Party Bus Insurance - No luck. Any pointers?

[the7exp]

Hello!

This is a long shot, but are there any party bus owners here? I live in NY, which turns out is impossible to get insurance for a new venture. My wife and I sunk our entire life savings into this project, and was wondering if anyone had any recommendations we can relocate to or any company that would give new people a chance. Thanks!

[rossvtaylor]

I'd tag Dbacks2k4 but there's no tag function in the forum. You might send him a message, though.

[cadillackid]

Party buys insurance is expensive no matter where you go... we are talking 1000s per month generally .. it gets a bit better the more busses you have and after you have a few years under your belt of no claims you get discounts.. i have a couple friends that run party bus services.. liability these days is huge.. people are out looking for a cheap and easy Payday so a party bus does any teeny thing wrong and the lawsuits fly which means the business insurance generally kicks in if the service loses or settles.. thus raising the rates.. New york is one of the worst states for this... thus why obtaining insurance is hard.. insurance companies look at risk.. new york,, esp around the big apple and surrounding areas is high risk... crime is high.. traffic is a disaster.. accidents all the time.. insurance companies hate it...



out here in the midwest is better but then its also harder to sell services as well compared to a metroplex on the east coast.. or in a tourist-rich area like upstate NY


-Christopher

[Dbacks2k4]

I ran a party bus company for several years. Insurance for that industry sucks in general. Too many bad actors and novices doing things illegally, unsafe, and on the cheap. Some intentionally, many just out of ignorance. So the insurance companies have really cracked down. I see that trickle into the skoolie world as well because insurance companies are very cautious about any bus, thus some of the hoops skoolie owners have to jump through to prove seats are out, etc.

Anyway, if you're operating 16+ passengers your options are Warren Buffet's National Indemnity, or Warren Buffet's Berkshire Hathaway Home State. Keep in mind that Warren Buffet will not compete against Warren Buffet, one won't quote you if you're already working with the other. Under 16 passengers opens up a few other options, but my fleet was all 16+ so I don't keep track of which carriers were issuing policies.

These companies the last several years have been wanting their insured to have significant years of experience managing a party bus company before venturing out on their own. I'm still listed as the responsible party under my old business. I sold my interest to my business partner under contract, but the insurance comapny is dragging their feet transferring the policy to him even though it's named under our joint LLC. He has more experience in the industry than I do, but he joined my company after I had formed it and gotten the policy issued. So the buyout contract between me and my partner keeps getting extended because I have to retain ownership shares due to insurance. It's a headache.

Add in the toughness of NY regulations and you're unfortunately in a bad spot. I've also seen where they will only insure 1 or at most 2 buses for most new-ish ventures. Before they'll issue insurance you need to at least have a USDOT number (if required by your state or if you're operating across state lines). The catch-22 is FMCSA won't issue you operating authority until you have insurance, so it's a juggling act of having the right things "in progress"

This was the broker I used, you can reach out and see if there's anything they can do for you.
https://rrinsuranceadvisors.com/commercial-insurance/

Even if you get a policy expect to pay in the $1000s per month. Our policy was the cheapest anyone had ever seen in the FB groups at $350/month/bus for $5M liability-only, no incidents (we'd call them claims, the insurance company refers to them as "losses"), and 5+ years experience in the middle of nowhere Iowa. We had a 100-mile operating restriction on our policy that kept us out of Chicago, Madison, Minneapolis, St Louis, etc. I've heard stories of nearly $1000/mo/bus in areas of Michigan and New England states. There's no such thing as a claims-free discount, but one incident and your rates will skyrocket if they don't altogether drop you. Every year your rates will go up even if you have no incidents. Sometimes you'll get lucky and it's only a 3-5% jump. Some years it'll go up by 35-40% for no reason. I'm not exaggerating, a local "friendly" competitor I talk with regularly showed me their bills.

They will control every aspect of your business. Even more than FMCSA does. They just mandate lots of paperwork and drug testing, that's easy in comparison Your insurance company will dictate who you can and cannot hire. Drivers are guilty until proven innocent. If they have an accident in their personal driving record they cannot be insured until the driver proves they weren't at-fault. If they have a ticket you'll get surcharged about $5-10k a year for the priviledge of hiring that driver. You likely can't hire anyone under age 25, even if they possess a valid CDL. Oh, and any driver you consider hiring must have held a CDL with passenger endorsement for at least 12 months before they can be insured (no hiring and training new drivers). Periodically you will have to provide documentation of the date your drivers obtained their CDL - and surprise! that doesn't appear in the usual MVRs you pull. That's a special document you must request from the State. Oh, but there are privacy laws, so your drivers must provide you consent to pull documents to provide to the insurance company.

