New Insurance Requirements May Force Some Charter Bus Companies Off The Road

After negotiating with Durham and Wake County Public Schools to have J&R Travel on an approved list for schools to use for field trips, bus driver Judy Kee was sent final contracts with a new requirement -- general liability insurance.

"Since they passed that, my bus has been sitting," she said.

The state only mandates $5 million in auto liability, inspections, licenses and other requirements that Kee has met to get a satisfactory rating, but the new coverage costs $8,000 that she does not have.

Charter owner Wallace Hedgpeth said his two-bus operation may go bankrupt because he cannot afford the new coverage either. He blames it on last spring's

charter bus accident

, which injured several Cumberland County students. That carrier had a lapsed policy.

"That's when it all started. Even my regular liability insurance went up $1,200 this year," he said.

Many local schools now ask for general liability, a sort of "gap" insurance coverage to protect students beyond basic auto liability. General liability insurance also protects against contract lapses. If the small charters can even get the insurance, it is going to cost them thousands of dollars more, and the schools that hire their buses may be expected to pick up the difference in the cost.

"You will have to filter in this insurance into the prices that you're charging schools," Kee said.

School attorneys said that child safety comes before price. They point out that many large charters already have general liability coverage. Small charters are struggling. Kee has seen more than 500 bookings dwindle to a few.

"It hurts because if you don't move your buses, you can't pay your bills," she said.

Small charters claim $5 million is excessive and their insurance agents can only write a $1 million policy themselves. However, school attorneys say the cost of litigation is on the rise and $1 million is too little.