In my last blog post, I discussed the inherent problems the popular ride service Uber has with insurance protection for its passengers, drivers and the public in general.
Uber is a very popular ride sharing company that utilizes a wireless network to connect riders to independent Uber drivers via a smart phone app. The company has grown immensely in just a few years, with many putting the company’s value at over $15 billion dollars.
Although the service is popular, the lack of adequate insurance for riders and other motorists is a major shortcoming that needs to be addressed.
Currently, Uber provides a $1,000,000 liability insurance policy for Uber drivers and its passengers beginning from the time the Uber driver accepts a fare while using the Uber network. This large commercial policy coverage is maintained throughout the ride. However, once the rider leaves the vehicle, Uber only protects its drivers with a minimum $50,000 policy per person or $100,000 per accident.
This lesser insurance coverage has caused a number of problems. First, competing services, such as basic taxi companies, are infuriated because they are required under Michigan law to carry higher, more expensive commercial policies for their fleets at all times. According to taxi cab companies, Uber is taking advantage of a business model that profits by not insuring Uber drivers in the same way taxi cabs are required to be insured.
Second, Uber drivers are worried they are not adequately protected for accidents they cause, whether it be liability coverage to others or property damage to their own vehicles. While Uber does insure its drivers up to $50,000 when the driver is in between fares, this may be all the protection the driver has. Most personal auto insurance carriers exclude coverage for policyholders who operate their vehicle for pay or for hire.
Third, many in the public are concerned because like anybody else, Uber drivers can get into accidents that cause serious personal injury. The prevailing wisdom is many Uber drivers are simply not driving around with enough protection, despite the fact they are making a good living working for Uber.
As a result, like the California state legislature and elsewhere, the Michigan legislature is now stepping in to help alleviate these concerns. House Bill 5951 was introduced last week in the Michigan House of Representatives. Although a noble start, the bill simply does not go far enough.
The bill, which is the first statewide proposal in Michigan dealing with Uber and other “transportation network companies” or TNCs, is very similar to the insurance coverage Uber already offers to the public. First, it seeks to require TNCs to maintain liability insurance coverage in the amount of $1,000,000 at all times during a “prearranged ride.”
According to the house bill, a prearranged ride is the period of time that begins when the TNC driver accepts a requested ride though a digital network, continues while the driver transports the rider in the vehicle, and ends when the rider departs from the personal vehicle.
As I mentioned above, Uber already offers this coverage to the public. In fact, Uber goes one step further, offering $1,000,000 in uninsured and underinsured motorist coverage to Uber riders as well.
The bill also requires contingent coverage of at least $50,000 per person and $100,000 per occurrence, and $30,000 for property damage for drivers during the time a TNC driver is providing transportation services. Again, Uber already provides similar coverage to its drivers.
The bill then requires at least $20,000 per person or $40,000 per occurrence in liability coverage for drivers who are in between fares but still utilizing the transportation network company’s digital network.
This amount of coverage, which is simply the state minimum of bodily injury coverage for all motorists in Michigan, is woefully inadequate. Uber drivers are operating their vehicles for commercial purposes. It is high time the Michigan legislature treats them as such by requiring they protect the public with commercial liability policies, similar to taxi cab services.
By only requiring basic 20/40 bodily injury policies for Uber and other TNC drivers, the Michigan legislature is playing favorites to these so-called TNCs and choosing their well being over the well being of their passengers and other motorists on the Michigan roadways.
Further the House Bill does not require any type of uninsured or underinsured motorist benefits for TNC passengers, again leaving riders inadequately protected.
The House Bill does have its good points. The bill requires Uber and other TNCs to provide the same Michigan no-fault benefits all Michigan policyholders enjoy. The bill requires local, state and national background check for each driver. A driver’s vehicle must undergo a safety inspection by a licensed mechanic to ensure the vehicle is in good working condition.
However, the good in the bill is basic and merely pronounces requirements that many commercial carriers already have. Instead of providing an added punch that adequately protects Uber drivers, passengers and other motorists, this bill just rubber stamps what is already there.
Although House Bill 5951 is a good start, I’m hopeful the Senate version or other House versions of the bill go much further in providing protection to all Michigan residents.