Who to insure with for commercial use of conversion?

[Kevin Warnock]

Any ideas on who will insure a bus conversion for business use? I have learned that my policy with my current carrier will not cover me if I transport my company's employees. It will cover me if I transport clients, but not employees. Thus, I am told I need a commercial policy, even though I am not carrying paying passengers or hauling goods. My current carrier will write me a commercial policy, but the premium jumps from $600 a year for $300K/500/300 full comprehensive coverage to $1,800 a year for the same limits. This is pretty expensive given what I perceive to be low risk, since my employees are covered by Workmans Comp insurance, and by law in California that is a workers' sole recourse if injured while on the job, as they would be when traveling in my bus conversion.

Any thoughts? Is the $1,800 what I should expect?

Thanks

[Airbag]

No one just drive. What if you offer an employee a lift home where do you draw the line? Is this going to be an on going thing? Or is it just one job?  This country has become insurance poor. They bleed you for every penny and then refuse to pay if there is a problem anyway. I say keep your money and just drive. Like you say workmans comp will be the payer anyway. It should only be a problem if your employee drives the bus am I right?

[Nick Badame Refrig/ACC]

I'm with Rick on this one,

Just go... the workmans comp will cover them if so needed.

I have done lots of Company outings with my employees in the bus. I'm not saying it's the right way but, look at your alternatives..

Good Luck
Nick-

[WEC4104]

This may come across sounding a little silly, but have you actually pulled out your copy of your printed policy and read through it?  It may offer some real insight, (if it is not too overrun with legal jargon).

The whole thing about covering clients, but not employees, strikes me as strange.   I would expect a policy to include a broad-brush exclusion of business and commercial use, not try to make distinctions between different types of riders.  If clients are okay but employees are not, what about vendors?  Sub-contractors?  Family members of employees? The questions could become endless.

I won't tell you what to do, but I know I have personally bent the rules using my bus from time to time. I once had 17 co-workers on my bus on a company sponsored tailgating trip to a Phillies game. That included my boss, who boarded the bus with a tub holding an iced down keg. (Unfortunately, I was driving, so I didn't get to enjoy any.)

[sweeney153]

How did you learn "that my policy with my current carrier will not cover me if I transport my company's employees.”?Did you read it in you policy, did your agent tell you, did a buddy tell you?

The best advice is what some on else already said, read your policy.

I honestly am not familiar with Calif. insurance law but I would be very surprised if it differentiates based on type of passengers. Every policy I have ever seen differentiates by use, Commercial use vs. noncommercial. If the employees are required to ride your rig as part of their job you may not be covered.  If they are riding as your guest, they are covered. For example, if you are traveling out of town for a job and offer them a free ride, they are covered (that assumes that if they want to arrange their own transportation they can.) If they are required to ride with you they would not be covered.

Remember my answer is based on NY insurance law.

Read your policy.

[Kevin Warnock]

The way I found out is I read the policy and then spoke with an underwriter and a claims representative on the phone with the policy in front of us. They showed me the exact language that said there is an exclusion for losses that arise out of or are related to a business. I didn't know exactly what that meant, so I asked. I was told that clients are OK, but employees on board being paid would be excluded. The employees in question are not exempt, so would be getting paid, thus the exclusion. Frankly, I think the written policy language excludes clients as well, but the claims representative told me clients are OK despite what the policy says. He also said if I were to check my work voice mail inside the bus conversion, I would be covered under my personal policy.

I can't risk just ignoring this now that I've gone on record with the insurance company asking these detailed what if questions. So I do need to buy a commercial policy or not carry the employees. I need to know who will write a policy at all for this use, as some companies I've checked with won't write commercial use RV policies at all, or require the bus conversion to be 'professionally converted.' I did my conversion myself.

Thanks

[sweeney153]

That makes more sense to me. If they are being paid to be there it would be a commercial use. You clients would be your guests if you are just "giving them a ride" I would agree you need a commercial policy. Check with the agent who handles your business insurance to see if you can purchase a rider for business use of a personal vehicle. Works in NY don't know about Calif.

[Sean]

You might call whoever is providing your business with its general liability policy.  If they don't underwrite this type of coverage, they should at least be able to make a referral to someone who does.

Bear in mind that you have a few other hurdles if your coach is "designed, used, or maintained to carry more than 10 persons including the driver."  That makes it a "bus" under the law (even if it has been converted to a "house car" and privately registered), and subjects you to a whole raft of additional requirements.

I assume through all this that the coach belongs to you personally and is registered and licensed to you personally.  If it is actually owned and operated by the business, it also becomes subject to a whole raft of additional requirements.  Even if it is owned by you personally, if it is "used or maintained for the transportation of persons for hire, compensation, or profit" it becomes a "commercial vehicle" and again becomes subject to the additional regulations.  Generally speaking, any "business" use is considered by the law as being for "compensation or profit" (if the business is actually a transportation business, then the usage is considered "for hire").  There are some very limited exemptions, such as for commuter van pools and the like.

Your business' general liability carrier should be able to advise you regarding their responsibility to you should anything happen in a privately owned vehicle not belonging to the business.

