By now you've probably heard about Karen Peck & New River's misfortune that happened in the early hours of August 27. If not, the nutshell version is that the group's bus was struck in the rear by a vehicle that was traveling at least 20 miles an hour faster. The driver of that vehicle was arrested and charged with DUI. Everybody on the New River bus, including me, is OK, and that's the best news.
This little incident does bring up an important issue for any group who owns a bus, especially those who are full-time: proper insurance for the bus. I'm happy to say that Karen's bus is properly insured, but many buses that are on the highway today don't fall into that same category.
In a departure from my normal fare, I'm going to use this space to post an article that was written by noted attorney Russ Farrar. For many years, Russ worked closely with many Southern Gospel artists, making sure that their insurance coverage was proper and sufficient. This article originally appeared in The Trade Review, once published by Singing News. Despite being a few years old, the information in this piece never goes out of date. Here is what Russ had to say...
Time and time again, I have stressed the importance of properly insuring your bus and yet, too many people have chosen to take "the cheaper road." Friends, let me tell you: you are but one accident away from financial ruin.
With many groups traveling by bus over 100,000 miles each year it doesn't take too long to realize that travel risks are at every hand. So why risk everything you own to save a few bucks? I urge you to take a few moments and read this article again. And, please, for your own sake, heed my advice.
For most every group on the road, your bus is your single largest investment. While this is the single largest investment you have, the question arises whether you have taken adequate steps to be sure you are carrying the appropriate insurance on your bus. While insurance is a subject no one likes to talk about, the failure to carry the proper insurance on your bus can have far reaching implications, not just on the vehicle itself, but in fact on your entire organization and on your family.
It is important to be sure you have automobile insurance coverage on your bus. In this regard, you should be aware there are two types of automobile policies. There is a personal automobile policy and a business automobile policy. A personal automobile policy is designed to cover items such as personal cars and trucks. You should also include under the umbrella of a personal automobile policy the coverage on a recreational vehicle. It is important to note the coverage for the recreational vehicle under a personal automobile policy would be designed for a family that uses the recreational vehicle for occasional holidays and vacations. The premium dollars charged are based on the vehicle being used on such occasional personal use.
On the other hand, the business automobile policy would cover any vehicles used in a business. This would include the buses used by most groups to get from concert venue to concert venue and carry necessary sound equipment and merchandise. Insurance experts have pointed out to me that when premiums are figured, in fact they are much higher for a bus used in a business than they are for a recreational vehicle. This being the case, the question would naturally arise as to whether or not a group would be better off to purchase coverage under a personal automobile policy for a recreational vehicle than for a bus used in the business under a business automobile policy. The answer to this question is an overwhelming "NO."
While it may be possible to a save dollars on premium costs, the risk of trying to purchase insurance for a recreational vehicle rather than for a bus used in your business can have costly consequences. At the outset, such a purchase, even if innocently made, may be considered to be insurance fraud. In the event of an accident involving the bus, it is possible that once the insurance company looks into the matter, if a recreational vehicle policy has been purchased, coverage could well be denied. The implications of this would be in fact that the bus is used to transport the group is not a recreational vehicle used for holiday weekends and family vacations. Because the recreational vehicle policy would require this representation be made and signed, the insurance company would have the ability to deny coverage for a bus. Moreover, you can count on the fact that if for some reason coverage was denied, your policy would be canceled immediately. Once a policy is canceled, whenever you make application for a new policy, one of the standard questions is whether or not you have ever had a policy canceled. If you answer the question that you have, then this could jeopardize greatly your ability to ever be able to buy any automobile insurance in the future.
Perhaps as important as anything to be considered is the fact that to obtain a policy for a recreational vehicle rather than a bus could jeopardize your entire financial future. If a bad accident occurs and coverage is denied, you could be left holding the bag for all damages to any party. This would include third parties who have suffered injuries in the event of liability on the part of the bus and possibly even members of your own group. If coverage is in fact denied, then you could be personally liable for all such damages. In this regard, I would point out if coverage is denied for insurance fraud even if your group is set up as a corporation, you could have personal liability.
This is based on two things. First of all, the policy itself would have had to have been a personal policy so you would have represented that it is a personal vehicle. This would be used against you in court. Secondly, even if a corporation is set up, if in fact coverage is denied for fraud, "the corporate veil" can be pierced. That means that even if you have the protection of liability by being set up as a corporation, in the event that fraud is found, the protection from liability would not apply and you may have personal liability.
In short, it is extremely important to be sure that you are obtaining the right kind of coverage for your bus and that you do not obtain coverage for a personal recreational vehicle, but rather for a bus used in the business. As I have stated earlier, it is a matter that could jeopardize your personal financial future if any mistakes are made in this area. The insurance company must be told the appropriate use of the vehicle and premium dollars rated accordingly. To pay a few more dollars in premium could save you much heartache, financial disaster and problems down the road. - Russ Farrar, August 2000
