The status of auto insurance coverage for drivers employed by Transportation Network Companies such as Uber and Lyft faced scrutiny at the State House Tuesday, as a joint legislative commission reevaluated the state’s Public Motor Vehicle Act, which passed in 2013.
The congressional committee was tasked with analyzing the compatability of the state’s current regulations for public taxi and livery — or chauffeured — services amidst the growing popularity of TNCs. The members heard testimony from Rick Szilagyi, chief executive officer of the New England Livery Organization; Robert Passmore, a representative of Property Casualty Insurers; Ernest Shaghalian, a representative of Independent Insurance Agents of Rhode Island; and Brad Nail, a public policy insurance manager at Uber.
All who testified said prudent regulation of the growing industry is both achievable and desirable. But protecting drivers employed by TNCs and customers of these services from risk remains a significant concern.
Over the course of testimony, the insurance “coverage gap” emerged as a major topic of discussion. Though services like Uber rely on private drivers who provide their own vehicles, insurance companies group them with other livery services that own the cars used by their private drivers. Personal insurance policies usually do not cover livery, and so those who elect to drive for Uber are faced with a gap between on-the-job and off-the-job use of their vehicles. Both Passmore and Shaghalian noted that this gap exposes drivers to considerable financial liability.
“People are more apt to sue big companies than someone who is just giving a ride gratuitously,” Shaghalian said, adding that risk-averse insurance companies are more worried about covering an employed driver, even in a personal vehicle.
Testimonies also addressed distinctions drawn between various stages of TNC operation. Other states with TNC legislation differentiate the period of time before a driver has accepted a ride request through the company’s phone application and the period after the driver has picked up a customer, Passmore said. Payouts for incidents — including but not limited to accidents — during the initial period are capped at a lower rate, he said.
Committee member John Olinger of the New England Livery Association questioned this policy. The two recent fatalities associated with TNCs were both pedestrians, not passengers, Olinger said. Thus, the drivers “need just as much insurance during that period one as they need in period two … In theory, they’re looking down at their phone more during that time,” he said.
Rep. John Edwards, D-Tiverton and Portsmouth, co-chair of the committee, highlighted what he saw as a major insurance problem while questioning Passmore. Because the driver would be relying on a personal insurance policy during period one, he said, states with existing legislative models do not provide comprehensive enough coverage for TNC for drivers.
Shaghalian expressed doubt that insurance providers would change their policies to correct for these perceived failures, even as services like Uber command more of the market. He described the caps on coverage as “woefully inadequate.”
Nail, representing Uber’s perspective in the conversation, noted that the company guarantees the absence of coverage gaps to its drivers while acknowledging that industry standards needed to be established. “The primary concern is how to ensure coverage at all times,” he said. The crucial elements of any proposed strategy are providing protection for everyone involved and allowing personal and commercial insurance policies to work together “as seamlessly as possible,” he added.
It is imperative for every TNC to provide commercial insurance coverage for its drivers, as Uber does, in order to avoid coverage gaps that arise from the failure of personal insurance policies in covering employed driving, Nail said.
