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.
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.
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.
Robert Weinstein is a husband, dad, stock market junkie, real estate broker, and of course…Insurance agent. Interests include my family, economics, marketing, technology, real estate, finance/investing, history, and Asia.
Robert’s insurance expertise includes having the designation of Certified in Long-Term Care (CLTC) and assist in asset protection for families with members entering retirement.
Robert is also an accomplished syndicated writer whose work can be found in TheStreet, MainStreet, CNBC, Forbes, Yahoo Finance, Seeking Alpha, MSN Money, The Money Show, Stock Saints, Motley Fool, Fidelity, Minyanville, RealMoney Pro, and many national and international newspapers.