PUC Suspends 90 Private Bus Operations Because of Lack of Insurance

The state Public Utilities Commission on Friday suspended the operations of 90 to 95 private bus companies that lost their liability coverage because of the recent failure of Transit Casualty, one of the nation’s largest insurers of public transportation.

The commission said the companies, mostly small charter bus lines, operate about 1,000 buses in California. The largest bus company affected by the decision was the Commuter Bus Line of Lynwood, which operates 30 routes in Los Angeles County and 18 routes near Sacramento.

Commission Director Victor Weisser said the suspension will not affect most California commuters, noting that it does not apply to publicly owned commuter lines, which are outside the PUC’s jurisdiction.

“There are 2,400 bus companies in California. The vast majority are unaffected,” he said.

The commission said it acted because state law requires that private bus companies with seats for more than 15 passengers carry $5 million in liability coverage and because Transit Casualty cannot provide the necessary coverage because it is insolvent.

“State law says the bus companies must be insured to $5 million. A commuter that gets on a bus believing that he is insured, won’t be,” Joseph E. Bodovitz, the commission executive director, said. “We had no other choice.”

The California Insurance Guarantee Assn., a pool set up by insurance companies to cover claims of failed insurers, pays up to $500,000 a claim.

That coverage falls far short of the commission’s requirement, according to a state insurance regulator who declined to be identified. The regulator, however, took issue with the commission’s requirement for $5 million in coverage.

“Even though the company is insolvent, there is $500,000 worth of protection as long as the insurance is in force,” the official said. “That seems adequate to me. What are (the PUC officials) going to do? Make people walk?”

James C. Carson, vice president of Commuter Bus Lines, said his company believes it has found new insurance for its Sacramento operations and “may soon have” insurance for its Los Angeles area operations.

“We think we may have a deal, but it is going to cost us three-and-a-half to four times as much for half the coverage,” he said.

The commission said the only other “significant” company in Southern California that was shut down by its decision was the Desert Stage, which provides public and charter service in Twentynine Palms. The owner could not be reached for comment.

The Nov. 26 failure of Transit Casualty forced hundreds of bus lines, taxi cab companies and limousine services to scramble for new insurance. The company, which maintained its main office in Los Angeles but was incorporated in Missouri, had its policies nullified after being seized by insurance commissioners in Missouri.

Previously, the state Insurance Department said Transit Casualty’s California policies would be canceled Feb. 7, which is 30 days after a hearing is set in Los Angeles Superior Court on the company’s financial condition. The commission decided against waiting until then to act, however, moving immediately after determining that the insurer was insolvent.

The commission sent telegrams to the bus companies late Friday ordering them to shut down by day’s end, catching some bus operators by surprise.

“We thought we had some breathing space,” Carson said.