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Friday, Jun 22, 2018
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Some doubt ride-sharing has it covered liability-wise

— Uber, Lyft and other ride-sharing companies tout their services as quicker, cheaper and more convenient ways to get around town.

Insurance regulators in California, Ohio and other states would add another description: underinsured.

The question of who is liable when an Uber or Lyft driver gets in a wreck has been hotly debated in cities targeted by the rapidly expanding “transportation networking” companies.

Tampa is the latest.

The companies connect passengers with drivers via smartphone applications. The drivers use their personal vehicles and usually carry only their own personal auto insurance, unlike most taxi drivers, who must carry a commercial driver policy.

Uber and Lyft say they have excess liability policies of up to $1 million per incident that kick in when the driver’s personal insurance coverage is exhausted.

But regulators in California and Ohio have issued consumer alerts warning of gaps in that liability insurance.

“While TNCs [transportation networking companies] may provide liability insurance, they may not provide medical payments coverage, comprehensive, collision, uninsured and underinsured motorist coverage, or other types of coverage to fully protect TNC drivers and passengers,” Ohio Insurance Director Mary Taylor said in a consumer alert issued Wednesday.

Representatives of Uber and Lyft argue that their policies are comprehensive.

In March, Uber announced it was expanding its coverage to fix an oft-cited gap — the period when a driver is logged into the company’s app but is not carrying passengers or driving to pick them up.

The new policy for Uber’s car-for-hire service UberX would also provide collision coverage during the gap period if the driver’s personal policy included full coverage.

“Uber holds a $1 million-per-incident policy from the moment of request until that person is dropped off,” said Rachel Holt, regional general manager for Uber East Coast. “They’re covered the moment the application is on: the driver, passengers, pedestrians.”

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The pre-pickup gap came to light after a New Year’s Eve accident in San Francisco in which an Uber driver hit and killed a 6-year-old girl. According to media accounts, the driver was not carrying a passenger but did have his Uber app activated.

After the accident, Uber issued a statement noting that “the driver was not providing services on the Uber system during the time of the accident.”

The girl’s family has filed a wrongful-death suit against Uber.

The $1 million policy is in excess of the driver’s insurance but also acts as primary insurance if the driver’s policy is not available for any reason, the Uber website says.

Since the first of the year, Uber has added additional coverage:

♦ Up to $1 million coverage for an Uber driver who has an accident caused by another driver with inadequate insurance.

♦ Up to $50,000 coverage, with $1,000 deductible, for damage to an Uber driver’s vehicle if the driver’s collision insurance does not cover the damage.

♦ Liability coverage for the Uber driver when he or she is available for business but is between trips. The coverage is for bodily injury up to $50,000 per individual, per accident, with a total of up to $100,000 per accident; and up to $25,000 for property damage. This coverage kicks in only if the driver’s personal insurance pays nothing.

Whether an Uber driver’s personal insurance is available to passengers remains in doubt.

Any personal driver insurance policy excludes coverage if a driver is charging passengers money for the trip, said John Madiedo, president of the Professional Insurance Center in Tampa.

Madiedo said that’s one reason Uber drivers should have to carry commercial driver insurance like cab and limo drivers.

“Personal auto insurance is not intended to cover people who are using their vehicle for commercial purposes,” said Madiedo, whose company specializes in covering public transportation vehicles.

He also questioned the value of Uber’s excess liability policy.

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The policy is issued by James River Insurance Co., what is known as a surplus lines company that covers high-risk, high-value markets, similar to Lloyd’s of London.

James River is a “fine company,” Madiedo said, but it is not “licensed and admitted” to practice in Florida.

Licensed companies are regulated by the Florida Office of Insurance Regulation and receive more scrutiny than surplus lines insurance, said Amy Bogner, a spokeswoman for the state office.

“We are looking at solvency of companies — if they have enough surplus to pay out claims,” Bogner said. “And we’re looking at rates and forms to make sure they don’t have inadequate rates and that they’re not discriminatory and their rates are fair.”

Surplus lines companies are not members of the Florida Guarantee Insurance Association, an industry trust fund that will pay a claim if an insurance company goes bankrupt or can’t pay.

The James River policy lists companies Rasier LLC, Rasier-CA LLC and Rasier-DC LLC as primary insured parties and Uber as “additional insured.”

Holt, the Uber manager, said Rasier is a subsidiary of Uber. Madiedo called it a shell corporation with no assets.

“Rasier does not contract with Uber drivers; Uber contracts with Uber drivers,” Madiedo said. “Uber is only covered if there is negligence emanating out of the name of the insured, Rasier.

“Rasier doesn’t do anything; it has no drivers,” he added. “It’s a ring around the rosie.”

Lyft, the other ride-sharing company now doing business in the Tampa area, has similarly beefed up its excess liability coverage.

Lyft and Uber are also members of the Rideshare Insurance Coalition, which includes members of the insurance industry and the California Public Utilities Commission. The California commission provides oversight of for-hire vehicles in the state.

“We’ve been working with the leaders of the insurance industry,” said Lyft spokeswoman Paige Thelen. “This is a new form of transportation that should be talked about. The goal is to bring together regulators, insurance companies and ride-sharing companies to talk about it.”


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