-Sean
http://OurOdyssey.BlogSpot.com

[Kevin Warnock]

Sean,

I was alarmed by your reply, since I don't want my conversion classified as a commercial vehicle, subjecting me to all that that entails.

I do own the conversion personally, and the business is a separate corporation, and I control that corporation. I get a W2 from the corporation for my salary.

I'm in the software business, and I want to be able to use the conversion as a workspace sometimes. The bus is big and it can go to nice scenic locations that I enjoy working in. So some software will get produced on board by me and my employees. The software will hopefully produce a profit. Does creating intellectual property in the confines of the vehicle make it a commercial vehicle with all that entails, do you think?  Note I would never have as many as ten on board.

I do like the suggestion to ask my business liability carrier, where I have millions of coverage, about providing a rider to use my personal vehicle for the business. I hope that works, as it seems simple and probably cheap.

What I also wonder about is the full time outside sales person, who spends their whole day on the road, working from a laptop in the front seat, with hanging file boxes and sales samples in the trunk, and a bluetooth headset attached to their ear. Their entire income is derived from their automobile usage. But I presume they mostly all have normal personal policies.

Further, what about lawyers, who often bill hundreds of dollars an hour for calls and voice mails while driving their own car. I'm pretty sure my own lawyer bills at least a few hundred dollars a day just on his commute to and from work. This is for profit, but I doubt it requires him to buy a commercial policy and keep a log book of miles etc... Do these exceptions exist because they are using passenger cars? Or are they really not exceptions?

I was under the impression my bus conversion "housecar" is legally a passenger vehicle in the same legal category as a family automobile. My registration defines the vehicle type as "auto."

Thanks everyone. I hope the news is simple in the end. If I have to make it a full commercial vehicle I might just have to shelve this fantasy of working on the road.

[Sean]

I'm in the software business, and I want to be able to use the conversion as a workspace sometimes. The bus is big and it can go to nice scenic locations that I enjoy working in. So some software will get produced on board by me and my employees. The software will hopefully produce a profit. Does creating intellectual property in the confines of the vehicle make it a commercial vehicle with all that entails, do you think?  Note I would never have as many as ten on board.
...
What I also wonder about is the full time outside sales person, who spends their whole day on the road, working from a laptop in the front seat, with hanging file boxes and sales samples in the trunk, and a bluetooth headset attached to their ear. Their entire income is derived from their automobile usage. But I presume they mostly all have normal personal policies.

Further, what about lawyers, who often bill hundreds of dollars an hour for calls and voice mails while driving their own car. I'm pretty sure my own lawyer bills at least a few hundred dollars a day just on his commute to and from work. This is for profit, but I doubt it requires him to buy a commercial policy and keep a log book of miles etc... Do these exceptions exist because they are using passenger cars? Or are they really not exceptions?

OK, first off, let me say that I am not a lawyer, nor do I play one on the internet.  However, I worked most of my career in California, and I even ran a fleet of vehicles, so I have more than a passing familiarity with the CVC, the Business and Professions code, the Health and Welfare Code, and even Title 13.

The issue you raise is a complex one, and I would advise you to seek professional counsel on this, perhaps from your existing corporate attorney.   I would not make any decisions based on Internet hear-say, from this board or anywhere else, and that includes from me.

That having been said, there are two separate issues in what you wrote, above, and I have tried to highlight this by adding the bold emphasis.

The CVC is primarily concerned with the operation of your vehicle as a vehicle, not with what else happens inside.  The law (both written statute and court interpretation) has generally allowed employers to allow employees to travel to and from work assignments in personal automobiles, even providing for mileage reimbursement, without constituting the personal vehicle a "commercial vehicle."  However, the minute the employer requires the vehicle to "transport" anything other than the employee herself, and here I don't mean incidental items such as briefcases or maybe even tools (though this is a gray area), but rather, say, the company inter-office mail pouch, or the new recruit that needs to go to the training center, it now becomes a commercial use.

Even so, there are some broad exemptions for passenger automobiles, which would also generally include "house cars," when such use is incidental to the primary use.  In other words, if I am your boss and I ask you to pick up a dozen bagels on the way to work tomorrow, that does not make your car (or motorhome) subject to the commercial rules.

However, if I make it part of your job to drive your team members to a remote job site every day, and carry the payroll files to headquarters, I am moving very close to commercial-use territory.  Your personal insurance probably doesn't cover it, and, moreover, I am probably making my company liable for anything that happens while you are doing this.  California court case files are full of exactly such cases, which, regrettably, usually must be hammered out in court each and every time.

The minute we start talking about vehicles other than passenger automobiles, however, things start to become more black and white.

If you go down to the Ford dealer and buy an F350 and then put a Knapheide utility box on it, you can probably register it as a personal vehicle (although CA requires all pickup trucks except those with camper shells to have commercial plates), but no court is going to believe that when you slammed into a Toyota with a truck load of tools, that you weren't "transporting" those tools for "compensation or profit."  Commercial standards will apply;  the good news is that no special license or other certificate is required to operate a truck of less than 26,000 lbs gross.

