Å˽ðÁ«´«Ã½Ó³»­

There’s a growing concern over a gap between personal and commercial insurance where ridesharing services like Uber and Lyft are concerned – and slowly states and cities across the country are taking a look at how liability should be handled when a worst-case-scenario plays out.

The smart phone apps that enable drivers to act like taxi or limo services and rent out themselves and their vehicles to nearby passengers who are willing to pay for a ride are rising in popularity in metropolitan areas. That popularity, and a recent tragedy, has the industry and would-be regulators asking poignant questions about liability.

In Washington, the Seattle City Council on Jan. 30 discussed an ordinance to create a two-year pilot program to these ridesharing services and the drivers. Seattle is believed to be the first U.S. city to come out with such regulations. And bills backed by Uber have been introduced in Arizona and Colorado that are wending their way through legislature.

Techno-friendly San Francisco seems to be a hub for all of this, and the city is attracting attention due to the tragedy of a young girl who was killed on New Year’s Eve by a motorist on contract with Uber.

That event has at least one insurance group speaking up even louder to drive home a point they’ve made all along about such services: personal automobile insurance is not intended to cover people who use their vehicles for commercial purposes.

Tragedy Highlights Gap in Coverage

The 6-year-year-old girl, Sophia Liu, was killed when an SUV driver under an Uber contract struck her in a San Francisco crosswalk. Attorneys for the driver, 57-year-old Syed Muzzafar, say he wasn’t working for Uber when the accident occurred. Uber has said it’s not liable because the driver was not doing a trip on the Uber system, but he was between rides, although he was roughly 45 minutes away from his home.

Uber’s commercial insurance does not cover drivers between rides, according to the San Francisco-based company, which has been issuing statements but not speaking much to the media. Uber did not respond to interview requests for this article.

A wrongful death lawsuit has been filed against Uber by Liu’s family. Because there was no passenger in the car at the time of the crash, Uber is denying insurance protection to cover Muzzafar and the Liu family.

The Property Casualty Insurers Association of American sees drivers like Muzzafar as providing a livery service, something that’s excluded in almost all personal automobile policies – as long as they are logged into the ridesharing app.

PCI, which worked with the California Public Utilities Commission while CPUC was drafting regulations for ridesharing services like Uber, is working to get the word out detailing their concern about a possible gap in coverage between commercial insurance and personal insurance.

CPUC in September 2013 decided to regulate transportation network companies (TNC), requiring TNCs to maintain commercial liability insurance policies providing not less than $1 million in coverage for incidents involving vehicles and drivers while they provide TNC services. CPUC continues to hone those regulations.

The current regulations state that insurance coverage must be available to cover claims regardless of whether a TNC driver maintains insurance adequate to cover any portion of the claim. But those rules don’t say what happens if a TNC driver who isn’t providing a ride gets into an accident.

“That’s something that we’re concerned about, is the gaps that are there,” said Robert Passmore, senior director of personal lines policy for PCI.

If a taxi driver is off duty and headed home, or is between fares, a commercial policy is in place to cover the driver. That’s not necessarily the case with Uber drivers.

“It doesn’t say when they pay,” Passmore said.

In PCI’s view, a driver using Uber or Lyft doesn’t need to have a passenger in the car to be considered working. Drivers 20 miles away from their suburban home in a heavily populated area are exposed to more risk than on a drive to the nearby grocery store, and they are likely looking for rides if they are logged into the ridesharing app, Passmore noted. PCI believes the commercial policy should pay whenever a driver is logged into the app.

The line should be drawn between personal use of a vehicle and commercial use “whenever you’re logged into the app, whenever you’ve made yourself available for a ride,” Passmore said. “You’re not going to say, ‘I’m going to log into the app to see if I can make some money while I’m going to the grocery store. People who use this app are gone from home for five hours and they go where the people are. That’s how the system works, is that the closest person gets [an] assignment.”

However, there are efforts underway to put liability on the other side of that dividing line. Uber-backed bills in Colorado and in Arizona are constructed to clarify that these TNCs are not subject to the same regulations as cab companies, and they define what a TNC is and what it isn’t.

In Colorado Senate Bill 125, and in Arizona House Bill 2273, both define the obligations of TNCs, such as background checks, the kinds of vehicles that can be used and certain moving violations and criminal background that would preclude a driver from being under contract.

Both bills also mandate that a $1 million commercial liability policy be in place, which differs from cab company requirements in each state. In Colorado, cab service operators are required to have a $1.5 million commercial policy; Arizona operators are required to have a $300,000 commercial policy.

Å˽ðÁ«´«Ã½Ó³»­ Requirements

It’s the insurance requirement where both bills offer an opposing view from that of PCI.

“They identify when that liability policy is triggered, and that’s when the driver and the rider connect,” said Kelly Campbell, vice president of state government relations for PCI, who has been dealing with the bills in both states.

She added, “We feel that trigger should be when the driver logs in.”

SB 125 in Colorado was set for a first hearing in the Senate Business Labor and Technology Committee in February. A hearing in the Government Committee for Arizona’s HB 2273 has not yet been set.

In Seattle, no decision was made by the city council, which heard public input on its TNC program.

Highlights of the program include a cap on the number of vehicles per TNC and limiting TNC drivers to operating 16 hours per week. Local media reported several citizens, many of them drivers, showed up at the council meeting to voice concerns.

The Seattle Times reports that a number of drivers depend on providing the ridesharing services as a source of income.

Seattle resident Sarah Cresswell told the Times driving for Lyft has kept her and her 6-year-old daughter off welfare and she will be unlikely to drive for the ridesharing service after the regulations are in place.

“There’s no way any of the companies would be able to survive with the existing limitations proposed,” Cresswell said.

Passmore believes there is need for the discussion about the CPUC rules and that PCI plans to further “engage” with CPUC to make known the association’s concerns.

The issue of how a vehicle is being used must be looked at as well, he said.

“The question is: Where is that line drawn?” he said. “That’s what we think needs to be worked on.”

CPUC spokeswoman Terrie Prosper said more work will be done on the TNC regulations. “Our proceeding has a phase II. Going forward, we will ensure that the overarching goals of public safety, equity and innovation are being achieved. We will have a public process in the next year to consider the performance of this new mode of transportation and accompanying regulations. This includes a public workshop.”

Quoting from part of the decision, she noted:

“The Commission will convene a workshop one year after the issuance of this decision to hear from all stakeholders on the impacts of this new mode of transportation and accompanying regulations. Workshop topics will include, but not necessarily be limited to, a consideration of safety, competition, innovation, accessibility, congestion, the California Environmental Quality Act, and other pollution related issues.”

In the meantime, discussion and possibly regulation may be handled at the local level.

San Francisco Supervisor Jane Kim told an ABC television station in San Francisco she wants the city to take a closer look at what she calls the gray area of who is responsible. “We have a new type of business that has only just begun to get regulated at the state level and no clear answers about where there’s liability when incidents occur,” Kim said.

Uber has entered more than 60 markets and has an international presence in cities such as Berlin and Tokyo. According to leaked information, Uber is generating $200 million per year in revenue beyond what it pays to drivers.

Passmore said that since the ridesharing apps came into existence, the company has been on PCI’s radar. “We’ve been on the lookout for this for a long time,” he said, adding that San Francisco was the tipping point for further discussion.

Passmore said some in the industry may see this as an opportunity to sell commercial policies to individual drivers, and his group doesn’t want to stand in the way of technological progress.

Topics Carriers Legislation Colorado