New Mexico tour companies, including those in Santa Fe, might have to increase their liability insurance coverage at the order of a state agency, an expense that sharply increases operating costs and may force at least one local operator to close her company.

That business is Custom Tours by Clarice, which is owned by Clarice Coffey. She started her business 21 years ago after moving to Santa Fe from Texas.

"I am worried the higher rate would destroy my business," Coffey said. "Since the last rate increase, I have had to sell three of my vehicles, reducing my fleet from a total of seven to three, and I am fearful that I will have to sell everything and shut down my business if the rates go up again."

Coffey added: "The city of Santa Fe struggles to provide shuttles for city conventions even now because there are so transportation providers. With this increase, there will be even fewer."

Coffey recalled the fatal bus crash on March 2, 1999, which resulted in two deaths and more than 30 injuries when a bus overturned on the way back from the Santa Fe Ski Area.

"Within 30 days of that accident, the Public Regulation Commission raised the insurance requirements from $500,000 to $2 million for all the commercial carriers in the state that carry more than 16 passengers in their vehicles, even though we had nothing to do with the accident," Coffey says in a presentation she will make to the PRC later in the month.

The PRC, which oversees commercial transportation in the state, will hold a public hearing Nov. 19 to discuss increasing the liability insurance required for tour operators with vehicles capable of carrying 16 or more passengers from $2 million to $5 million.

"We do have to abide by federal regulations," said the PRC's transportation director, Larry Lujan. "And that does involve a rule change."

The change is necessary, Lujan said, because "some of these big buses just don't have enough (insurance) coverage. If a vehicle is involved in a fatal accident, then $1.5 million is nothing."

As for Coffey possibly being forced out of business, "that's her opinion," Lujan said. "We have to adopt the proper requirements. Tour operators "will have the chance to enter their complaints and ask their questions at the hearing."

Coffey replied that small tour operators are privately owned and neither request nor receive any federal dollars to operate the business.

"We should not be held to any federal standards in which the federal government might require higher insurance rates," she said.

Coffey recalled that when she started her business in Santa Fe, there were 16 tour companies offering their services, but now there are only four.

She also said that she has "struggled" to make insurance payments because a tour business typically operates on very slim margins and is barely able to cover costs.

Coffey said she has met with both Sen. Jeff Bingaman and more recently, Gov. Bill Richardson, to see if there was anything they could do to help, but to no avail.

Keith Toler, executive director of the Santa Fe Convention and Visitors Bureau, said in a letter of support for Coffey that tourism represents more than 40 percent of Santa Fe's economy and added that tour operators such as Coffey are important in getting tourists to extend their stays in Santa Fe and help maximize their "spending opportunities."

Toler added: "I would hate to see the service level offered by these (tour) companies diminished in any way."

Coffey's is not the only Northern New Mexico tour operation that could be hurt by the mandated increase in insurance liability coverage.

"We've had to raise our insurance, and it's affected our overhead," said Greg Wilson, the manager of Roadrunner Shuttle and Charter. "Our insurance bill went up about
50 percent, which is pretty pricey. But it wasn't fatal (to the business) or anything like that."

Roadrunner has one large bus, one mini bus and four vans, Wilson added.

When asked about the impact of higher liability coverage on Faust Transportation, which is based in El Prado, Loretta Gonzales said, "of course it has an affect on us. With the bad economy, the groups aren't coming to begin with. We're a small business trying to compete with larger fleets."

The transportation business, she added, "is very difficult with all the agencies we have to deal with. It becomes very complex and expensive to keep in compliance."

Additional competition for small businesses comes from the Rail Runner and the North Central Regional Rural Transit District, Gonzales said, both of which receive government funding.

Contact Bob Quick at 986-3011 or bobquick@sfnewmexican.com.