Insurance Challenges for Paratransit

BusesOctober 2008

By Nicholas Farber

Providers of public transportation services—in particular, those entities that provide paratransit—face a number of challenges related to insurance. Paratransit passenger transportation is more flexible than conventional fixed-route transit, most often refers to customer-requested wheelchair-accessible service, also referred to as “demand response.” Paratransit is offered by various providers, including large transit agencies, specialized for-profit and nonprofit transportation entities, and businesses such as taxi cab companies.

Because paratransit providers must have insurance to cover liability inherent in providing services, they are subject to the cyclical nature of the insurance market. When the market is “hard,” premium prices are high, difficult to obtain, or nonexistent, which can force providers to cut back their services, or exit the market. Insurance market intricacies also can negatively affect the services a paratransit service can to provide.

This issue brief presents an overview of the most pressing insurance challenges facing paratransit, including providing door-through-door services, crossing state lines, using volunteer drivers, mixing populations, sharing vehicles and addressing insurance market stability. Discussion follows of state laws regarding paratransit insurance. Various risk management techniques for paratransit providers then are explained. The final section includes discussion of state policy approaches to help provide vital services. Three appendices detail state statutes that establish insurance pools for governmental entities and nonprofit organizations, state statutes that explain the extent of volunteer driver liability, and an overview of risk management tools and risk financing.

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