Insuring a Minibus

Minibuses remain popular with a multitude of uses, so their insurance needs are complex

For some, insuring a minibus may seem just like trying to cover any other vehicle, but it has its own specialist requirements.

The definition of a 'minibus' is a registered vehicle constructed or adapted to carry more than eight - but less than 17 - passengers in addition to the driver. They provide transport for employees, schools, universities, youth organisations, hotel clients, nursing homes, charities, voluntary organisations, social welfare, community and religious groups, as well as meeting the taxi needs of large passenger groups.

Typically, for underwriters, minibuses present two distinct risk categories. First, minibuses not used for hire or reward; for example, those owned by employers solely to transport employees, notably without charge. Second, minibuses used for hire or reward controlled by local licensing authorities. Any payment in cash or kind, which is directly or indirectly for the carrying of passengers and gives a right to be carried, constitutes 'hire or reward'.

There are special licensing arrangements allowing minibuses to be driven without having to hold the higher 'passenger carrying vehicle' driving license. Drivers of minibuses with nine to 16 passenger seats will normally need to hold a PCV licence category D1, or a category D license to drive larger buses. But different regulations apply to non-profit organisations.

The rising cost of operating minibuses has led many voluntary bodies to levy a membership charge for their use; so licensing authorities evaluated their use as hire or reward, but non-profit making activities are treated differently under UK regulations. These do provide for the issue of permits to bodies using minibuses, thereby exempting them from the need for a PCV licence. Any permit issued will specify the classes of persons who may be carried.

Despite the best intentions, when organisations rely on volunteers considerable scope exists between minibus owners and irregular drivers to misinterpret driver licences, vehicle permits and hire and reward usage. All of this potentially causes gaps to arise between the cover and use needed and arranged with an insurer. Consequently, care needs to be taken when looking at driving licences and what is required.

Understanding these, and the governing rules and implications of related European Union directives that are designed to harmonise passenger transport across Europe, is a science in itself. Further detailed information can be obtained from the VOSA publication PSV385, DVLA leaflet INF28 and the DVLA website.

In addition to any licence and use issues, recent legislation has resulted in developments in the obligations and responsibilities upon owners, as with other organisations, of minibuses. .

Looking at traditional underwriting features, the diversity of minibus use means underwriters and brokers active in this area need an intimate understanding of both risk sectors. Risk exposure depends not only on operational areas and the nature of passengers carried but vehicle age, value and mileage, plus drivers' age, experience and claims history.