Between Public and Private Mobility: Examining the Rise of Technology-Enabled Transportation Services (2016) / Chapter Skim
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7 Insurance
7 Insurance
Pages 114-127
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From page 114... ...
Finally, while much has been made in the media about insurance concerns facing TNCs, other forms of shared mobility, such as car- and bikesharing and microtransit, also face challenging insurance issues; thus, the chapter describes how those services are currently managing financial risk and insurance policies. Insurance Requirements for Taxis Insurance requirements for taxis are set by local jurisdictions, which nearly always require commercial policies.
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From page 115... ...
2 Often called the "safety valve" of the insurance industry, "surplus lines" insurers fill the need for coverage in the marketplace by assuming those risks that are declined in accordance with the standard underwriting and pricing processes of "admitted" insurance carriers. With the ability to accommodate a wide variety of risks, the surplus lines market acts as an effective supplement to the admitted market.
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From page 116... ...
Private passenger automobile insurers expressed concern about the notion that carrying passengers via one of the TNCs was not a commercial activity and threatened to refuse a policy to individuals driving for the companies. Taxi companies likewise expressed concern that they were being undercut by TNCs because the insurance requirements and costs imposed on traditional taxis were considerably greater than those imposed on TNC drivers.
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From page 117... ...
A second key consideration is ensuring that all of the risk caused by for-hire operations -- the added TNC-related mileage when the driver would not otherwise be on the road -- is borne by the commercial TNC and not the driver's private insurer, unless the private passenger automobile insurer specifically provides for coverage. As discussed in Chapter 5, most TNC drivers work part-time, some providing just a few paid rides in a month.
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From page 118... ...
In period 1, California requires that TNCs provide primary insurance with minimum coverage of $50,000 for bodily injury per person, $100,000 for total bodily injury per accident, and $30,000 for property damage; California also requires the TNCs to provide excess coverage of $200,000 during period 1 to cover any additional costs. In periods 2 and 3, TNCs must provide primary commercial insurance of $1,000,000, with an additional $1,000,000 in uninsured or underinsured motorist coverage during period 3 (California Public Utilities Commission 2015)
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From page 119... ...
Moreover, because the GPS-enabled TNC app records all vehicle movements in time and space from call to pickup and from pickup to drop-off, including the routes taken, the opportunity to fine-tune coverage such that marginal risk reflects marginal price -- as many private insurers are doing with in-vehicle travel-monitoring devices for personal insurance policies -- would be lost with a blanket commercial coverage requirement. In fact, as data on the movements of taxis improve, the opportunity for taxi services to shift from expensive full-time
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From page 120... ...
Shifting away from this could potentially reduce commercial insurance costs for taxi companies and would be another approach to leveling the playing field with TNCs. Hybrid Insurance Policies Some insurance companies are beginning to create policy endorsements that will fill the current gaps between personal automobile policies and commercial coverage for TNC drivers.
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From page 121... ...
. In 2005, Congress passed the Graves Amendment as part of the surface transportation funding reauthorization bill; this amendment protected rental car companies from vicarious liability.5 In 2009, a driver rear-ended by a Zipcar vehicle sued both the driver and Zipcar, claiming that Zipcar should be held responsible for deaths, injuries, and property damage resulting from negligence in the use and operation of its vehicles.
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From page 122... ...
Insurance coverage for car2go (a one-way carsharing provider) varies by state, but it generally provides $100,000 bodily injury liability per person, $300,000 bodily injury liability per incident, and $50,000 property damage liability, plus uninsured motorist coverage of at least $10,000 and often more, as well as collision and comprehensive coverage with a $1,000 deductible (car2go 2015)
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From page 123... ...
. As of 2015, RelayRides, for example, covered vehicle owners with a $1 million liability insurance policy and provided three insurance options for renters: (1)
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From page 124... ...
. Liability insurance for the bikesharing operator can start at $5,000 annually for a $1 million policy, with minimum liability coverage varying depending on the requirements of the property owners where the bikesharing stations are located.
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From page 125... ...
As these new shared mobility services established track records, providers' access to a robust set of insurance options is likely to broaden. To date, moreover, 27 states have adopted laws that are based largely on the precedent-setting insurance requirements adopted earlier in California that close the gap between coverage applying to taxi drivers and to TNC drivers while engaged in a commercial activity.
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From page 126... ...
2014. City Council Approves Transportation Pilot Program.
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From page 127... ...
2015. Transportation Network Company: States with Enacted Legislation.
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