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Insurance questions drive Seattle's rideshare debate

An insurance industry representative endorses language in a draft council bill, but liability remains fuzzy for rideshare drivers and companies.

There are still gray areas clouding insurance coverage for ridesharing services like Lyft and Uber. But there's also interest on the part of insurers and the services in clearing up those issues.

That became clear Thursday during a City Council discussion where an insurance expert outlined his industry’s concerns about app-based ridesharing services. Resolving lingering questions surrounding insurance coverage will likely be central to the Council’s final push toward a set of rules for the taxi-like tech upstarts.

Lyft and Uber say they have $1 million per-incident liability insurance that protects anyone involved in an accident with a driver using their apps. But the companies also say those policies only cover drivers from the moment they tap their phone to accept a passenger to the moment the ride ends. Whether a driver is covered by their personal auto insurance policy while they are logged into one of the apps and waiting to be contacted by a rider remains unclear.

Kenton Brine, assistant vice president of the Property and Casualty Insurers Association of America, told the council that the companies represented by his association prefer to see bright lines between personal and commercial insurance. And he endorsed a distinction the council made in a recent draft version of new city ridesharing regulations.

“We like the proposed language that suggests that when they make themselves available, whether they’re giving rides or not at that moment, that’s when they’re off their personal policy,” he said. “In almost every case, there is no coverage on your personal automobile if you’re hauling passengers for money.” 

Brine said the insurers he represents are open to hearing viable proposals from ridesharing companies, which the council now calls Transportation Network Companies, or TNCs. “If there’s another way to find that line that works, that’s a good practical solution,” he said. “We want to be at the table.”

Lyft spokesperson Erin Simpson said that “right now there is no bright line” and that insurance professionals have differing opinions about when drivers are — and aren't —  covered.

Council staffer Tony Kilduff said companies like Lyft and Uber are concerned that if they expand their $1 million policies to cover drivers waiting for passengers, “they face the potential to be gamed.”

Uber’s Seattle general manger, Brooke Steger, concurred. “It’s not realistic to cover someone 24 hours a day just because they’re on our system,” she said outside the Council chambers. Referring to coverage for drivers while they’re logged-in waiting for a passenger she said: “They say it’s not clear and that’s something we need to work with the city on and the [insurance] industry on.”

The city requires taxi drivers to carry $325,000 commercial liability policies that also cover $100,000 per-person and $300,000 per-incident coverage for collisions with uninsured or underinsured motorists. Uber recently added underinsured and uninsured coverage to their $1 million policy. Taxi and flat-rate for-hire drivers have complained that they have to pay for commercial policies that can cost $450 per month, while competing against rideshare drivers paying only for personal auto coverage.

Councilmembers, ride-sharing representatives and Brine all alluded to the fact that a niche insurance policy might eventually be created to specifically cover rideshare drivers.

“Clarity is key,” Brine said. “If the carriers understand what the rules are, they’re going to run the numbers to determine whether or not this is a market they can make money in.”

Any new type of insurance policy would need to be approved by the Washington State Office of the Insurance Commissioner. An Olympia lawmaker, meanwhile, has already taken a crack at drafting bill that addresses ridesharing insurance.

“We’d like that legislator to hold off,” Brine said. “We think there’s a lot of things they don’t know about this issue." 

“It would be better if we work it out first,” he said.

Wearing a Lyft tee-shirt with a small pink mustache stuck to the chest, a driver, who asked to be named only as James, said he told his insurance company that he uses his 2011 Nissan Maxima to do transportation-related "independent contracting" work and they did not ask any questions. He conceded that there is a degree of uncertainty, but he added, "I don't lose sleep over it."


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Comments:

Posted Fri, Jan 31, 8:58 a.m. Inappropriate

The city council should just require that the TNC vehicles get commercial insurance. These cars are on the street now and are uninsured. The TNCs have stated that they are not going to provide the insurance. Maybe some product will show up in the future but there is nothing out there now.

Posted Fri, Jan 31, 1:07 p.m. Inappropriate

What I wonder is whether the so-called ride share services are actually a business or some type of scam?

I know this sounds harsh, but from what I read the business model seems to be based on avoiding the regulations, licensing, insurance, and various fees that other transportation services have to pay.

And I wonder if this is also some type of tax avoidance scheme. Do drivers actually report all the income that they make? What is the degree of tax evasion in the ride share business?

