For reasons known only to the parties involved, the CPUC has bent over backwards to help the TNC's expand their businesses. This has included lifting or ignoring their own Cease & Desist orders, silencing or ignoring opposition speakers during the Rulemaking hearings, and, of course, working to create a totally unique insurance policy for the TNC's that would enable them to cut their insurance costs and keep their business model intact.
For the TNC business model to work, the TNC drivers have to be able to keep their personal insurance because commercial insurance would simply be too expensive for people using their cars to make a little extra money. If, as the insurance companies have indicated, the TNC drivers would need commercial insurance to transport customers, the TNC corporations would trouble finding drivers.
The other alternative would for the TNC corps to take out fleet policies like taxicab and limo companies carry but these are expensive and would force the TNC to raise their rates - putting an end to one of the main reasons why some customers might prefer the TNC's to taxis.
So they (the TNC's) came up with a new type of insurance policy. Instead of full coverage, the policy gives "per incident coverage for incidents involving TNC vehicles and drivers IN TRANSIT or DURING A TNC TRIP."
If I read this correctly it covers a driver for the period after he or she accepts an electronic hail to the point and time when said driver drops off the customer. Lyft CEO John Zimmer has said he wouldn't show it to anybody because it was a totally unique policy that he didn't want imitated.
And, he's right about it being totally unique but it probably won't be imitated. There may be a reason why nobody has ever written a policy like this before. It doesn't appear to work.
For instance, the term "in transit" is vague. Does it just mean when a driver has accepted an electronic hail and not picked anybody up yet, or can it mean the time that the drivers spend driving around looking for business? It's impossible to tell from the wording.
It would also be impossible for the insurance companies to tell whether or when the TNC vehicles are being used for business, which is the main reason why insurance companies insist on commercial insurance for vehicles transporting passengers in the first place.
There could be a lot more said about said about this. My comments to the CPUC start here:
The
CPUC wrote in their decision:
“Each TNC
must maintain excess
liability insurance policies providing a
minimum of $1,000,000 (one
million dollars) per-incident coverage
for incidents involving TNC
vehicles and drivers
in transit to or during a TNC trip. The
insurance coverage must be available to cover
claims regardless of whether a relevant TNC
driver maintains insurance adequate to cover
any portion of
the claim.
We note that
the claim that
Lyft, SideCar, and Uber do not have insurance is false. The Commission's safety & The Commission’s Safety & Enforcement Division, in entering into settlement
agreements with these TNCs,
made sure that each of these companies maintained excess
liability insurance policies
providing a minimum
of $1 million per incident. We note
PIFC’s comments in
this Rulemaking, and
note that, even if
a TNC driver’s personal insurance does not
apply in the
event of an
accident, the excess liability insurance
required by the
Commission will apply.”
The
CPUC is to be congratulated for finally working out insurance agreements with
Lyft and SideCar since both corporations (especially Sidecar) claimed to have
million dollars policies in effect long before they actually did.
However,
I believe that there are two aspects of public safety that do not appear to be adequately
covered by these agreements.
1. The fact that all three TNC’s require both their passengers and drivers to sign terms & agreements that waive the right to receive compensation in case of negligence or an accident while riding in a TNC vehicle. As far as I know the TNC’s are the only forms of public transportation – be it bus, airplane, train, taxi or limo – where customers must sign away their rights to collect liability just to get into a vehicle.
