What insurance does a limo or bus operator have to carry?
Three layers, and the top one is usually the biggest. Federal law sets a liability minimum by seat count for for-hire passenger carriers in interstate commerce, $5,000,000 at sixteen seats or more including the driver and $1,500,000 below that. Your state permit sets its own schedule, which in California runs $750,000, $1,500,000 and $5,000,000 across three seat bands. And the hotels, venues, airports and school districts you work for write their own limits into the contract, almost always above both.
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The detail
For-hire motor carriers of passengers operating in interstate or foreign commerce must carry $5,000,000 for "any vehicle with a seating capacity of 16 passengers or more, including the driver."
49 CFR 387.33, Financial responsibility, minimum levels (Cornell Legal Information Institute)
The same rule sets $1,500,000 for "any vehicle with a seating capacity of 15 passengers or less, including the driver."
49 CFR 387.33, Financial responsibility, minimum levels (Cornell Legal Information Institute)
The federal rule applies to "for-hire motor carriers transporting passengers in interstate or foreign commerce." It does not apply to "a motor vehicle transporting only school children and teachers to or from school", to "a motor vehicle providing taxicab service and having a seating capacity of less than 7 passengers and not operated on a regular route or between specified points", to "a motor vehicle carrying less than 16 individuals in a single daily round trip to commute to and from work", or to a vehicle under contract "providing transportation of preprimary, primary, and secondary students for extracurricular trips organized, sponsored, and paid by a school district."
49 CFR 387.27, Applicability (Cornell Legal Information Institute)
Proof of federal financial responsibility for a passenger carrier is the endorsement Form MCS-90B or the surety bond Form MCS-82B, and "proof of the required financial responsibility shall be maintained at the motor carrier’s principal place of business."
49 CFR 387.31, Financial responsibility required (Cornell Legal Information Institute)
California charter-party carriers must carry, by "Vehicle Seating Capacity (including the driver)": $5,000,000 for "any vehicle with a seating capacity of 16 persons or more", $1,500,000 for "any vehicle with a seating capacity of 9 through 15 persons" and $750,000 for "any vehicle with a seating capacity of 8 persons or less."
The Commission lists General Order 115 as the "passenger carrier insurance requirements for Charter-Party Carriers", and carriers file the policies electronically through the Transportation Carrier Portal.
California Public Utilities Commission, "Insurance Requirements - Passenger Carriers"
In California the certificate or bond "shall not be cancelable on less than thirty days’ notice to the Public Utilities Commission."
What this means for you
- Count the seats as manufactured, including the driver. Both the federal rule and the California order count the driver, and both follow the capacity the vehicle was built with rather than how many people you happen to carry. A fifteen-passenger van is a fifteen-seat vehicle only if the manufacturer says so. A conversion that added seats is filed at the number it has now.
- Interstate is a trip, not a business model. The federal rule reaches for-hire passenger carriers in interstate commerce. A limousine that runs one airport transfer across a state line a month is in it. An operator that never crosses the line answers to the state permit alone, and should still be insured as if a client will one day ask for the run to the next state.
- The state permit is its own filing. In California a charter-party carrier holds a TCP permit from the Public Utilities Commission and the insurer files the policy electronically with the Commission. The bands are stricter at the low end than the federal ones, with a separate $750,000 tier for eight seats or fewer, and the policy cannot be cancelled on the Commission without thirty days’ notice. Other states run their own schedules and their own filings, and we read the order for yours before we quote.
- The MCS-90B is proof, not coverage. It is the endorsement a passenger carrier’s policy carries as evidence of federal financial responsibility. It promises that the insurer will pay a judgment up to the minimum even where the policy would not have, and then lets the insurer recover from you. An operator who relies on it as coverage has an unfunded promise, which is why the underlying policy has to actually cover the operation.
- The contract is the third layer and usually the highest. A hotel, a venue, an airport authority or a school district writes a limit into the agreement, asks for a certificate of insurance showing it, and asks to be named as an additional insured. Those demands are frequently above the federal floor. Read every contract before renewal, and give the underwriter the highest limit any of them names.
- Abuse coverage is now asked for by name. School districts, youth sports leagues and churches that contract passenger work increasingly require abuse and molestation coverage as a listed line on the certificate, because the general liability policy commonly excludes it. An operator that cannot show it does not get the contract, whatever the auto limit says.
Federal is the floor. Your state can require more.
Everything above is the federal minimum and applies wherever you run. States set their own rules on top of it for intrastate work, and several are well above the federal number — New Jersey is double it. Pick yours.
Related questions
- Does a 15-passenger van need $5,000,000?
Not under the federal rule, which puts a vehicle seating fifteen or fewer including the driver at $1,500,000. Nor under California’s order, where nine through fifteen seats is also $1,500,000. The van is the vehicle the bands were drawn around, and a sixteenth seat, including the driver’s, is what moves it.
- Limousine service insurance
- We only work in-state. Does federal law apply?
The federal financial responsibility rule reaches interstate or foreign commerce. A purely intrastate operation is governed by the state permit, which in California carries the same $5,000,000 top band and adds a $750,000 tier for small vehicles. The moment a booking crosses a state line the federal rule applies to that vehicle, so most operators insure to the federal band regardless.
- FMCSA insurance requirements, explained
- Are school field trips exempt?
From the federal rule, in two specific cases. A vehicle carrying only school children and teachers to and from school, and a contracted extracurricular trip organized, sponsored and paid for by a school district, are both excepted. The state permit still applies, and the district’s contract will ask for more than either rule does.
- Charter bus and motorcoach insurance
- A party bus is a bus. Is the requirement the same as a charter coach?
For the limit, yes. Anything at sixteen seats or more including the driver is a $5,000,000 vehicle under both the federal rule and the California order. What differs is the underwriting, because alcohol on board and standing passengers are exposures a charter coach does not carry.
- Party bus insurance
- Does a chauffeured sedan need a filing at all?
A chauffeured sedan on interstate work is a for-hire passenger carrier under the federal rule at $1,500,000. The taxicab exception is narrow, for vehicles seating fewer than seven that are not on a regular route, and a black car service dispatching to airports is not a taxicab. In California the sedan files with the Commission at $750,000 for eight seats or fewer including the driver.
- Black car and chauffeur service insurance
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Reading about it and having it handled are different jobs, and the second one is ours. We place the accounts other brokers decline — claims history, a cancellation, an unusual operation, a business nobody wants to underwrite twice — and we will tell you when the policy you already have is the right one. Tell us the situation and a licensed human replies the same business day.
Written by the licensed brokers at Boring Insurance. Last updated 2026-09-07. See all guides.