They will inspect your website and social media looking for buses that you don't have listed on your policy. You cannot remove a vehicle from your policy if you're not using it, repairing it, or storing it. If you take a vehicle off your policy you must furnish them documents showing it's been sold and title transferred before its taken off and they stop billing you for it.

Sorry if this all sounds like I'm fear-mongering, just giving you the facts as I've seen them play out.

[cadillackid]

Originally Posted by Dbacks2k4

I ran a party bus company for several years. Insurance for that industry sucks in general. Too many bad actors and novices doing things illegally, unsafe, and on the cheap. Some intentionally, many just out of ignorance. So the insurance companies have really cracked down. I see that trickle into the skoolie world as well because insurance companies are very cautious about any bus, thus some of the hoops skoolie owners have to jump through to prove seats are out, etc.

Anyway, if you're operating 16+ passengers your options are Warren Buffet's National Indemnity, or Warren Buffet's Berkshire Hathaway Home State. Keep in mind that Warren Buffet will not compete against Warren Buffet, one won't quote you if you're already working with the other. Under 16 passengers opens up a few other options, but my fleet was all 16+ so I don't keep track of which carriers were issuing policies.

These companies the last several years have been wanting their insured to have significant years of experience managing a party bus company before venturing out on their own. I'm still listed as the responsible party under my old business. I sold my interest to my business partner under contract, but the insurance comapny is dragging their feet transferring the policy to him even though it's named under our joint LLC. He has more experience in the industry than I do, but he joined my company after I had formed it and gotten the policy issued. So the buyout contract between me and my partner keeps getting extended because I have to retain ownership shares due to insurance. It's a headache.

Add in the toughness of NY regulations and you're unfortunately in a bad spot. I've also seen where they will only insure 1 or at most 2 buses for most new-ish ventures. Before they'll issue insurance you need to at least have a USDOT number (if required by your state or if you're operating across state lines). The catch-22 is FMCSA won't issue you operating authority until you have insurance, so it's a juggling act of having the right things "in progress"

This was the broker I used, you can reach out and see if there's anything they can do for you.
https://rrinsuranceadvisors.com/commercial-insurance/

Even if you get a policy expect to pay in the $1000s per month. Our policy was the cheapest anyone had ever seen in the FB groups at $350/month/bus for $5M liability-only, no incidents (we'd call them claims, the insurance company refers to them as "losses"), and 5+ years experience in the middle of nowhere Iowa. We had a 100-mile operating restriction on our policy that kept us out of Chicago, Madison, Minneapolis, St Louis, etc. I've heard stories of nearly $1000/mo/bus in areas of Michigan and New England states. There's no such thing as a claims-free discount, but one incident and your rates will skyrocket if they don't altogether drop you. Every year your rates will go up even if you have no incidents. Sometimes you'll get lucky and it's only a 3-5% jump. Some years it'll go up by 35-40% for no reason. I'm not exaggerating, a local "friendly" competitor I talk with regularly showed me their bills.

They will control every aspect of your business. Even more than FMCSA does. They just mandate lots of paperwork and drug testing, that's easy in comparison Your insurance company will dictate who you can and cannot hire. Drivers are guilty until proven innocent. If they have an accident in their personal driving record they cannot be insured until the driver proves they weren't at-fault. If they have a ticket you'll get surcharged about $5-10k a year for the priviledge of hiring that driver. You likely can't hire anyone under age 25, even if they possess a valid CDL. Oh, and any driver you consider hiring must have held a CDL with passenger endorsement for at least 12 months before they can be insured (no hiring and training new drivers). Periodically you will have to provide documentation of the date your drivers obtained their CDL - and surprise! that doesn't appear in the usual MVRs you pull. That's a special document you must request from the State. Oh, but there are privacy laws, so your drivers must provide you consent to pull documents to provide to the insurance company.

They will inspect your website and social media looking for buses that you don't have listed on your policy. You cannot remove a vehicle from your policy if you're not using it, repairing it, or storing it. If you take a vehicle off your policy you must furnish them documents showing it's been sold and title transferred before its taken off and they stop billing you for it.

