Like taxis, ridesharing services need adequate liability insurance.
In the brave new world of ridesharing led by Lyft and Uber, exactly when should company auto insurance vs. the personal insurance of drivers kick in? And what levels of coverage are adequate?
Those are the questions Minnesota lawmakers are considering as they debate mandates for transportation network companies, known as TNCs. A proposal that passed out of a Senate committee this week rightly holds the popular Lyft/Uber-type services just as accountable for driver and customer safety as any other taxi service.
The plan adopts coverage levels similar to those required in Minneapolis, St. Paul and some other states. And the bill says that company coverage applies as soon as the driver turns on his or her smartphone app — signaling availability to pick up a fare. TNC representatives had previously fought that provision, arguing that drivers could be engaged in personal business after signing in but before accepting a fare. But on Friday they said they'd reached an agreement with their insurers that alleviated their concerns.
Minnesota lawmakers took up the issue because of concerns raised by 26 state commerce commissioners, including Minnesota Commerce Commissioner Mike Rothman. They worried that TNCs were not carrying adequate coverage after the 2013 death of a 6-year-old girl in San Francisco. She was struck and killed in a crosswalk by an Uber driver who was waiting for a ride request.
The accident led to a liability lawsuit against Uber. Consequently, California became the first state to adopt legislation mandating that the TNC cover its drivers with $50,000 in death and injury liability coverage, $100,000 in total coverage, $30,000 in property damage and an additional $200,000 in excess liability coverage.
Minneapolis, St. Paul and six other cities and states have already passed ordinances mandating $1 million in commercial insurance policies for drivers who connect with fares exclusively through smartphone apps. But that coverage does not kick in until the driver accepts a ride request through an app.
The state proposal calls for company insurance coverage during that "gray area'' between logging in and receiving the ride request. That's good for drivers and riders; it offers more clarity about which insurance company should be responsible.
The bill, authored by Sen. Kari Dziedzic, DFL-Minneapolis, and Senate Commerce Committee Chairman James Metzen, DFL-South St. Paul, now heads to the Senate floor. And a similar bill is moving on the House side.
Their initial proposal was somewhat more stringent for TNCs than for traditional cab companies. However, this week, the bill was modified to bring it more in line with Twin Cities and other states have done.
By whatever name or business model, ridesharing companies are still transportation-for-hire services. As such, they must carry appropriate levels of insurance protection.