With the Seattle City Council set to vote on ridesharing regulations next Monday, Lyft and Uber have announced more insurance coverage for the drivers using their apps.
The expanded insurance addresses a potential gap in liability coverage that has worried officials and regulators in Seattle and elsewhere. The move would also help the companies comply with the regulations proposed by the council.
Both of the taxi-like companies said they would broaden their liability insurance policies to cover drivers who are logged into their apps but not carrying passengers. Prior to the change, the policies apparently only covered drivers from the time they hit the button on their smartphone to accept a passenger until the time the ride ended.
Whether drivers were covered by their personal auto insurance while they were logged into the app waiting for riders has remained unclear. Most personal auto insurance policies are void if a driver is using their car to carry passengers for money. This raised the possibility that drivers awaiting riders could be driving around uninsured.
The proposed council regulations require that the companies’ policies cover drivers any time they are logged into the apps. The council ordinance refers to services like Lyft and Uber as Transportation Network Companies, or TNCs.
“What we wanted to do is make sure that ambiguity goes away,” Uber Technologies co-founder and CEO Travis Kalanick told reporters during a conference call on Friday.
An accident in San Francisco last year highlighted the coverage gap. An UberX driver who was not carrying a passenger, but was logged into the app, allegedly hit and killed a 6-year-old girl, Sophia Liu. The girl's mother was also hit and severely injured. The Liu family has filed a wrongful death lawsuit against Uber and the driver.
Shortly after the accident the company distanced itself from the driver, saying in a statement that he "was not providing services on the Uber system during the time of the accident."
Kalanick said Friday that the driver’s personal auto insurer had agreed to pay damages, but that he did not know in what amount.
Chris Dolan, a lawyer who is representing the Liu family, took issue with the statement. “It’s a fraud and he knows it,” Dolan said.
Dolan said that the driver's personal auto insurer would only pay $15,000. The girl's mother, he said, is still in the hospital with a head injury and her medical bills alone are approaching $500,000. Because the family did not have health insurance at the time of the accident, Dolan said the City of San Francisco would end up covering those costs if Uber does not pay any damages.
"I'm going to make Uber pay for it," he said.
Auto liability insurance pays for damages caused by the at-fault driver in a car accident. In Washington, personal auto policies must provide at least $25,000 for one person and $50,000 for any two people, killed or injured in an accident, as well as $10,000 for damaged or destroyed property.
Uber’s new policy covers damages and death up to $50,000 per person, $100,000 per incident and provides a maximum of $25,000 for property damage. The limits in the new Lyft and Sidecar policies were not immediately available.
Lyft, Uber and Sidecar all say they have $1 million liability policies that cover drivers when they are carrying passengers.
Taxi and flat rate for-hire drivers in Seattle are required to carry commercial policies that provide $325,000 per incident liability coverage, as well as $100,000 per-person and $300,000 per-incident coverage for collisions with uninsured or underinsured motorists who are at fault. These commercial policies, drivers say, can cost $450 per month.
The council’s proposal would match the underinsured motorist coverage limits for TNCs with those for the taxi and for-hire requirements. Uber and Lyft added that coverage to their policies in recent months. Sidecar has said it is working with their insurer to provide the coverage.
Kalanick said the company’s new coverage was effective as of Friday for drivers using the UberX app. The coverage would be triggered only if a drivers’ personal auto insurer declines a claim. A Lyft spokesperson said in a statement that the company would implement its new policy “state-by-state in the days to come.” The company did not respond to questions about when exactly the new coverage would go into effect in Washington. A third company, Sidecar, also said on Friday that it is working on similar changes to its liability policy.
The TNC’s main beef with the council regulations are caps that would restrict the number of drivers allowed to use each app at any one time to 150. Both Lyft and Uber have said the rules would restrain their ability to meet demand. Kalanick said that demand for UberX vehicles in Seattle was as high as 1,500.
“The rules are designed to incapacitate Uber and make it unusable," he said, adding that he was not sure what the company would do if the city puts the proposed caps into place.
Dolan, the lawyer, remains skeptical of the latest insurance developments and says the $1 million policies should be in place whenever drivers are on a TNC system.
"These are real people," he said, "being affected by [Uber's] business decisions."
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