What makes motorcoach insurance unique?
BUSRide’s ongoing series of interviews with Tim O’Bryan, president of Service Insurance Agency, Richmond, VA, now turns to the intricacies of motorcoach operators’ insurance, what makes it unique from other transportation insurance plans, and how adept the industry is at navigating its various pitfalls.
You deal in all transportation modes – what do you notice as unique to the motorcoach industry?
Differentiating buses and motorcoaches from what we see in trucking, the biggest separator is the minimum limit of insurance these operators are required to carry. Any carrier transporting 16 or more passengers across state lines must carry $5 million of coverage; whereas for the cargo trucking industry the regulation is $750,000 – although most trucking carriers carry $1 million.
It certainly distinguishes the differences in operations for each sector. On the trucking side, we commonly write for auto liability and physical damage on one policy and a separate policy for cargo. Cargo is not property of the trucking company; we view its care as a responsibility in the service for a client.
The cost of the equipment is another consideration. New model motorcoaches are upward of $600,000, compared to a fully-equipped and accessorized semi-rig starting around $150,000. Relatively speaking, the associated costs of physical damage are tremendous. Dealing with equipment five to six times more expensive, coach operators have gravitated to higher deductibles simply to keep their costs down.
What is your take on efforts by DOT to increase the requirement for motorcoaches to as high as $20 million?
Very few insurance companies would be comfortable with such high limits on motorcoaches. A higher level of insurance coverage does not mean a coach company will necessarily operate more safely than before.
From your experience, what do motorcoach operators need to know or better understand in working with their insurance broker? What advice do you continually try to impart?
I think it has mostly to do with relationships, with their agent as well as the insurance company. In this respect, a pretty small group of agents and insurance companies. Seven companies, at the most, write policies for the motorcoach industry.
If the agent is doing a good job and the relationship is strong, the company can trust him or her to go out get quotes. Establishing and developing that type of relationship with the insurance company through the agent is very important to operators. The agent can be instrumental in assisting with safety programs and compliance issues; ensuring the company is doing everything right.
One of the fastest ways companies can fall out of grace is through low SMS scores. Having a bunch of violations on record clearly shows they are not giving enough attention to safety. They may not have a lot of insurance claims, but if their safety scores are trending poorly, it looks bad to the underwriter. These are supposedly indicators of what the future could hold. The theory is that high number of violations given will ultimately lead to an accident of some kind.
In this day and age, it important to pay closer attention to the information and messages conveyed on the company website and social media.
For example, party buses are becoming more popular, while insurance companies are not getting overly excited; favoring forward-facing, two-and-two seating, preferably with seatbelts. One operator thought it would be cool to show a party bus on his website as a possible service. The problem being, he doesn’t run any buses configured as a typical party bus. Still, he’ll have a devil of a time convincing an insurance underwriter that is not the case.
As another example, one operator started out running a party bus and managed to evolve into corporate charters over the course of 10 years. However, to this day, he has yet to reflect his progress on his website; which, if for nothing else, makes it a “royal pain” to insure him because he still appears as the party bus guy.
The lesson: If anything has changed or is out of date, fix it. It may mean paying a webmaster, but its money saved on the potential insurance premium.
Tim O’Bryan serves as president of Service Insurance Agency. Since 1952, the company has been committed to the transportation industry. Service Insurance Agency strives to provide the most knowledgeable advice and personal service to all of its valued customers.