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Bus crash highlights inadequate insurance requirements

The bus crash near Palm Springs that killed 13 people returning from a casino was the subject of a recent post here. The previous post focused on the investigation into the cause of the crash. A new issue has now arisen: Was the company that owned the bus involved in the bus-truck collision required to carry an amount of liability insurance that will afford adequate compensation to victims of the accident?

13 people were killed in the accident and 30 were injured. The injured victims and the survivors of the dead passengers are certain to seek compensation, but they face an unpleasant reality: the bus company carried only the minimum policy of $5 million, and all of the claimants must divide this amount among themselves.

Federal transportation law requires bus companies to carry a minimum of $5 million in liability insurance. This requirement was imposed in 1982, when the trucking and bus industries were deregulated during the Reagan administration. Most bus accidents do not come close to exhausting the limits, but in crashes such as the Palm Springs collision, where dozens of people are either killed or seriously injured, many people either receive inadequate compensation or are left completely empty handed. The significant increases in medical costs during the 35 years since the minimum was established now make it plainly insufficient. A recent study found that if the amount of minimum required insurance had been adjusted for increases in medical costs, it would have grown to $21.3 million.

All efforts to increase the minimum level of insurance have met fierce opposition from bus owners and their trade associations. The president of the American Bus Association said that the premium for an annual policy providing $5 million of liability insurance can cost from $10,000 to $12,000, an amount that is significant for small operators.

Source: Los Angeles Times, “Victims of Palm Springs bus crash may face years of uncertainty over compensation,” Ralkph Varabedian, Nov. 6, 2016

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200 South Garfield Avenue
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