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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