Sorry if this all sounds like I'm fear-mongering, just giving you the facts as I've seen them play out.

im not sure who my buddy has but he got a discount after some years of no claims. not sure why hartford insurance rings a bell..maybe thats just his general umbrella business insurance and not the bus operations insurance.. $350 per bus would be a pipe dream.. his busses are designed for 25 passengers although he is insured up to 35 (and the bus has seats for such).. he has a USDOT number as he operates in a couple states since he is near a state line. he doesnt go outside of 150 mile radius so ELD isnt required.. obviously CDL is since its commercial over 15 passenger..



he is in flyover country so the congestion and vandalism prevalent in coastal states is much less of a concern..maybe that affects insurance..



he understands that piece.. im just there to help with the busses and esp to make sure the Air conditioners work

[HamSkoolie]

I'm just curious what the Business Plan said about insurance during the due diligence stage? Was there a sudden explosion in rates between the Business Plan and pulling the trigger on writing checks to fire up the business?

[LargeMargeInBaja]

I would contact anybody anyplace with a party bus.
I would ask them about their insurers.

[cadillackid]

Originally Posted by HamSkoolie

I'm just curious what the Business Plan said about insurance during the due diligence stage? Was there a sudden explosion in rates between the Business Plan and pulling the trigger on writing checks to fire up the business?

I dont know about his plan.. but I know our general business insurance premiums have been going up a lot.. much faster than they ever did before.. luckily in our business we can do a good job of baking it into our costs ... ever since covid subsided rates for Limos and party busses have skyrocketed.. im sure some of it was fuel related last year and maybe some employee salary costs..



id hope insurance was a Huge part of the business plan.. it should be for anyone starting a business

[HamSkoolie]

Originally Posted by cadillackid

I dont know about his plan.. but I know our general business insurance premiums have been going up a lot.. much faster than they ever did before.. luckily in our business we can do a good job of baking it into our costs ... ever since covid subsided rates for Limos and party busses have skyrocketed.. im sure some of it was fuel related last year and maybe some employee salary costs..

id hope insurance was a Huge part of the business plan.. it should be for anyone starting a business

I got my Bachelors in Business Management in 2014 and of course the Capstone was a business plan. It was quite an eye opener to see the quality of the other students business plans.... or rather, disappointing.

I on the other hand was offered a free Masters program by the Dean herself... who also offered to pay for my cap and gown for graduation because I hadn't planned to "walk" and she was trying to convince me. I told her that because she was so adamant I'd "walk" but I could pay for the accoutrements.
Glad I did because it was rather satisfying to walk across the stage packing my full size sidearm which was handily concealed beneath the gown. All through school I'd had to carry a compromise weapon that was concealable and have the holster for my full size empty on my hip.
Anyway, the point is that even with a business plan, if it were prepared by one of my fellow students, might miss major items like insurance.

[cadillackid]

I think a lot of people get over zealous to open their doors.. its easy to do you come up with an idea, a dream and want t osee it come to fruition.. .. the other thing I see happen is people instantly assume their new business will be the best and the busiest so they spend too much startup $$ on opening and dont have any reserves for rainy days or tough times.. over-estimating revenue and esp over-estimating profits.. paying themselves top notch salaries on day 1 or even well prior to go-live.. planning AND DOCUMENTING is really boring many times but it has to be done..



public facing retail businesses (stores, services, restaraunts) are even tougher because in this day and age people google and social media everything before they go..



the thing you have that likely alot of those other students didnt have as much of is LIFE experience.. and also common sense to know when pie in the sky is probably holographic pie in the sky.. there is no replacement for that kind of experience.. real-world..

[Booyah45828]

Real world experience is invaluable. It seems easy, but everyone that's actually in the industry says otherwise. I know, the money numbers seem too good for it not to work. It sounds too easy to buy a 3500 dollar bus, charge 600+ a night, and not make money hand over fist. But I'd caution you to really think this through and get accurate numbers.

My experience is based off what the owners said, as we serviced a few party bus fleets in the past, but haven't since covid wiped a lot of them out. In my opinion they were always on a shoe string budget. The reality for a lot of them is that old school buses can rack up huge bills in just maintenance costs, and if you can't do most of it yourself, while valuing your time at nothing, you'll go broke in a hurry. Let alone a catastrophic event like a blown engine or transmission occurring and turning the entire project into a loss that you won't recover from.

