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Federal Insurance Minimum Not Enough for Bus Crash Victims

The USA Holiday tour bus that crashed just outside of Palm Springs last month carried the exact federal insurance minimum—$5 million. That amount is what will go toward covering the needs of passengers who were injured, as well as the families who lost loved ones in the fatal bus accident.

At first glance, some might say $5 million seems like a lot of money. Though when you start to factor in the number of people that died, the ambulance rides and hospital visits immediately following the accident, the future medical expenses to continue treating those injuries, plus covering the loss of income for victims who cannot work, that $5 million is far less than the bare minimum needed to cover the horrific damage done in this crash.

When victims of disasters like the Palm Springs tour bus crash file lawsuits against a bus company that only has the minimum amount of insurance required by federal law, it puts them in an incredible bind. How do we know this? Because the 2011 casino bus crash in New York shares many similarities with the Palm Springs accident.

Five Years Later, New York Casino Bus Crash Victims Still Seeking Justice

The ill-effects of a low federal insurance minimum are nothing new for victims. Five years ago, Ren Xiang Yao was on a chartered tour bus returning to New York City early in the morning after a night of gambling at a Connecticut casino.

The bus was going 23 miles-per-hour over the speed limit when it struck a guard rail and flipped onto its side, sliding down the highway for over 100 yards before it slammed into a light pole. The impact of the collision sheared the roof off of the bus just above the windows.

Fifteen people died in the crash. Mr. Yao was among many others who sustained serious injuries. Parts of both of his arms were missing when emergency responders pulled him from the wreckage.

The injuries he sustained in the casino bus accident were devastatingly painful and would later contribute to the dissolving of his marriage. He now uses a metal hook as a hand.

Like many other victims of the accident, Mr. Yao filed a bus crash lawsuit. Five years removed from the crash that changed his life, Mr. Yao and other victims are still no closer to resolving their legal claims. Just like the crash in Palm Springs, the bus carrier responsible for the New York accident carried the federal insurance minimum, which will have to cover the claims of 32 crash victims or the surviving members of their families. How that money will be distributed is still to be determined.

Why is the Federal Insurance Minimum for Bus Carriers So Low?

Bus travel has been largely deregulated for well over half a century. Between the Great Depression and the early 1980s, individual bus riders were covered by only a $5,000 insurance limit. In 1982, the Reagan administration set the $5 million federal insurance minimum for bus carriers that we still use today. Since then, the country has experienced decades of inflation and skyrocketing medical costs, which has greatly diminished what $5 million is capable of covering.

In 2014, the Federal Motor Carrier Safety Administration (FMCSA) attempted to increase the federal bus insurance minimum, issuing a report to Congress that stated it had “determined that the current financial responsibility minimums are inadequate to fully cover the costs of some crashes in light of increased medical costs and revised value of statistical life.”

The FMCSA report elicited resistance from the bus industry, which said small operators simply wouldn’t be able to afford the increased premiums that would coincide with raising the federal insurance minimum. Carriers also say that buses are now significantly safer now than they ever have been.

Bus safety advocates, however, have a different opinion on both counts. Higher insurance costs would not only benefit the victims of bus crashes; it would also weed out smaller, potentially unsafe operators that probably shouldn’t be transporting passengers in the first place. According to federal records, the bus driver who perished in the Palm Springs accident would in some years renew his $5 million policy every few months, possibly because he had trouble affording a full year of coverage.

As for the assertion that buses are safer, that too is disputed by engineers. According to the Los Angeles Times, newer buses weigh less than they used to, and their windshields have been redesigned to improve the passenger experience at the expense of bus safety.

“A lot of vehicle safety standards like crumple zones and roof crush don’t apply to buses,” said Baum Hedlund who represents bus crash victims. “Bus passengers today are exposed to weaker safety standards than any other kind of transportation and are nonetheless forced to deal with lower insurance policies to compensate them if they are injured or killed in a crash. We need to see some change.”

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