Taylor Bus Service’s Insurance Firm Delays Cancellation of Policy
An insurance firm has delayed cancellation of its liability coverage for Taylor Bus Service Inc. until March 26, saying the delay should give school districts time to develop contingency plans for transportation of their students.
Taylor provides bus service to 100 California school districts. The firm had said that Nationwide Mutual Insurance Co.’s earlier threat to cancel its insurance on Jan. 15 would have left many school districts with limited alternatives for bus service.
“Basically, we were very, very concerned for the school districts,” said William A. Lee, who heads Southern California operations for Nationwide, the fourth largest property and casualty insurance firm in the nation. “We feel they’re out on a limb here.”
Suit to Block Cancellation
Taylor sued Nationwide last week in an attempt to block the cancellation of its liability insurance. Superior Court Commissioner Jane D. Myers issued a temporary order preventing the cancellation, and Taylor lawyer Frederick E. Turner said he will press to have that order made permanent.
Turner said he believes that Nationwide has made a decision to get out of the business of insuring school buses.
Lee said Nationwide first insured Taylor for the 1985-86 school year. When Taylor sought to renew the contract, Nationwide agreed if Taylor would provide proof of financial responsibility. Lee would not specify what proof was requested.
Lee said Taylor still has not provided the required proof of financial responsibility. He said Nationwide delayed its cancellation only to accommodate the school districts and characterized that decision as an act “above and beyond the call of duty.”
Taylor contended in its lawsuit that Nationwide’s threatened cancellation involved a dispute over a $27,000 premium payment. Turner claimed Friday that the insurance firm had “concocted” its concern about financial security.
Several Disputes
The bus firm has had several disputes with school districts in past years over the adequacy of its insurance. Taylor was low bidder on a large contract in San Jose, but another bus firm was hired after Taylor failed to provide conventional insurance acceptable to the school district. A lawsuit ensued.
Officials in the Los Angeles Unified School District were so concerned about insurance last summer that they purchased coverage on their own and have been deducting costs from payments to Taylor for bus service.
Concerns have centered on Mesa Verde Insurance Trust, which Taylor has listed as one of its insurance carriers in contracts with several school districts. The firm, which is being investigated by the state Department of Insurance, offers what has been described as a form of self-insurance.
Turner, the bus company’s lawyer, said lack of availability of insurance forced Taylor to turn to Nationwide in the last school year. He said Taylor agreed to pay $1 million--four times as much as the previous year--for about a tenth of the coverage.
Nationwide’s extension of the policy period was announced in a written news release Friday.
“This additional extension of coverage, while not changing the terms of the original policy or the need to satisfy the financial condition originally required, should provide adequate time for Taylor to meet the necessary conditions or find alternative means of insurance,” according to the statement.
“More importantly, it will allow additional time for affected school districts to develop contingency plans for transportation of their students should such plans be needed.”
