We Don’t Know a Lot About the Insurance Risks of Ride Sharing

An UberX driver was involved in an incident that killed an 6-year-old girl.

The Tenderloin, the San Francisco neighborhood where a young girl was killed in an incident involving an UberX driver. Credit: AdamJackson1984 on Flickr

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In reporting on a deadly New Year’s Eve car accident involving an UberX driver, San Francisco public news outlet KQED pointed to its coverage of insurance issues raised by the fact that there’s a new class of professional-ish drivers on the road who nonetheless don’t carry the traditional protections we associate with professional driving. The driver in the case, reports KQED, “worked for UberX, which is Uber’s ‘ride-share’ service, a competitor to Lyft and Sidecar.” (Though it’s worth noting that we don’t know whether the driver had been hired out at the time of the incident.)

As we discussed here back in August, the California Public Utilities Commission coined the term Transportation Network Companies, or TNCs, to apply to outfits like Lyft, Sidecar and UberX, and largely signed off on them, with a handful of conditions.

I’ll let KQED take it from here:

Lyft and the other TNCs point to the $1 million per incident excess liability coverage that the California Public Utilities Commission (CPUC) requires them to carry. The policies are designed to deal with liability claims a driver’s insurance doesn’t cover. But the policies won’t cover drivers’ cars. That means the drivers must rely on their personal auto insurance policies — which still may leave them uncovered since insurers typically, though not always, bar claims if a driver’s vehicle was in commercial use when an accident occurred.

This comes as evidence behind the knock against Uber that, as it grows like kudzu, it’s offloading a considerable number of the burdens of running a business on individual drivers. At least publicly, the company hasn’t done all that much to equip its UberX drivers to know what they should do on the insurance front. A search for “insurance” in Uber.com’s Help Center reveals just one result, and it only talks about how Uber’s black car and taxi services contract with preexisting licensed and insured drivers.

A little help would be useful, because when a driver needs commercial insurance it isn’t so cut-and-dried.

As a teenager in New Jersey, for example, I delivered pizzas for a hot minute until my dad, an attorney, made a strong case for why it wasn’t okay that the pizza shop didn’t cover me or my Camaro. Meanwhile, as the insurance company Progressive says, “even though an Avon representative may use her car to deliver products once a week, a personal insurance policy would still fit her needs.” Commercial insurance tends to make more sense for fleet owners, as it’s more cost-effective and there’s greater coverage for things like replacing business-critical cars. But there’s a good chance that your company will deny a claim on your personal insurance if you were working in some form at the time.

Indeed, the situation is such that even Esurance, the hassle-free insurance site, says, “The complexities involved in determining if you’re a good fit for commercial car insurance obviate hard-and-fast answers.”

The taxi industry is reviving its “if it quacks like a duck” argument, making the case that technology alone doesn’t mean the old rules that apply to hired cars should fly out the window. Or in legalese, as the San Francisco Cab Drivers Association put it in its recent comments asking for a rehearing of the Public Utilities Commission’s August decision, “There is no functional difference in the service TNCs and taxicabs provide.”

In the meantime, the confusion has benefitted Uber and similar companies. Ride sharing has grabbed hold in the U.S., though there’s little chance it would have if early-adopting drivers had been required to shell out extra money for commercial insurance. In 2014 we’ll likely see vigorous debate over what it means to be a “professional” driver, and what burdens — insurance and otherwise — attach to it.

Forgive what might be too far a stretch, but the ride sharing situation echoes the late aughts’ debate over the professional vs. the amateur in journalism, and who should get protections like so-called shield laws and the like. That fight has petered out with no real conclusions, but that probably won’t happen here.

Your average blogger will rarely write something that puts him or her at risk. But driving a car carries risks every time you head out on the road.

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Nancy Scola is a Washington, DC-based journalist whose work tends to focus on the intersections of technology, politics, and public policy. Shortly after returning from Havana she started as a tech reporter at POLITICO.

Tags: californiashared cityuberride-hailinglyft

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