Ridesharing and Ridesourcing

by | Jul 13, 2015 | Insurance Articles & News

Jerry M. Milton, CIC

Article appears in the June, 2015 Primary Agent Magazine main_page

I’m sure many of you have heard of Uber.  It’s possible that some of you have even used the company.  But, how many of you have heard of Lyft, Sidecar, Haxi or Wingz?  These are also ridesharing companies.  They just haven’t received as much publicity as Uber.

Ridesharing is provided through transportation network companies that arrange shared rides on short notice.  Ridesharing is like carpooling and is promoted as a way to better utilize the empty seats in a car. The driver shares the same destination as the passengers.  Recent technological developments such as GPS navigation systems that determine a driver’s route and cell phones that allow a traveler to request a ride from wherever they happen to have made these types of arrangements possible.

However, most of these services are not “ridesharing”, they’re “ride sourcing”.  The traveler contact the transportation network company, and a driver is dispatched.  The companies provide a service similar to taxis, and the drivers do not share a destination with their passengers.  These independent drivers operate through the same transportation network companies (Uber, Lyft, etc.) as the true ridesharing drivers.

“Ridesharing” or “ridesourcing” — it doesn’t really make a difference.  Both have been controversial and criticized for inadequate regulation, insurance, licensing and training.  Strong opposition has come from taxi companies and public transit operators because they are seen as a competitive alternative.

Under this concept of ridesharing or ridesourcing, most drivers use their personal vehicles.  Many of them probably have a Personal Auto Policy, which provides absolutely no coverage.  The Personal Auto Policy excludes liability “arising out of the ownership or operation of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.”* I wonder how many of those drivers know that.

Until recently no state had enacted legislation regulating these companies.  That changed in March 2015 when Georgia became the first state to pass a ridesharing bill.  Maryland followed in short order and in April 2015 enacted a bill regulating transportation network companies to provide commercial insurance to cover any commercial activities undertaken by the drivers.

The Maryland bill contains insurance coverage limits that apply throughout the time commercial business is being conducted.  The Georgia bill requires that the coverage begins when the driver accepts a request for the transport of a passenger.

Minimum liability limits ar $50,000 for bodily injury or death of one person, $100,000 for bodily injury or death of more than one person, and $25,000 for property damage in Maryland; $50,000 for property damage in Georgia.

These minimum limits apply from the time the driver logs on to the mobile application networking system until a passenger accepts a ride.  once a ride is accepted, the minimum insurance requirement is $1,000,000 for bodily injury, death and property damage.  Any other state compulsory coverage must also be provided.

These bills should help close the insurance gaps that currently exist with these transportation network companies.

Y’all take care!