How To Start a Party Bus Business

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Starting a party bus business encompasses many of the same requirements as any business, namely knowing the industry, understanding marketing, being able to properly price your product, scheduling, and of course the big one, customer service. Again, I want to emphasize the importance of customer service. You can have everything perfect, the right bus, the right price, the right availability, and if you fail at customer service, especially in the beginning when your reputation is most vulnerable, and your chances of success fall precipitously.

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Size matters – When you're starting a party bus business, one of your most significant concerns is the size of the bus. Party buses are sized based on seating capacity. Depending on your party bus seating capacity, you may have vastly different insurance requirements. Because commercial auto insurance for your party bus is one of the largest cost components to your operation, managing your insurance premium is a must. For example, using a bus that crosses state lines as a sample, if the bus can hold 15 or fewer passengers, the insurance requirements for your vehicle is $1,500,000. However, your state my require more, and if you're operating sometimes only within your state, then your state requirements likely must be satisfied as well.

DON'T GROW YOUR PARTY BUS BUSINESS TOO FAST, HERE'S WHY

Still using the above example, let's say your bus sometimes crosses a state line, and sometimes the entire trip for any given booking stays within the state. If your state requires $1,000,000 for intra-state travel, your insurance requirements will still be $1,500,000 because sometimes you cross a state line and then are required to follow federal requirements.

On the other hand, and still using the above example, if your state requires $2,000,000 minimum bodily injury / property damage liability insurance coverage, your party bus operation will be required to carry at least $2,000,000 in coverage, even though sometimes the bus crosses a state line and the federal requirements are only $1,500,000. In other words, planning your operation with a keen eye on commercial auto premiums that need to be paid are essential to running your business profitably.

Now let's take a look at larger buses. You may or may not be thinking your party bus will start with a vehicle that can carry 16 or more passengers, albeit it needs to be well thought out because once you move to the "larger party buses," things and requirements change quickly. With a party bus that can carry 16 or more passengers, you're likely going to find (at the time of writing) that your bodily injury / property damage liability insurance requirements are $5,000,000. It's a big deal that shouldn't be taken lightly. For a casual party bus operator that only wants to work the occasional gig, the insurance premiums can (and likely will) prevent the operation from getting off the ground, much less make any money. A party bus operator considering running a bus that can carry 15 versus one that can carry 16 is likely to find the insurance cost increases by $3000 or more. In other words, all else being equal when you're starting out, you are well advised that a 15 passenger party bus will cost much less to insure.

Looking under the hood and more – Party buses are subject to DOT inspections. As an operator, you can expect intense inspections where the state patrol or other inspecting authority are very much looking for all the safety features to be fully operational and in good order. If you're one that takes safety in a somewhat causal approach, you'll likely find that the state patrol has no sense of humor and wants to make sure that you're well on the side of an abundance of caution. Intuitively, it should make sense too, because the state patrol officer has everything to lose by signing off on an inspection, and zero to gain. 

One strategy that many party bus operators employ is having DOT inspections when there's NO PASSENGERS on the bus. Regardless of how safe you feel your bus is, you never want to have an inspection while passengers are sitting, waiting, and paying for a service that you're not able to provide because you didn't take the time to get your vehicle inspected ahead of time.  Plus, if you're party bus is placed "out of service," meaning the bus didn't pass the DOT inspection, your business will not only face monetary costs that far exceed any anticipated profit, because you'll now have to figure out transportation (maybe from the side of a remote road), albeit towing, fines, and of course refunds and damaged reputation. In a world with online social media driving real world businesses, you can't afford to have an easily managed and solved regulatory requirement destroy your business due to lack of understanding of the process or concern with the ramifications if things don't go as planned. 

As an insurance agent that helps party buses get the right coverage, I'm going to of course make sure you have the right coverage, albeit there's a lot more to know, including state and/or federal filings. The business of transporting people in the modern world remains an old-world term, and is called "livery." According to Merriam-Webster dictionary, the term livery means (within this context) a concern offering vehicles for rent, or the feeding, stabling, and care of horses for pay. Modernly, it's how buses and limos are described in a regulatory sense. To be in the party bus business is to be in the livery / entertainment business. A party bus is livery because the fact remains you're moving people from A to B (even if B happens to result in the same place as A), and the clients are doing so to be entertained. That's an important distinction if you're planning on being successful. As I started with, if you're not keeping your eye on the level of customer service and satisfaction, and start believing that people are only paying for transportation, you'll quickly find that your boss (aka your potential clients) will fire you much quicker than any "real boss" will.

Regulations, regulations, and more regulations. Not only must you become intimately familiar with your state's regulatory requirements to operate your bus, if you cross state lines, your operation becomes part of "interstate commerce" and federal regulations also take effect. The list is way too long and complicated to be within the scope of this article, albeit know that you must reach out to your state DOT and find out what's required. For example, in Wisconsin, the DOT is located in Madison and you can call them or review it's website. For medical card information and what's required to drive a party bus, take a look at http://wisconsindot.gov/Pages/dmv/license-drvs/mdcl-cncrns/medbusinfo.aspx  There you will read about medical information specific to passenger bus drivers.