I know a lot of them also exploited a loop hole in calling the buses motorhomes, saving themselves a bunch on registration and insurance(which would have been rendered worthless if it was ever actually needed). However, that loophole has all but closed off, so now they're back to having to run as commercial/for hire, and pay all of the taxes, fees, registration, and commercial insurance associated with it.

Whatever you do, be sure this is in an LLC and run it completely legitimate. Because one mess up, that doesn't even have to be your fault, can make you penniless and homeless after lawyers get involved. So protect yourself at all times and be sure that it's air tight.

However, the biggest hurdle that I saw was finding cdl drivers with a passenger endorsement. Let alone finding a driver that could be convinced to work the night shift on weekends, much less a driver that is worth anything and is smart enough to not destroy the equipment, or let the passengers destroy it.

I know some drivers were getting paid nearly half what the company charged per night, plus all the tips they earned, which could end up being $50+ an hour, and they still struggled to find them.

To the OP, I wish you the best of luck. You telling us that you sunk your life's savings into this makes me queasy. I really hope it works out. Be sure to listen to everything Dbacks2k4 wants to tell you, as once again, the experience in the business is invaluable.

[Dbacks2k4]

Don't even get me started on finding drivers, haha

Out of the 50 or so drivers I had over the years, there are 2 I wish I could clone. I always advertise for drivers and interview looking for a "bartenders mentality" - someone who finds dealing with intoxicated customers entertaining rather than annoying and someone who likes working nights and weekends for (mostly) cash. The IRS says I'm supposed to report their cash tips. I say if I don't see the cash then it's the drivers responsibility to report or not report as they see fit. I digress.... I'll save taxes for another soapbox post

The first driver I wish I had 10 of - let's call him "Dave." Dave is a 65 year old military veteran and is a stereotypical dirty old man. He has a clean driving record and has had a CDL for 20+ years because he worked maintenence for a school district that required employees to get a school bus endorsement and be backup drivers. Dave likes taking bachelor parties to the strip clubs and looking at scantily dressed young ladies, but he never says or does anything inappropriate. He helps people on and off the bus and is super friendly. Dave volunteers to drive whenever I needed and is the kind of guy that would give you the shirt off his back as long as you treat him with respect and pay him when you say you will. Dave is a unicorn.

The second, let's call him "Lamar." Lamar is a convicted felon, 3 years out of prison on a drug dealing conviction. Lamar found religion in prison and is trying to get his life back on track. He got his CDL as part of a parole program and works days driving city buses. He works for me weekends for extra money to pay off debts and occasionally have a little fun money. He's super respectful and bends over backwards to make sure he's doing everything I expect of him because he knows if I fire him it'll be that much harder finding employment as a felon.

The rest range from acceptable to "if I wasn't so short staffed you'd have been gone a long time ago." Between demanding cash on the spot wages, bringing unauthorized friends along for the ride, calling out last minute, no-call/no-shows, school bus drivers who won't work past 10pm, a 70 year old man who insisted I provide him a detailed itinerary ahead of time so he could mapquest his route (yes, I said mapquest), a driver who called from a job 70 miles away and said the Drop-off cliffs around Galena, IL were giving her anxiety and she was done/come get the bus/halfway through a wedding transport, the driver who once handed a bride the bag of trash as she was walking up to the church, the driver who tested positive for Marijuana when she finally went in 2 weeks after refusing to test initially, the driver who tried turning around in a field of grass after a record rainstorm and got stuck, the driver who drove into a flooded road and stalled the submerged engine, and lastly the driver who didn't even get out of my storage lot the first time driving without hooking another bus and ripping off the bumper.... Given all that drivers are only second on my list of stressors - insurance still wins the prize.

As booyah said an llc is important, but even more important is "observing the corporate standards" which is legal speak for proper accounting, separate bank accounts from personal, not buying personal items on the business bank account or vice-versa, and lastly remembering that negligence is a one-way ticket to "piercing the corporate veil" - again legal speak for losing all protections of the llc and say bye bye to your house and personal savings account.

