Working in the passenger transportation industry comes with many wonderful benefits, but also some inherent risks. Spending so much time on the road, and in close proximity with strangers, increases the chances of dangerous events like collisions, theft, assault, and more. That’s why it’s so important to protect yourself and your business with proper passenger transportation insurance. Read on to learn more and explore your options!
An Introduction to Passenger Transportation Insurance
According to the Federal Motor Carrier Safety Administration (FMCSA), a for-hire passenger carrier is a person or company that provides transportation of passengers for compensation. Regardless of their size, all businesses and individual drivers in the passenger transportation industry must be registered, licensed, and insured. There are minimum insurance requirements set by law for each state, and failure to comply with your local state regulations can result in massive fines.
Although meeting minimum requirements is important, it is better to go a step further and invest in more comprehensive passenger transportation insurance. While general passenger transportation insurance plans usually apply during collisions, comprehensive passenger transportation insurance plans include coverage when the vehicles are not in motion. This coverage usually includes damages due to natural disasters, civil disturbances, theft, vandalism, accidents involving wildlife, falling objects, fire, and more.
The peace of mind that comes with knowing that your drivers, passengers, vehicles, and business as a whole is protected is priceless.
Registration Requirements for Passenger Transport Insurance
Individuals planning to operate and acquire insurance for for-hire passenger transportation vehicles must obtain operating authority registration. Operating authority registration is necessary for companies who: are compensated directly or indirectly for their transportation services, are paid or not paid by the customers, or if the company operates as a non-profit.
All parties applying for Motor Passenger Carrier Operating Authority must undergo a thorough investigative process. The FMCSA conducts these in-depth investigations to verify the registrants fit for the position and willingness to complete the vetting process. This includes all applicable federal and state transportation provisions and regulations. Individuals cannot receive their for-hire motor passenger carrier operating authority until the entire process is complete.
This type of registration can be bypassed if the driver is operating exclusively in a commercial zone or otherwise exempt.
Types of Commercial Passenger Transportation Insurance
Depending on the nature of your passenger transportation business, there are different types of commercial insurance available to you. Keep in mind, there are many specific types of insurance and it can quickly get confusing, so talk with a transportation insurance company if you have questions or are unsure of where your business falls.
The main types of passenger transportation insurance are outlined below:
- Taxi Insurance: Standard vehicle insurance is simply not enough to protect your taxi business, driver, passengers, and vehicles from all these risks that come with the job, which is why you need commercial insurance for taxi cabs.
- Limousine Insurance: Limo insurance is a type of livery insurance that protects drivers and luxury vehicles that transport people on a for-hire basis. In other words, because limo and black car businesses typically offer pre-scheduled or for-hire rides, they need a specific type of insurance, known as livery insurance.
- Shuttle Bus Insurance: The type of insurance you need for your shuttle bus depends on the type of bus and what it’s used for. The different types of insurance for shuttle buses include but are not limited to: property damage liability, medical payments insurance, workers’ compensation insurance, and bodily injury liability.
- Non-Emergency Medical Transportation Insurance: Non-emergency medical transportation insurance is a specific kind of for-hire livery insurance. This type of insurance protects businesses that transport patients or people with specialized needs on a prearranged, non-emergency basis.
Passenger Transportation Insurance Cost
You can expect passenger transportation insurance to cost more than standard car insurance because of increased mileage, more passengers, and more risks while you’re on the road. The actual cost of your passenger transportation insurance will depend on many factors — particularly the type of passenger transportation business you operate. Other factors that affect the price include the level of coverage you choose, the location of your business, the specifics of your vehicle, the driving records of your drivers, and more.
The schedule of limits provided by FMCSA reflects the following:
– A vehicle that is designed to transport 16 or more passengers (including the driver) is required to carry $5,000,000 in insurance.
– A vehicle that is designed to transport 15 or fewer passengers (including the driver) is required to carry $1,500,000 in insurance.
These requirements are determined by the highest seating capacity of a vehicle within a fleet operated by an interstate for-hire motor carrier of passengers.
To give you a sense of the price range, taxi cab insurance policies usually cost somewhere between $5,000 and $10,000 per cab per year in the U.S., on average. For a more accurate cost estimate, you should request a detailed quote from a passenger transportation insurance provider serving your state.
Passenger Transport Insurance Limit Exceptions
While these facts and figures can seem overwhelming, there are some exemptions to the rule. According to the Federal Transit Administration, if a company is a recipient of the Federal Transit Administration Grant (Transit Benefit Operators) they are exempt from the minimum requirements observed for each state.
In October of 2020, the U.S, Department of Transportation’s Federal Transit Administration awarded almost $9.1 million in grants through their Safety Research and Demonstration Program, along with others, to support projects that improve safety and innovation in the transit industry across the United States. The projects and initiatives were awarded to nine states including Maryland, Pennsylvania, and Louisiana. Recipients involved in the following projects may be exempt from carrying the federally mandated insurance coverage but they are still required to register with FMCSA for operating authority.
Other exceptions can include: a vehicle transporting only school children and personnel to and from school, a taxi service without specified routes or stops that can carry less than seven people, a single daily round trip to work of 16 people or less, or a contracted carrier to provide transportation for students that is organized sponsored and paid for by the school district.
Acquire Passenger Transportation Insurance for Your Business
If you’re looking for affordable passenger transportation insurance, we’re here to help! We specialize in passenger transportation insurance and can help you find the right solution to protect your business and help you thrive.
