Will the City Council swallow Ed Murray's ride-share plan?

Councilmember Mike O'Brien has concerns about insurance standards and wants more time to look over recently brokered legislation.
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Councilmember Mike O'Brien has concerns about insurance standards and wants more time to look over recently brokered legislation.

Under pressure from Lyft, Uber and some members of the traditional taxi and for-hire vehicle industry, the Seattle City Council could vote Monday to approve legislation containing a new set of ride-sharing regulations.

But at least one councilmember is saying, not so fast. 

Mike O'Brien plans to introduce a motion on Monday that would refer the legislation back to the council's Committee on Taxi, For-Hire and Limousine Regulations. Mayor Ed Murray sent the 113-page bill to the council about two weeks ago. It is the product of a recent negotiation process led by the Mayor's Office, which involved ride-sharing companies and taxi and flat rate for-hire representatives.

Ride-sharing companies have urged the council to pass the bill as-is quickly to avoid a protracted ballot initiative process.

"This is complex enough that we need to take at least a couple weeks to work through this bill," O'Brien said on Friday.

O'Brien also said that he would introduce an amendment to further tighten insurance standards for app-based ride-sharing services operating in the city.

Whether he can muster the votes needed to pass the motion or the amendment is unclear. Also uncertain is precisely how much latitude the council has to modify the compromise legislation before ride-sharing companies decide to bypass them and move forward with a ballot initiative.

Lyft and Uber responded to a set of regulations that the Council and the mayor approved earlier this year by dumping combined contributions upwards of $800,000 into a campaign for a ballot referendum.

The referendum would have asked voters to decide on whether to repeal the regulations, which included caps on the number of vehicles each ride-sharing service could have on the streets at any one time.

Once enough signatures were collected to get the referendum on the ballot, the new regulations were suspended until a vote could take place. Soon thereafter, the Mayor's Office initiated the negotiations that led to the current compromise bill. The ride-sharing companies have since agreed to stop the referendum effort, but have instead begun collecting signatures for a ballot initiative that contains their own preferred set of regulations.

"If some major change is made, it absolutely could result in going to the ballot," said Uber's Seattle general manager, Brooke Steger. "That definitely still is a possibility."

Meanwhile, questions about ride-sharing insurance requirements continue to dog the city's months-long effort to come up with rules for the insurgent car services, which allow passengers to request rides through smart-phone apps from drivers using personal vehicles.

The city refers to the services as transportation network companies, or TNCs. Lyft, Sidecar and UberX, the three major TNC operations in Seattle, each provides a $1 million liability insurance policy for their drivers. But that insurance is only designed to cover accidents that occur from the time a driver taps their smartphone to accept a passenger, until the time the passenger gets out of their car.

Lyft and Uber recently added coverage that provides up to $100,000 of insurance for incidents involving drivers who are logged into the apps awaiting ride requests. But this coverage is designed to kick-in only if a driver's personal auto insurer declines to cover an incident.

For O'Brien, that's not quite good enough.

He wants the TNCs to provide "exclusive" insurance coverage, from the time a driver logs-on to an app until the time they log-off. O'Brien's goal is to take personal auto insurance policies out of the ride-sharing equation.

"If they want to reshape the insurance industry, I'm all for that," O'Brien said. "But I'm not ready to experiment with our citizens and the city's resources."

Uber's Steger pointed out that during the time drivers are waiting for a ride request they could be conducting other business, or might even be logged into another ride-sharing app.

"You're definitely not engaged in commercial activity with us at that time," she said.

The issue has real consequences. In San Francisco, a court case involving an Uber driver who hit and killed a six-year-old girl, Sophia Liu, last New Year's Eve remains unresolved. The driver's insurer is covering the accident and Uber has not offered to pay damages.

But according to Chris Dolan, the lawyer representing the Liu family, the driver's policy will only provide $15,000. Liu's mother, he said, also suffered serious injuries in the accident and incurred $187,000 in medical bills. Because she did not have health insurance at the time of the accident, Dolan notes that those costs will likely be passed on to the city, the county or the state.

In Washington, personal auto insurance 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.

"When there's inadequate insurance, the public is going to be picking up the tab," Dolan said. "Either through the taxpayers or by paying higher [insurance] premiums."

Uber's Steger said that in Seattle a personal insurer has never declined a claim filed for an accident that has happened when a driver was awaiting a ride-request on the UberX app. "We've supplied an ample amount of documentation that shows the insurance we offer is extremely safe," she said. Steger added that it was up to the state to further clarify and update insurance standards for the industry.

"I think the state just needs to take a deeper dive," she said.

The Washington State Office of the Insurance Commissioner is not currently working on any rules for ride-sharing services, but is monitoring the situation, according to spokesperson Kara Klotz.

"Right now, what we're telling consumers and drivers, is check with your insurer or agent," she said.

According to a City Council memo, a number of other amendments are also expected on Monday. Most would clean up language in the bill, or pertain to taxis, or flat rate for-hire vehicles. The legislation would also allow flat rate drivers to pick up passengers who hail them on the street and would release 200 additional taxi licenses.

Ride-sharing, taxi and flat rate representatives involved in the negotiations led by the Mayor's Office recently sent councilmembers a letter asking them to pass the legislation unchanged.

"Many points of the proposal that may seem minor were actually painstakingly negotiated, and even small changes in the terms could cause support for the agreement to collapse," the letter said. "In addition, we ask that you move to consider and enact this agreement quickly in order to avoid a divisive ballot initiative fight."


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