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Ridesharing in 2015: Changing Rules of the Road

June 05, 2015| By David Hurt | Auto/Motor | English

Region: U.S.

In my last blog, I discussed how Transportation Network Companies (TNCs) are rapidly becoming a popular alternative to hailing a cab. In this follow up, I would like to bring you  up to date on the slew of legal and legislative changes that occurred in 2014 and the ongoing debates in 2015.

As we move through 2015, several states continue to fight against the ridesharing technology brought on by TNCs. However, I think we’ve moved past the point of whether or not we “allow” them to operate in our states. The legislative question now is “how” we regulate them. Unfortunately for the taxi/limo industry, TNCs are already woven into our transportation fabric of everyday life, especially in larger urban areas. The poster child of the TNCs is Uber Technologies, Inc. In fact, I recently overheard a passerby on her phone saying, “I’m Ubering over to your house later." It’s now a verb in our vernacular!

The big legislative issue being debated in most states at the moment is “when” a TNC driver becomes a TNC driver. Is it when the driver opens the phone app? Is it when he accepts a request from a customer to be picked up? Or is it when that customer is actually picked up? And when does it end? It matters, especially to the insurance industry. We all know that personal auto insurance does not cover commercial activities, known as the Livery Exclusion. So, for our industry, the debate is really about when or if a TNC driver is insured under our personal auto policies. Because if he is a TNC driver, it would seem that this would be a commercial activity, which is excluded by his personal auto policy.

At the end of March 2015, several insurance industry organizations, auto carriers and Uber announced the creation of  a TNC Compromise Bill that will be presented to state legislatures across the country. It appears that everyone has pulled back their respective lobbyists and agreed to an acceptable insurance regulatory framework. According to the media statement release, the model “creates neither a presumption of coverage nor a presumption against coverage for TNC-related activities.”1 For a full draft version of the agreement, go to It is similar to the Colorado bill, but not as restrictive as the California legislation discussed below. We’ll keep an eye on its success.

By the end of 2014, only three jurisdictions had passed statutes regulating TNCs. The California Public Utilities Commission was the first, but it does not take effect until 7/1/15. The essential legal elements are:

1. TNCs must notify TNC drivers that they (the drivers) are not covered under their personal auto policies from the point they log on to the TNC app through the time they log off.

2. TNCs must provide certain minimum insurance coverage limits between the time a ride is requested until the ride ends.

3. Finally, between the time the driver activates the app and the driver accepts a request for a ride, either the driver or the TNC or some combination of both must provide certain minimum insurance coverage limits. These limits are much lower than the time when a rider is in the vehicle.

Colorado and Washington D.C. have similar requirements, recognizing that the personal auto policy does not cover TNC activities. The debate has primarily focused on protecting rideshare passengers by requiring higher liability limits while a customer is in the vehicle. These states have taken that idea seriously and recognized that personal auto policies were never meant to cover these ridesharing exposures. Many states have issued consumer alerts regarding insurance coverage gaps. By the end of 2014, several other states had legislative actions pending.2 Although ongoing debates are nearing resolutions, several of those state actions are noted below.

My next blog will raise questions about losses involving TNCs and offer suggestions about investigating claims when a TNC vehicle is involved.

1. PCIAA media release, 3/30/15.
2. NAMIC State of the States Webinar Series, 2/23/15.


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