[cadillackid]

As booyah said an llc is important, but even more important is "observing the corporate standards" which is legal speak for proper accounting, separate bank accounts from personal, not buying personal items on the business bank account or vice-versa, and lastly remembering that negligence is a one-way ticket to "piercing the corporate veil" - again legal speak for losing all protections of the llc and say bye bye to your house and personal savings account.

this!!


in my LLC we have completerly separate everything.. bank accounts.. company credit cards, separate insurance..



as owners we can lease vehicles and write them off *BUT* we keep track of personal vs business usage and only write off the business portion..


if we do buy something with our personal credit card.. we fill out expense reports and the company reimburses us just as if we were an employee.. no "gray matter"..



since we are in the travel business travel is a pretty easy write off without raising hairs.. (those that wonder why I stay in hotels vs have a true skoolie) - we are in the hotel business so we can write off hotels.. writing off sleeping in an RV gets a whole lot more complex..

[Dbacks2k4]

Yep, I had a banker once tell me they wanted to do a line of credit as a joint loan to the llc and me personally. It took some negotiation, but I told them that was unacceptable, I was willing to personally be a cosigner/guarantor to satisfy the bank's requirement of being able to collect; but they could not issue joint debt to me and the llc. It seems trivial, but that's the sort of intermingling of finances to watch out for.

[Dbacks2k4]

One last piece of advice for tonight....not sure if the OP is still subscribed or if I've scared them off, but for anyone stumbling across this thread in the future...

If possible find a mechanic from a local school district or government fleet (who's most likely underpaid but perhaps sticks around for the government benefits) and pay him 3/4 of the going shop rate of your local dealer to maintain your bus "on the side."

If he's smart, he won't sign your annual inspections for liability reasons, but he'll tell you what work needs done before the bus breaks down, fixes it, and you'll pass those formal inspections with flying colors. If you subscribe to his preventive maint recommendations, your overall maintenance/repair costs will be about equal but your customer refunds due to breakdowns and tow bills will be very minimal.

If you listen to what he says and ask intelligent questions -then That is how a self-described computer nerd like me wound up knowing so much about diesel buses.

[seadonu]

If we're talking about small 15 passenger bus, which doesn't require CDL, could it be qualified as just "rental car" without driver? What difference by law in that case in van with fancy VIP seats and bus with fancy couch?

[Dbacks2k4]

Originally Posted by seadonu

If we're talking about small 15 passenger bus, which doesn't require CDL, could it be qualified as just "rental car" without driver? What difference by law in that case in van with fancy VIP seats and bus with fancy couch?

The difference is for-hire vs personal-use but owned by someone else. In most states, a <15 passenger vehicle for-hire requires a chauffers license instead of the Class B CDL with Passenger Endorsement.

https://www.fmcsa.dot.gov/registrati...d-usdot-number

[seadonu]

Originally Posted by Dbacks2k4

The difference is for-hire vs personal-use but owned by someone else. In most states, a <15 passenger vehicle for-hire requires a chauffers license instead of the Class B CDL with Passenger Endorsement.

https://www.fmcsa.dot.gov/registrati...d-usdot-number

If I understood correct - you need chauffer license if you're collecting money from passengers, but if you rent 14-passenger van/bus and travelling with family/friends you don't need any special license. That's my understanding. I could be wrong

[Dbacks2k4]

Originally Posted by seadonu

If I understood correct - you need chauffer license if you're collecting money from passengers, but if you rent 14-passenger van/bus and travelling with family/friends you don't need any special license. That's my understanding. I could be wrong

Correct. One key difference, at least in Iowa where we operate, is Open Container (alcohol) law. In a personal vehicle, van, or RV open container is prohibited for all passengers. In a commerical vehicle with operating authority from the state open container is permitted.

The DOT officer who did our onboarding told us that's their favorite way of busting illegal party buses. These operators are running under RV tags and personal insurance. They tell their passengers if DOT stops them to just say they're all friends hanging out together and nobody is paying anybody "to make the stop go faster." DOT stops the bus, driver says they're all friends hanging out hence no commerical insurance and no CDL. Officer starts asking the passengers if they paid the driver, they all say nope, we're just friends. Officer starts handing out open container citations to all the passengers. Wait a second, they say, no we paid him to drive us around, he just told us to say that. Now the driver gets nailed for about $9000 in FMCSA violation fines and the bus is towed. Passnegers are still stuck on the side of the road, but no tickets for them.

[seadonu]

After conversion can you drive with passengers on those seats without seatbelts?
if your bus originally was 24 passenger, how to know how many people you can carry after conversion?