If you’re starting a new party bus business in your local area, you may be surprised at how much commercial auto insurance costs, so knowing your options is key to keeping your insurance costs low.
Depending on your state (and feel free to reach out and ask about your state, we’re here to help), you may have an option to lower your party bus insurance costs by limiting your operations to intra-state (staying within your state and not crossing state lines) versus inter-state (traveling in more than one state with your party bus). For example, if the federal rules requires your party bus to have $5 million in liability insurance coverage, you may be able to have less than half the amount of coverage by simply limiting your party bus operation to only stay within your state.
While you won’t expect your insurance rates to drop in half if you have half the coverage (because the first dollar loss in insurance policies is the most likely loss, while the last dollar of an insurance policy is the least likely to have to be paid out, all else being equal), the savings remains significant for most party bus operators.
In other words, you want to make sure when you’re shopping for party bus insurance, you’re working with an agent that understands the many nuances of where you can save money, and maybe more importantly, can help you weigh the pros and cons between intra and inter-state insurance coverage. Admittedly, this is often an easy choice because for many operators, your proximity to large cities and a state line will force your hand. For example, a party bus operator in the Dallas Texas area may only require a 100 mile radius and just a state filing of operations because they’re not going to have a requirement to travel to Oklahoma when every major attraction is within Texas.
On the other hand, a party bus operator in Wisconsin may want to travel to Illinois or Minnesota depending on the physical location. Even though Milwaukee is a large city, many buses still need to go to Chicago from time to time, and a party bus business I insure again in Wisconsin, albeit in the north west (what many consider the north-woods), the largest city is Minneapolis Minnesota, which requires a federal filing along with the state filing).
It’s still not always clear, because other party buses may limit their travels to bar hopping for wedding parties and forgo partaking in taking people to major events that require leaving the state. By knowing what demographics and markets you’re going to focus on, and not simply assuming you’re going to take “any business you can get,” your party bus business could save thousands of dollars per year in both marketing, labor, repair, and of course insurance costs.
That said, when a new party bus operator wants to know where to start, I strongly suggest learning as much as possible about the local market and look for unmet demand that will allow you to scale quickly. By scale, what I mean is if you’re starting with a single bus, your focus should be on booking the bus for as many bookings as you can until it’s fully booked all year before moving up to a second and more party buses.
In other words, take your time and grow deliberately and stay within your core competency if you want to maximize your return on investment. This is especially the case if you’re brand new and learning as you (attempt to) earn. The market pays a premium for those that are the very best, and it’s incredibly challenging to become the best in more than one category in any given market. And if you’re new, your competition must really be sub-par for you to take on and be the best in multiple offerings. For example, taking wedding parties bar hopping is a very different experience for your passengers than having a particular target location (like a sporting event), compared to a family reunion. While all three bookings may appear to be essentially the same thing for those not understanding the nuances of each, albeit for those with sufficient party bus operation experience, each has it’s own requirements and expectations.
The next party bus insurance issue that must be addressed is how big of a party bus to buy. Depending on your state (and if federal rules apply due to having a federal authority when crossing state lines), a driver may be required to have a Commercial driver’s license (CDL).
Keep Keep KEEP in mind, that most insurance carriers (if not all) require drivers already have three years experience with their CDL. Where some new operators run into frustration is that they want to have a larger bus (often a party bus with 16 or more passengers) and intend to use their newly issued CDL to drive. They apply for insurance and find out they can’t drive their own bus. It’s a show stopper that you don’t want to find out after you buy your bus.
It’s also a great time to mention that if your insurance agent is trying to “figure it out” and doesn’t really understand what’s required and can offer you advice and guidance, you’re not receiving all you can from your insurance agent. Regardless if you call me or not, I can’t stress enough that you DO want to work with someone who can provide advice and consulting, and not an agent who is only focused on putting the policy together so they can get a commission, while hoping nothing “goes wrong.”
Call or email me so we can talk about your party bus insurance requirements and strategize not only your options, albeit your optimal direction to making money in this very profitable industry.
Wedding party picture is from Pulse Party Bus in Eau Claire Wisconsin
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.