·
Lyft’s Limitation
of Liability (1)
· IN NO EVENT WILL WE, OUR
SUBSIDIARIES, OFFICERS, DIRECTORS, EMPLOYEES OR OUR SUPPLIERS, BE LIABLE TO YOU
FOR ANY INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES (INCLUDING, BUT NOT
LIMITED TO, DAMAGES FOR DELETION, CORRUPTION, LOSS OF DATA, LOSS OF PROGRAMS,
FAILURE TO STORE ANY INFORMATION OR OTHER CONTENT MAINTAINED OR TRANSMITTED BY
OUR SERVICES, SERVICE INTERRUPTIONS, OR FOR THE COST OF PROCUREMENT OF
SUBSTITUTE SERVICES) ARISING OUT OF OR IN CONNECTION WITH LYFT, OUR SERVICES OR
THIS AGREEMENT (HOWEVER ARISING, INCLUDING NEGLIGENCE) EVEN IF WE OR OUR AGENTS
OR REPRESENTATIVES KNOW OR HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. WE DO NOT SCREEN THE PARTICIPANTS USING THE SERVICES IN ANY WAY. AS A
RESULT, WE WILL NOT BE LIABLE FOR ANY DAMAGES, DIRECT, INDIRECT, INCIDENTAL
AND/OR CONSEQUENTIAL, ARISING OUT OF THE USE OF LYFT OR THE SERVICES,
INCLUDING, WITHOUT LIMITATION, TO DAMAGES ARISING OUT OF COMMUNICATING AND/OR
MEETING WITH OTHER PARTICIPANTS OF LYFT OR THE SERVICES, OR INTRODUCED TO YOU VIA
LYFT OR THE SERVICES. SUCH DAMAGES INCLUDE, WITHOUT LIMITATION, PHYSICAL
DAMAGES, BODILY INJURY, DEATH AND OR EMOTIONAL DISTRESS AND DISCOMFORT.
·
Sidecar’s Limitation of
Liability (2)
·
·
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
IN NO EVENT SHALL SIDECAR, ITS AFFILIATES, AGENTS, DIRECTORS, EMPLOYEES,
SUPPLIERS OR LICENSORS BE LIABLE FOR ANY DIRECT, INDIRECT, PUNITIVE,
INCIDENTAL, SPECIAL, CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING WITHOUT
LIMITATION DAMAGES FOR LOSS OF PROFITS, GOODWILL, USE, DATA OR OTHER INTANGIBLE
LOSSES, THAT RESULT FROM THE USE OF, OR INABILITY TO USE, THIS SERVICE,
INCLUDING WITHOUT LIMITATION ANY RIDES FACILITATED BY THE SERVICE. UNDER NO
CIRCUMSTANCES WILL SIDECAR BE RESPONSIBLE FOR ANY DAMAGE, LOSS OR INJURY
RESULTING FROM HACKING, TAMPERING OR OTHER UNAUTHORIZED ACCESS OR USE OF THE
SERVICE OR YOUR ACCOUNT OR THE INFORMATION CONTAINED THEREIN.
·
TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
SIDECAR ASSUMES NO LIABILITY OR RESPONSIBILITY FOR ANY (I) ERRORS, MISTAKES, OR
INACCURACIES OF CONTENT; (II) PERSONAL INJURY, INCLUDING DEATH, OR PROPERTY
DAMAGE, OF ANY NATURE WHATSOEVER, RESULTING FROM YOUR ACCESS TO OR USE OF OUR
SERVICE (INCLUDING RIDES FACILITATED BY THE SERVICE); (III) ANY UNAUTHORIZED
ACCESS TO OR USE OF OUR SECURE SERVERS AND/OR ANY AND ALL PERSONAL INFORMATION
STORED THEREIN; (IV) ANY INTERRUPTION OR CESSATION OF TRANSMISSION TO OR FROM
THE SERVICE; (V) ANY BUGS, VIRUSES, TROJAN HORSES, OR THE LIKE THAT MAY BE
TRANSMITTED TO OR THROUGH OUR SERVICE BY ANY THIRD PARTY; (VI) ANY ERRORS OR
OMISSIONS IN ANY CONTENT OR FOR ANY LOSS OR DAMAGE INCURRED AS A RESULT OF THE
USE OF ANY CONTENT POSTED, EMAILED, TRANSMITTED, OR OTHERWISE MADE AVAILABLE
THROUGH THE SERVICE; AND/OR (VII) USER CONTENT OR THE DEFAMATORY, OFFENSIVE, OR
ILLEGAL CONDUCT OF ANY THIRD PARTY. IN NO EVENT SHALL SIDECAR, ITS AFFILIATES,
AGENTS, DIRECTORS, EMPLOYEES, SUPPLIERS, OR LICENSORS BE LIABLE TO YOU FOR ANY
CLAIMS, PROCEEDINGS, LIABILITIES, OBLIGATIONS, DAMAGES, LOSSES OR COSTS IN AN
AMOUNT EXCEEDING THE AMOUNT PAID TO YOU BY SIDECAR HEREUNDER OR $1,000.00,
WHICHEVER IS GREATER.