Speaking of DOT, you'll need a DOT number, and it's likely the first regulatory number you receive. For a USDOT number, and anyone operating a party bus across state lines is included, you can learn more information from the Federal Motor Carrier Safety Administration in regards to USDOT numbers at https://www.fmcsa.dot.gov/registration/do-i-need-usdot-number  In a nutshell, do not automatically think you don't need one if you're planning on operating a bus that is designed to transport eight or more passengers, and that includes the drivers.  States that require a DOT number include the following (as of the writing, albeit are subject to change at any time):

  • Alabama
  • Alaska
  • Arizona
  • California
  • Colorado
  • Connecticut
  • Florida
  • Georgia
  • Idaho
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Maine
  • Maryland
  • Michigan
  • Minnesota
  • Missouri
  • Montana
  • New Jersey
  • New York
  • Nebraska
  • North Carolina
  • Ohio
  • Oklahoma
  • Oregon
  • Pennsylvania
  • Puerto Rico
  • South Carolina
  • Texas
  • Utah
  • Washington
  • West Virginia
  • Wisconsin
  • Wyoming

Also, in regards to motor vehicle regulations, you and your staff if you hire drivers and or support people will need to use some common sense and be aware of your local laws that have nothing to do with transportation. For example, drinking laws and especially underage drinking. Laws differ from state to state, so what might be perfectly acceptable and legal in one state, may subject you to legal penalties, fines and possibly jail time. Take a look at the following news clip video that discusses a party bus driver that allowed underage passengers on the bus and the hot water it caused.  

In order to protect the safety of passengers, party bus operators must comply with Federal regulations that apply. Failure to comply with applicable regulations can result in civil or criminal penalties.

Generally speaking, bus companies are required to obtain both USDOT registration and operating authority registration from the Federal Motor Carrier Safety Administration (FMCSA) before transporting party going passengers for compensation. That's different that a bunch of friends taking a bus together, or even a family driving a bus (think RV and motor home). Once you're charging for your service, it leaves the realm of private use and enters the world of commerce and when crossing a state line (including leaving the country), it becomes legally interstate commerce. 

According to the FMCSA website listed here -> https://www.fmcsa.dot.gov/safety/passenger-safety/legal-notice-motorcoach-operations

  • There are some statutory exemptions to the operating authority registration requirement. For example, carriers operating wholly within a commercial zone or within a 25-mile radius of an airport may not be required to obtain operating authority registration.  These carriers, however, are still subject to FMCSA’s safety jurisdiction and the USDOT registration requirement, in most cases.
  • Interstate commerce generally occurs when a passenger is transported across a State boundary.
  • In order to obtain operating authority registration, a motorcoach company must demonstrate that its operations meet FMCSA’s safety fitness standard and that the company is willing and able to comply with all applicable statutes and regulations, including regulatory insurance requirements.
  • To obtain and retain operating authority registration, motorcoach companies must maintain and file evidence of $5 million in insurance coverage.

An interstate motorcoach driver must meet the following qualification requirements and responsibilities: 

  • Be at least 21 years of age; 
  • Speak and read English well enough to converse with the general public, understand highway traffic signals, respond to official questions, and be able to make legible entries on reports and records;
  • By experience, training, or both, be able to drive the motorcoach vehicle safely; 
  • Possess a valid medical examiner’s certificate;
  • Have only one valid commercial driver’s license (CDL) and this CDL must have a passenger endorsement;
  • Provide his/her employer with a list of all motor vehicle violations or a signed statement that driver has not been convicted of any motor vehicle violations during the past 12 months;
  • Not be disqualified from operating a motorcoach.

Interstate motorcoach drivers are subject to driving limitations that are established by Federal regulations. 

No interstate motorcoach driver can drive:

  • More than 10 hours following 8 consecutive hours off duty. 
  • For any period after having been on duty 15 hours following 8 consecutive hours off duty.

No interstate motorcoach driver can drive for any period after such driver has been on duty: 

  • 60 hours in any 7 consecutive days if the driver’s employer does not operate every day of the week; or
  • 70 hours in any 8 consecutive days if the driver’s employer operates every day of the week. 

If a motorcoach driver works more than one job of any kind, that time must also be included as on-duty time.

A motorcoach company is subject to the Americans with Disabilities Act (ADA) implementing regulations. 

A motorcoach company that provides charter or tour service must provide accessible motorcoach service to passengers with disabilities when provided with 48-hour advance notice of the need for accessible service.  With 48-hour notice, a charter or tour operator must provide accessible service to include a motorcoach equipped with a wheelchair lift when required for passengers who are unable to board the motorcoach without the use of a wheelchair. The motorcoach must also be equipped with a specified location and equipment for securing the wheelchair.

It is considered discrimination for a motorcoach company to:

  • Deny transportation to an individual with disabilities except when such individual engages in violent, seriously disruptive, or illegal conduct. Service may not be denied, however, if the individual’s disability results in appearance or involuntary behavior that may offend, annoy, or inconvenience employees or other people.
  • Use or request the use of persons other than the motorcoach company’s employees (e.g., family members or traveling companions of a passenger with a disability, medical or public safety personnel) for routine boarding or other assistance to passengers with disabilities, unless the passenger requests or consents to assistance from such persons;
  • Require or request a passenger with a disability to reschedule his or her trip, or travel at a time other than the time the passenger has requested, in order to receive transportation; or
  • Fail to provide reservation services to passengers with disabilities equivalent to those provided other passengers.

 


Interstate motorcoach operations are regulated by the FMCSA. As the Federal agency responsible for safety oversight of commercial motor vehicle operations, FMCSA and our law enforcement partners enforce and administer applicable Federal laws and regulations. Motorcoach companies and their drivers and vehicles are subject to inspection by Federal, State, and local authorities. A violation of a law or regulation could result in a fine, a penalty, or the driver, vehicle or entire motor carrier operation being ordered out-of-service.

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