Uber, Lyft setback: Insurance chief backs proposal to hike coverage requirements

by Patrick Hoge, San Francisco Business Times

RIDESHARE CROPPED 330px-Side_on_collision_wikipedia_ccJUNE 12, 2014 – California Insurance Commissioner Dave Jones threw his weight Thursday behind the California Public Utilities Commission’s proposal to increase insurance requirements for transportation network company services such UberX, Lyft and Sidecar that use smartphone apps to connect passengers to people driving for hire in their own vehicles.

Among other things, PUC President Michael Peevey on Tuesday proposed mandating that TNCs ensure that drivers have $1 million primary, commercial insurance coverage as soon as they open smartphone ride-ordering mobile applications, not just between the time that ride orders are accepted and passengers leave their vehicles. The PUC also wants medical payment coverage in the amount of $5,000, comprehensive and collision coverage in the amount of $50,000, and uninsured/under-insured motorist coverage in the amount of $1 million per incident during the same period.

The proposed ruling is meant “to clarify” the pathbreaking rules the PUC adopted in September governing operations like Uber and Lyft, and it will be considered at a July 10 PUC hearing.

Jones himself had earlier recommended the $1 million app-on/app-off requirement following an April 24 public hearing he convened to address what he called insurance coverage “gaps” arising from the new transportation services. In addition, Jones recommended that companies like Uber and Lyft match optional coverages drivers may have purchased on their personal automobile policies, such as medical payments, comprehensive and collision, or uninsured or under-insured motorist coverage, and he said he will continue to advocate for those changes.

Uber has criticized the PUC’s proposal as one that “protects trial lawyers, insurance companies, and big taxi  ignoring the needs of hardworking Californians,” and warning that such regulations threaten to cause the state’s “innovation economy” to “crumble at the hands of special interests.” Uber has advocated instead for allowing a lower level of insurance coverage when drivers are logged onto mobile apps but haven’t yet accepted a call, something the company got recently in Colorado, where a new state law allows Uber and like companies to have “contingent” policies that kick in only if a driver’s personal policy doesn’t apply during that key period.

A coalition of five property casualty insurance trade associations, however, strongly supports Peevey’s recommendation. Those groups represent the companies that write nearly 100 percent of the commercial and personal auto insurance policies covering 24 million vehicles in California, which in 2013 generated premiums of $23 billion combined ($2.6 billion for commercial, $20.4 billion private passenger).

The insurance groups, which include the American Insurance Association, the Association of California Insurance Companies, the National Association of Mutual Insurance Companies, the Pacific Association of Domestic Insurance Companies and the Personal Insurance Federation of California, are also continuing to support a bill introduced by Assemblywoman Susan Bonilla, D-Concord, that would require unspecified but consistent insurance coverage starting when an app is opened.

Bonilla has said such a requirement is needed to close what she considers to be an insurance gap highlighted last New Year’s Eve when a driver seeking passengers in San Francisco with the UberXd smartphone application open struck and killed a little girl.

Uber has said the driver’s personal insurance was willing to pay, and has argued in court papers that it isn’t liable because the driver didn’t have a ride order at the time. Liu’s parents have sued Uber seeking damages, and their attorney said the driver’s insurance only allowed for maximum payouts of $15,000 per person and a maximum of $30,000, the California minimum.

After Liu’s death, Uber added insurance coverage for the period when drivers have the app open but no call for service, but it is only one player in a growing industry and other companies haven’t yet followed suit, though Lyft promised to do so.

Also continuing to move forward in the state Legislature is a taxi industry supported bill by Assemblyman Adrin Nazarian, D-Sherman Oaks, that would go even further by requiring Uber and Lyft and others to provide $1 million insurance coverage for enrolled drivers at all times. Insurance groups haven’t taken a position on that bill.

Both Bonilla and Nazarian’s bills are scheduled to be considered next Tuesday at the Senate Energy, Utilities and Communications committee.

Uber is planning a demonstration at the state Capitol on Tuesday and has called on drivers around the state to contact legislators in opposition to both bills. Lyft drivers have protested Bonilla’s office and are also writing letters.

The insurance groups are similarly conducting a letter writing campaign and have been running radio and online advertisements in the Bay Area and Sacramento.


Photo credit: Wikipedia

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