As
I pointed out in my initial comments (3), these terms print out to more than 20
pages at 12 point type and are impossible to read on a smartphone, meaning that
few passengers or drivers know, much less understand, the terms they signed.
Although these waivers of liability would probably not hold up in a court of law, they
have no place at all in the contracts of companies transporting the public.
They
also speak to the duplicity and dishonesty (4) with which Lyft and Sidecar
conduct their businesses and the need to closely regulate them.
2. The CPUC states that the $1million per incident insurance policies covers the drivers “even if a TNC driver’s personal insurance does not apply in the event of an accident, the excess liability insurance required by the Commission will apply.”
The
CPUC appears to assume that once said driver is no longer transporting TNC
customers and is driving the car for personal reasons that the driver’s
personal insurance would take effect.
However,
I believe that this that this is a misreading of the PIFC’s comments (5). The
PIFC was not talking simply about a “per incident” basis when they wrote,
“… the industry standard for personal auto insurance policy contracts is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a fee. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance would exist.”
“… the industry standard for personal auto insurance policy contracts is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a fee. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance would exist.”
The
PIFC DID NOT specifically write that that “no insurance would exist” only WHEN
or WHILE the vehicle is transporting passengers for a fee but IF the vehicle is
used for transporting passenger at all.
This
was clarified by the last sentence of the paragraph – one that the CPUC left
out in it’s ruling.
“Tracking if accidents have occurred involving such vehicles is difficult, as the insurer will not always have the knowledge that the passenger paid for transport.”
“Tracking if accidents have occurred involving such vehicles is difficult, as the insurer will not always have the knowledge that the passenger paid for transport.”
In
other words, since it’s often impossible to tell if a vehicle is being used
commercially at any particular time, it always must be insured at commercial
rates if it is used for commercial purposes at all.
This
is a standard insurance practice with taxicabs. If, for example, an individual
owns and operates a taxicab by himself, the vehicle still requires commercial
insurance even when the driver is using it for personal reasons like grocery
shopping or taking his children to see a doctor.
It
can be much more difficult tell whether a TNC vehicle is being used to
transport passengers then it would be for a taxicab because the TNC’s would
have removable markings. In addition, the CPUC’s description of when the TNC’s $1
million policies is vague and ambiguous.
Each TNC
must maintain excess
liability insurance policies providing a
minimum of $1,000,000 (one
million dollars) per-incident coverage
for incidents involving TNC
vehicles and drivers
in transit to or during a TNC trip.
But
what about the times that the TNC vehicles are neither in transit to a TNC trip
nor on such a trip? What about the times that they are working as a TNC
vehicles but don’t currently have a ride or hail? Are they covered by the
$1million policies at such times or not?
In
addition, if a TNC driver who carries only personal insurance causes an
accident, he may be covered for the liability by the $1 million but any
collision policy he might have would “not exist.” This could result in a severe
financial loss for the driver.
All
of the above naturally would lead to either the TNC’s or the TNC drivers to
giving false information about an accident. And, this would no doubt lead to
the general public picking up the bill in terms of higher rates for their
personal insurance policies.
Therefore,
the TNC vehicles should be required to carry commercial insurance in addition
to the TNC’s carrying $1 million per incident policies.
I’m
a former insurance underwriter and I think that insurance companies will soon require
commercial insurance for individual TNC drivers once they understand the
potential problems that I’ve mentioned above – if they are not doing so
already. It would be easier for all concerned if the CPUC would clarify the
situation by either requiring individual TNC drivers to carry commercial
insurance or requiring the TNC corporations to carry $1 million fleet policies listing all
drivers and cars covered like taxicab companies are currently required to do.
· Notes CPUC Final Comments
· 3. Ed Healy’s comments to Rulemaking 12-12-0011 Undercover at Sidecar and Lyft: 100,000
Uninsured Rides and Counting p10 & 11.
· 4. Ibid. p. 2-4, 8-11
· 5. Personal Insurance Federation of CA Comments to
Rulemaking 12-12-0011