Posted Fri, Jan 31, 4:50 p.m. Inappropriate

Payment is made via PayPal or equivalent, no cash (except maybe tips) so concealing the driver's income would not be a good risk. Much less opportunity to avoid taxes than, for example, street markets or some retail shops.

kieth

Posted Fri, Jan 31, 11:37 p.m. Inappropriate

Interesting that in this story no mention of the Uber driver in san fran who was on the grid, being sent fares by uber, and had picked up three fares that day who ran over and KILLED a six year old walking across the street with his family. Uber's response? The driver is on his own, they take no responsibility. Now the courts will sort it out. Stay tuned.

katzjamr

Posted Sat, Feb 1, 9:04 a.m. Inappropriate

katzjamr:

Thanks for reading and for your comment. The last paragraph of the story mentions the San Francisco incident.

Best regards,

Posted Sat, Feb 1, 7:55 a.m. Inappropriate

The headlines for these stories need to begin referring to these companies as Transportation Network Companies. They are not ridesharing and it is irresponsible to continue to call them that.

Posted Sat, Feb 1, 9:29 a.m. Inappropriate

mrappleby21:

Thanks for reading and for your comment. As "Transportation Network Companies" becomes a more widely used phrase it will start to appear in headlines. As you probably noticed "TNC" is used in the story, which should start to familiarize readers with the term.

Best regards,

Posted Sat, Feb 1, 8:08 a.m. Inappropriate

It would be irresponsible for City Council to let these companies operate in Seattle even if they can invent some sort of insurance. These companies are predators.

http://www.nytimes.com/2014/01/27/technology/rough-patch-for-uber-services-challenge-to-taxis.html

http://bits.blogs.nytimes.com/2014/01/27/uber-and-a-childs-death/

Posted Sat, Feb 1, 8:33 a.m. Inappropriate

Yes it is surprising the San Francisco case wasn't mentioned. Events have been occurring in that case just this last week.

Goodspike

Posted Sat, Feb 1, 9:18 a.m. Inappropriate


Goodspike:

Thanks for reading and for your comment. The San Francisco case is mentioned in the last paragraph of the story.

Best regards,

Posted Sat, Feb 1, 10:34 a.m. Inappropriate

You mentioned the suit and Uber's response. You did not mention that while the driver was not carrying Uber customers the driver had earlier that day accepted Uber passengers and was logged on to accept riders. As the attorney for the family of the dead girl states in the NY Times:

“Uber’s claims that they are not responsible for injuries caused by Uber drivers who are logged on to the system but not carrying a fare flies in the face of hundreds of years of law,” he said. “New technology does not eliminate well-established legal principles.”

Please try to give both sides of the story.

Posted Sat, Feb 1, 11:22 a.m. Inappropriate

supersinic:

Thanks for reading and for your comment. I think this is a balanced article that does give "both sides of the story." Given that the family in San Francisco filed their lawsuit against both Uber and the driver, I thought it was apparent that the driver was logged into the app at the time of the accident. Perhaps I could've made that more clear.

Best regards,

Posted Sat, Feb 1, 5:27 p.m. Inappropriate

There is a very misleading representation by Uber that the drivers have insurance while clocked in with Uber. It is true that Uber has insurance for its contingent liability....covering Uber...NOT covering the driver. While the driver may be dispatched by Uber and if that driver has an accident, Uber is covered for any claims brought against the corporation, however there is no direct insurance available for Uber drivers from Ubers non owned auto policy.
There is a distinction between Uber drivers and Uber-X drivers. In most instances when an Uber car is dispatched, it is a black town car and part of an existing limo company where the limo operator sees an opportunity to pick up fares when business is slow. Those limo companies have the appropriate commercial insurance. On the other hand, Uber-x drivers are drivers who use their own personal vehicles to pick up fares. Unless those Uber-x drivers buy a commercial public auto policy, they do not have any coverage whatsoever under their personal policy. While a previous poster said he thought he was covered because he told his insurance company that he was engaged in some minor commercial enterprise, that won't work because if the driver had been forthcoming with what his real exposure was, for hire transportation, the insurer would have unquestionably told the customer that there is no coverage afforded by his personal policy.
I don't know what companies the insurance industry representative was referring to when he said that the industry was looking for a solution. As a public auto broker, I work with the small universe of specialty public auto underwriters and with the exception of one, there is no interest in insuring these TNCs. The only interested underwriter in providing Uber-x drivers with insurance will only do so if they insure the drivers 24-7 and their rates are as expensive as the State Assigned Risk facility, which is by law obligated to insure any operators that come to them. The Assigned Risk is not a solution because it's so exorbitantly costly. In Seattle a $1M policy will cost in excess of $10,000 annually for one Uber-x auto.
I've discussed the conundrum with Uber and they are trying to find an affordable solution to insure their drivers while dispatched. Currently they do not have a viable solution for this problem.
The City should not allow uninsured drivers to pick up passengers. So for now, limo or town car companies who carry appropriate insurance should be the only drivers permitted to operate. When Uber and other TNCs have a real insurance policy for its drivers, they should be allowed to conduct business in Seattle but not until then.

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