Pa. presses ride-sharing companies on insurance coverage for consumers
The state is ratcheting up pressure on ride-sharing companies like Uber and Lyft, warning consumers that insurers may not provide coverage for injuries if the cars are involved in an accident.
“Consumers may be focused on the new innovation without understanding their liability or risk exposure,” said state Insurance Commissioner Mike Consedine. “Learning too late of gaps in insurance coverage can have serious financial consequences for participants in these programs.”
Nearly a third of all states have issued similar warnings. The warnings have surged in the past month as so-called transportation network companies have garnered more attention to their service that connects passengers with drivers through an online or mobile phone application.
The ride-sharing companies, which allow consumers to summon a ride by using a mobile phone app, have faced opposition from traditional taxi operators and enforcement action from the state Public Utility Commission, which is seeking hefty fines for the companies and their drivers.
The enforcement arm of the commission, which regulates transportation companies, has cited Uber and Lyft drivers. The agency has proposed fining Lyft $130,000 and Uber $95,000 for what it calls illegal operations and is seeking a cease-and-desist order to shut them down.
The latest wrinkle for the companies could discourage riders from using the service. The insurance department's warning, issued on June 2, said personal auto insurance policies typically exclude coverage while a vehicle is being used as a public livery service.
Some ride-sharing companies may purchase coverage for their network of drivers, but that insurance may not cover all costs in the case of an accident, the department said.
Both Uber and Lyft say their insurance for independent contractor-drivers provides coverage if their personal policies do not.
Paige Thelen, spokeswoman for San Francisco-based Lyft, which began service in Pittsburgh on Feb. 7, said the company has insurance coverage that provides up to $1 million in liability and uninsured/underinsured motorist coverage per incident for both drivers and passengers above the driver's personal coverage.
“It is designed as an excess policy above the driver's policy, but if the driver's policy does not apply, it will drop down to first-dollar coverage as the primary coverage,” she said.
Uber spokesman Taylor Bennett said it offers similar coverage. Uber began service in Pittsburgh in March.
Rosanne Placey, spokeswoman for the Insurance Department, said it has received no complaints statewide from consumers about ride-sharing companies. The agency has no authority to regulate the companies.
“We were trying to be proactive to warn consumers about these programs so they can make informed choices,” Placey said. “We been working on this for several months to get our hands around the problem.”
Dave Phillips, spokesman for State Farm Mutual, the largest auto insurer nationally and in Pennsylvania, said the question of coverage most often comes down to “payment is being received” for the ride service.
There have been questions whether a ride-sharing vehicle is being used for personal or business purposes, he said, and State Farm has had to make a decision on coverage in such cases, but he declined to give specifics.
“When the driver of our insured passenger vehicle offers rides for payment, these rides may not be considered to be on a shared-expense basis,” Phillips said. “In this case, under most situations, there would not be coverage. This would be considered a ‘livery' exposure, which would be best covered under a commercial vehicle policy.”
Both Uber and Lyft have applications pending with the PUC. Spokesmen for both said their drivers will continue to operate as normal. Hearings are set for June 26 and 27 on the cease-and-desist order. PUC spokeswoman Jennifer Kocher could not be reached.
“There has been an avalanche in the past few weeks of states warning their consumers that ‘ride sharing' is unsafe,” said Dave Sutton, spokesperson for the ‘Who's Driving You?' a campaign paid for by the Taxicab, Limousine & Paratransit Association, a trade association that represents 1,100 licensed transportation companies worldwide.
It highlighted on its website a warning from Nevada that said consumers “need to be aware that when utilizing these types of ride-sharing technology companies that they may be driving with someone who is uninsured. This puts passengers at financial risk should they be involved in an accident and are injured.”
Uber is being sued in a San Francisco case in which a child was killed. Media reports say the family of a 6-year-old girl who was killed in a crosswalk by an Uber-approved driver on New Year's Eve wants the company to be held liable for the accident. Uber said the driver was an approved one but was not working on an Uber call at the time of the accident, the reports say.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.