Judge’s Ruling Averts Bus Service Crisis for Schools

An Orange County Superior Court judge Monday ordered Nationwide Mutual Insurance Co. to continue to provide liability coverage to Taylor Bus Service Inc., avoiding an insurance crisis that could have sent 100 school districts throughout California scurrying for new bus service.

Judge Gary L. Taylor, citing “a matter of public safety,” said that he was issuing a preliminary injunction to make Nationwide honor its present insurance contract through next September.

Taylor, an Anaheim-based transportation company that contracts to provide bus service to 100 California school districts, filed suit against the insurance company when it was told that its insurance was being canceled.

Last Friday, Nationwide granted Taylor a 60-day delay that moved the cancellation date to March 17.

Trial Set in September

Attorney Robert Moss, who is representing Nationwide, said the preliminary injunction would require the company to continue coverage until the matter goes to trial, which he said will probably not occur before next September. He said the injunction would not apply if Taylor violated provisions of the contract, such as failing to make a premium payment.

Lawyers for Taylor claim that the dispute over the insurance policy centers on a missed $27,000 premium payment which, Taylor has said, was subsequently paid. But Nationwide attorneys said the bus company has failed to keep a promise to provide proof that it has the financial ability to pay premiums for the balance of the school year.

If Taylor’s insurance problems had not been resolved, attorneys said, school districts across the state, including Los Angeles Unified, would have faced the difficult task of finding new bus service in the middle of the school year.

Taylor attorney Frederick E. Turner said Monday that the publicity surrounding the cancellation of the insurance has “put us in a terrible situation.” He said the preliminary injunction was needed to illustrated to the company’s 1,500 employees and customers that Taylor will continue to have insurance and operate its buses.

Could Pay More

Turner said the bus company is not sure why Nationwide cancelled the policy but said no one at Taylor ever agreed to provide a “letter of credit” to prove that the company has the ability to make the premium payments.

Moss argued against the preliminary injunction, saying that Taylor could remedy its insurance cancellation problems by providing the letter of credit, finding a new insurance company or paying a higher rate to Nationwide.

Taylor claimed in its lawsuit that no other insurance is available and that cancellation would not only disrupt school bus service but would force layoffs of hundreds of employees and destroy the company.

Bus company officials also claimed that Nationwide acted maliciously when it mailed notices of pending cancellation to the 100 districts served by the bus firm.