SUBMIT A RISK
For a student transportation group running school bus, activity, and charter operations in ten states, auto liability is not just an insurance line — it is a condition of every route contract. School districts require high limits, additional insured status, primary and noncontributory wording, and waivers of subrogation. Federal and state regulators require passenger-carrier filings. And all of it must sit on paper with the financial strength rating that contracts and statutes demand. Captives Insure structured a program that satisfies every one of those requirements while placing the underwriting results in the group's own hands.
All 27 operating companies are written on a single commercial auto policy on A− (Excellent) AM Best rated admitted paper, carrying the state amendatory forms for each jurisdiction the group operates in. The risk is then reinsured back to a captive the group owns, which retains 100% of the first $2,000,000 of each auto liability loss above the self-insured retention. Specific excess reinsurance carries the remaining $3,000,000 of the $5,000,000 limit, and aggregate reinsurance sits above the captive's annual retention.
- Limits built for passenger transportation. $5,000,000 combined single limit per occurrence for auto liability, with hired and non-owned auto liability included within the limit and no policy aggregate. Uninsured and underinsured motorists coverage and personal injury protection are written at statutory limits in each state.
- Physical damage in the captive, too. Comprehensive and collision are written at a stated amount with a $5,000 deductible per covered auto, and the captive retains physical damage losses up to $1,000,000 per occurrence.
- Regulatory filings in place. The policy carries the federal MCS-90B endorsement for passenger motor carriers and Form E state filings, along with the public transportation autos endorsement suited to a school bus and charter fleet.
- Contract-ready endorsements. Blanket additional insured coverage where required by contract, a blanket waiver of subrogation, and primary and noncontributory wording — the terms school districts and charter customers routinely require.
- Value-added coverages. Driver assisted technology coverage, compliance audit readiness expense, and family emergency travel coverage are built into the form.
- Risk and reward, with protection above. The captive retains 100% of the first $2,000,000 of every auto liability loss above the group's $25,000 self-insured retention, with reinsurance above that layer and aggregate protection above its annual retention. The underwriting profit and investment income that come with it belong to the captive's shareholders.
| Layer | Amount |
|---|---|
| Self-Insured Retention (Auto Liability, per occurrence) | $25,000 |
| Captive Retention — Auto Liability (per occurrence, excess of SIR) | Up to $2,000,000 |
| Third-Party Specific Excess Reinsurance (per occurrence) | $3,000,000 xs $2,000,000 |
| Auto Liability Combined Single Limit | $5,000,000 |
| Physical Damage Deductible (per covered auto) | $5,000 |
| Captive Retention — Auto Physical Damage (per occurrence) | Up to $1,000,000 |
| Risk Participation — Insured's Captive | 100% of the first $2,000,000 |
Aggregate reinsurance sits above the captive's combined auto liability and physical damage retention, capping the captive's total exposure in any one policy year — so a single severe year cannot consume more than the captive was built to bear.
In this structure, the premium ceded to the captive becomes its loss fund. Covered claims within the captive's layer, and the associated claim-handling costs, are paid from that fund. Whatever the fund does not consume in a given policy year is underwriting profit — and it belongs to the owners, along with the investment income earned while reserves are held.
That makes fleet safety a balance-sheet decision. Driver hiring and training standards, pre-trip inspections, route planning, and onboard safety technology are no longer costs whose benefit accrues to an outside carrier. With the captive retaining the first $2 million of every liability loss, each collision avoided across 27 operating companies is retained directly by the business that prevented it.
Rated, Compliant Paper
School districts, charter customers, and regulators see a policy on A− (Excellent) AM Best rated admitted paper, with federal and state filings in place — while the risk reinsures back to the group's own captive.
One Policy, Ten States
Consolidating 27 operating companies onto a single policy with state-specific amendatory forms simplifies administration across a growing group and pools the entire fleet's experience into one captive.
Direct Claims Influence
As reinsurer of its own policy, the group gains independent defense panel counsel and a direct hand in claims handling through an independent third-party administrator — speeding resolution, discouraging fraudulent claims, and controlling the ultimate cost of loss.
Protected Severity
Specific excess reinsurance above $2 million per occurrence and aggregate reinsurance above the captive's annual retention let the group keep the predictable layer of its losses while transferring the severity it should not carry alone.
By taking its commercial auto program into a captive it owns, a multistate student transportation group now retains up to $2 million of every auto liability loss and up to $1 million of physical damage — with $5 million limits, regulatory filings, contract-ready endorsements, and A− rated paper — so that every safe route driven has the potential to become underwriting profit for its owners.
Is Your Fleet the Right Fit for a Captive?
If your organization carries predictable exposure, a disciplined safety program, and meaningful annual premium, a captive may convert that spend into retained profit. Captives Insure designs, fronts, and reinsures programs that put underwriting profit back where it belongs — with you.