transportation industry covers a wide variety of services, each with its own unique insurance needs. It’s critical to ensure your public auto client has an insurance policy that covers passenger transport at the required limits of coverage. Make sure your client has contacted the DOT and/or FMSCA in order to know what they are required to do in order to legally operate their business.
Types of FOR HIRE Passenger Transportation Business Classes:
Taxi services: taxis are subject to legal and regulatory requirements which vary between jurisdictions. Cities and States may have their own specific regulations. Make sure your client is informed on these details as they have a significant impact on their insurance requirements.
Non-Emergency Medical Transportation (for profit): this class is operated with a private passenger type auto or van without sirens and lights to transport clients to and from doctor appointments. The insurance provider will need to know if the vehicle is equipped with special disabled persons’ equipment or not. Private passenger type sedans without wheelchair access are often rated like taxicabs. The insurance provider will also need a copy of any additional insured or contract requirements if they haul for a specific entity.
Charter Buses, Party Buses and Limousines: These classes of business are operated on a prearranged basis for special trips, business functions, weddings, outings or similar purposes. They usually have specific insurance requirements, depending upon seating capacity and if they cross state lines. State or Federal Filings may be required and limit requirements differ based upon the seating capacity of the units. As a side note, MJ Kelly will need to know if the limousine is stretched or not, and what the length of the stretch is for rating purposes.
Airport shuttles: transporting passengers 50% or more of the time from airports to hotels, homes, rental car agencies, or airport passenger stations. This class has its own unique requirements, depending upon the airport regulations for the area they operate in.
Rideshare services: this is an emerging field with complex coverage needs. While most rideshare companies can provide excess coverage for drivers, there may be gaps or vulnerabilities to consider. Primary commercial auto liability coverage may be needed for drivers and their units if they drive for UBER or Lyft. This type of risk is a subclass of taxicabs. Some personal auto carriers are offering rideshare endorsements.
The legal and regulatory position of the rideshare industry is under criticism in our country. It is difficult to project what direction the legal status of the industry may take in the coming years.
Assessing the unique needs of your client’s business niche is a good first step. Now let’s discuss some other details on passenger transportation insurance.
Broad legal and regulatory requirements:
Scale and scope of operations: a comprehensive policy must match the value and scale of your client’s operations and needs. Insufficient coverage leaves the business exposed in the event of an accident.
Know what filings and limits are required: There are specific coverage requirements depending on the number of passengers.
Intrastate passenger transportation is subject to DOT requirements. Your client needs to contact their state to determine whether or not filings are required.
Interstate passenger transportation requirements are set by the Federal Motor Carrier Safety Administration (FMCSA), designating higher coverage requirements for vehicles transporting 16 or more people at a time. Details on these requirements can be found on the FMCSA website or call 1-800-832-5660.
The bottom line: your client must know what their insurance requirements are and provide you with details. Your insurer will need to know details such as seating capacity, required filings and limits, and whether or not travel will be inter-state or stay within state borders.
These details are critical for creating a comprehensive policy in line with all legal and regulatory environments. Mistakes in this area are costly. Take this claim as an example:
A party bus was insured to haul 15 passengers and operated intrastate (not crossing state lines). The auto liability limit on the policy was $1M CSL. The insured allowed 16 passengers on the bus for a bachelor party and crossed into a bordering state.
The bus had a fatal accident, and it was determined in court that federal filings and a $5M CSL Auto Liability Limit were required when crossing state lines hauling 16 passengers.
In the end, the policy paid out $1M CSL, and the business had to pay the additional $4M out of pocket to the family of the deceased person.
Clearly, the stakes are high, so you need a passenger transportation policy covering your risks with the required limits and filings. Contact MJ Kelly for an auto quote TODAY to ensure your client is protected NOW!