Your bus, should it be forced to come under commercial standards (and, BTW, this would apply just as well to a 30,000-lb Holiday Rambler as to an MCI) for whatever reason, will require a Class-B license with air brake endorsement, current medical certificate, and a Passenger endorsement to carry anyone other than fellow employees (required in any case if there are 10 or more seats).

You can probably get away with driving it around as your "personal vehicle" even when you are on "company time," in the same way an employee using an automobile could.  However, the minute you begin to "use or maintain [it] for the transportation of persons ... or property," it becomes commercial.  And therein lies the rub:

If the "employees" you describe above are riding in your personal vehicle on a non-job-related outing (say, you invited them as friends to a baseball game, and they were not obliged to go), then you are probably fine (I say probably -- any one of them can sue you later for any reason).  However, if they are required to ride in your vehicle as part of their job, are not free to decline, and you transport them essentially for business purposes (say, to that same ballgame to entertain customers), then you are transporting persons for profit, and you are subject to commercial regulation.

A court would, of course, have to look at the bigger picture -- was this a one-time occurrence and incidental to your primarily personal use of the vehicle, say, the company van broke down, and everyone needed to get to the job site before the customer complained?  Or was it recurring (you did this every day, or three days a week) and/or a "significant" part of the use (you took a tax deduction on part of the bus as a "home office," or it can be shown that a certain percentage of your annual mileage was this business use, or you reimbursed yourself for business mileage, or even filled the tank on the company credit card).

I was under the impression my bus conversion "housecar" is legally a passenger vehicle in the same legal category as a family automobile. My registration defines the vehicle type as "auto."

You should make sure your registration shows as "house car" or you can have a bunch of other problems (certain exemptions in the code for vehicles over 26,000 only apply to house cars).  That said, no, it is not in the same legal category as a car.  The CVC defines them very differently.  But note that even a car becomes a "commercial vehicle" under certain circumstances.

Note also that, while it is not usually visible to the general public, there are plenty of legal cases in which normal passenger automobiles were found to be serving commercial purposes unlawfully (not properly registered or insured), with resulting civil and criminal penalties.

Hope that helps.

-Sean
http://OurOdyssey.BlogSpot.com

[Kevin Warnock]

June 1, 2009, San Francisco, CA

I think I have the final answer for my particular situation of having paid employees working in my bus conversion.

I called the California DMV and spoke with Jenny, ID #008, at 11:35 am local time and she said my proposed use does not make my vehicle a commercial vehicle. I described the use in detail, and told her I may make money from the work that my employees complete while on board my vehicle. She said as far as the DMV is concerned, my vehicle would not become a commercial vehicle with this usage.

She said the California Highway Patrol may have a different view, and advised me to also check with them to be certain. I called the CHP and was transferred to Officer Shields, badge number 17390, at 12 noon local time who said he is the officer that answers questions about commercial vehicle definitions. He listened to my proposed use that I have my paid employees working on board, and that the company may make money from that work and he concluded that that does not make it a commercial vehicle. He said I may maintain the vehicle's current Housecar registration and continue to drive it with a regular Class C license.

I am writing this up here so that I have it documented who I spoke with and when, just in the remote case that there is ever an issue down the road.

Thank you to everyone, especially Sean, for putting so much time into helping me with this issue.

[gmpd4104]

having talked to someone means nothing...get it in writing from them, then you can olnly get  a slap on the wrist

[Sean]

Thank you very much for posting the results of your inquiries here.  I think that's useful to know.

Were you able to resolve the insurance issue?

-Sean
http://OurOdyssey.BlogSpot.com

[buswarrior]

I trust no bureaucrat's or cop's interpretation, it is neither their place, nor are they paid, to interpret the law, that is the court's job, after there is a problem to resolve... You have to be in trouble, or find some case law...

Solution time:

Follow the money... at this point in your journey, I'd forget about the DMV and CHP, sounds like they are uninterested, and they won't give it to you in print, except to send you copies of the statutes.

Who pays the bills when it all goes wrong? As long as your insurer knows what you are doing, and puts it on record as to what you are covered for, job is done. No talk from someone on the phone, you want this foolishness written down.

And $1800 a year for a commercial level of coverage? That's pretty cheap compared to coach insurance!

happy coaching!
buswarrior

[NJT 5573]

I'd just pay the $1800. The rest of us are in the $5000 per vehicle bracket. If something happens, you want an insurance company to step up and take care of your people and not leave you and them hanging. I'd also go to $1,000,000 for them and make sure that the uninsured motorist was also covered in that amount.

As far as the commercial DOT part of this I'd make them catch me and prove their case before I'd get a DOT number and play the whole game. Buy the insurance and tell your agent, no state or federal filings.

I am saying this thinking you will only have a small number of people riding along infrequently. If this is not the case, then you need to play the entire commercial game and do it by the book.

The who to insure with is your choice, call some brokers and get some quotes. $300,000 sounds like alot of insurance untill you end up in court. Take a good look at your General Liability Policy, you may have some help there. My $2,000,000 General Liability only runs $500 a year.

When the unforseen happens those big insurance policys really help you sleep good, and the alternative runs all the way to prison time.....