Notes Uber's Comments on the Assigned Commissioner's Ruling

I wasn't able to read all the comments on the Proposed Modifications to Commissioner Peevey's CPUC Decision 13-09-45 on TNCs. Therefore I decided to restrict myself to making a few comments on Uber's comments.

My format will be:

First, I'll quote a passage from Uber's lawyers then I'll give my comment. The result will be the sort one-sided dialogue that you can find on Uber's website or in their online magazine Tech Crunch. Except – here I get the last word.

(Note: You can find an update on how safe (not) it really is to ride with Uber in an end note.)



1 Uber writes:

“The Assigned Commissioner’s Ruling (“ACR”) seeks comment on whether providing TNC services should be modified to include the period ‘when the TNC app is open and available to accept rides from a subscribing TNC passenger until that app has been closed.’ 

Adoption of this modification would result in a significant expansion of the period in which the TNC insurance requirements would be required.” (My underline.)

My comment: 

Yes – that’s the intention. As it is now, Uber's claims that their "Excess Liability Insurance" does not cover their TNC vehicles when their drivers are looking or positioning themselves for rides but have yet to connect with a customer. Since Personal Liability Companies don't cover vehicles used for commercial purposes, Uber's TNC vehicles are uninsured during that time. Therefore,  the costs of accidents occurring during this period are currently being picking up by the general public and by the victims.

Uber writes:

“… extending the Commission’s TNC third party liability insurance requirements of $1 million of coverage  … is contrary to public policy and is not warranted for the protection of TNC passengers, drivers and the general public.”

My comment:

Whose public policy? Not warranted? Tell that to the family of Sophia Liu. But, then, Uber already has.

Uber writes:

"TNC drivers differ from taxicab drivers and TCP drivers in one material respect – they operate their private vehicles. … By contrast, TNC drivers necessarily engage in personal activities, as well as TNC transportation activities, with the same vehicle."

My comment:

Forty percent of San Francisco taxicabs are owned and operated by individual drivers. They also use their vehicles for shopping and other personal activities. In addition, many TNC drivers work five or six days a week.

Uber writes:

“It is undisputed that no TNC insurance coverage is required for the period where a TNC driver is using his or her vehicle solely for personal use. During such personal use period, the driver must comply with the state insurance requirements for private vehicles and maintain at least the minimum insurance coverage required under the law.” (My underline)

My Comment:

Undisputed? Jon Brooks of KQED writes,

"During my reporting last year, I contacted the American Automobile Association and Allstate to see if they’d insure me for the personal use of my car if I also wanted to use it for transporting paying passengers as a TNC. Both said they wouldn’t.

'If they discover that your car’s being used that way, then that’s going to raise the red flag for any claim,” an Allstate broker told me. “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."”

The American Insurance Association (AIA)  writes,

"AIA recommends that a TNC must maintain a commercial auto policy for TNC vehicles, and that there not be shifting between personal and commercial policies. ..."

"Any test or bright line, such as the app open/app closed test, will not be indicative of the full risk involved because TNC drivers will be putting extra miles on vehicles, and commercial usage is not contemplated for personal automobile policies.  Also, there will be instances where any test or bright line will not be clear and result in litigation as parties dispute when an incident took place.

Personal automobile policies are not intended to cover commercial activities, and are underwritten to reflect personal usage risk.  The increased use of vehicles in commercial activities, and additional risk resulting therefrom, is not contemplated. Personal auto policy holders should not subsidize commercial vehicle usage."(My underlines.)


Finally, I called a total of 14 top rated insurance companies on two different occasions and not one of them would write a personal insurance policy if the vehicle was being used to transport customers at any time at all.

Uber writes:

"... the Commission should consider the following scenarios:

1. Driver has contracted with multiple TNCs and keeps all applications open at all times, in order to maximize the likelihood of procuring a request for transportation.

2. "In a world where the TNC insurance coverage of $1 million commences at the opening of the App, Driver keeps the App open at all times regardless of the driver's intent to accept a request for transportation services."

My comments:

1. Uber is saying that it would hard to tell which company would be responsible if the driver used multiple apps. But there is really no problem. 

It's illegal to text on one cellphone while driving much less on two, three or four. The potential for distraction accidents in such a scenario is mind-blowing. No intelligent insurer would knowingly underwrite a vehicle in such a situation. In an accident with multiple companies involved, the most likely scenario is that nobody would pay.

In any case, driving with multiple apps open in an obvious danger to the public.

The possibility of a TNC using multiple apps was not contemplated by the Commission in the original ruling. Therefore I suggest that the CPUC now rule that one TNC vehicle cannot be used by more than one TNC company.

2. This is an imaginary reversal of the way many TNCs operate now.  Uber, Sidecar and Lyft drivers routinely hide or take off their logos while working so that their personal insurance will cover them in the case of an accident and so they won't be turned into their insurance companies by cab drivers with cameras.

However, Uber does underline the impossibility of knowing for certain when a TNC is being used commercially or not. In addition, a certain number of TNC drivers pick up flags or regular customers in order to avoid paying the TNC companies their percentage. Therefore the only realistic solution is to require commercial livery insurance for all TNC vehicles at all times.

The California Department of Insurance (CDI) writes:

“Underlying these findings and recommendations is the conclusion that as long as TNCs are encouraging non-professional drivers to use their personal vehicles to drive passengers for a profit, a risk for which personal automobile insurance is not available, TNCs should bear the insurance burden.”

"The only solution to cover this insurance gap, short of mandating personal lines insurance cover it, is to have the TNCs (the companies) bear this risk. CDI concludes that personal auto insurers should not be mandated to cover a risk which associated with the business model of the TNCs."

Uber writes:

“Finally, extending the proposed modifications of the ACR to Uber is premature. In the TNC Decision, the Commission deferred issues regarding whether Uber should be regulated as a TCP to Phase 2 of the proceeding. No proceedings have yet been convened to consider this issue and no decision issued. As a result, it would be premature and unfair for the Commission to extend the proposed modifications of the ACR to Uber without due process.”

My comments: 

Due process my derriere! This obviously is a nuisance suit designed to help Uber avoid following regulations. Or, as I once put it in reference to Uber's compatriots, if it looks like a duck and walks like a duck will it quack if you call it a dog?

In any case, Uber is arguing that they are merely a technology company and that they do not provide transportation services. Since they brought the subject up ...

1. Unlike many of Uber's limo drivers, TNC vehicles would not be driving around trying to pick up passengers without the apps.
2. Uber personally interviews the drivers before letting them download the app.
3. Uber vets the drivers (superficially), checks that they have valid drivers' licenses and personal liability insurance.
4. Uber requires their drivers to undergo a training session before they can use the app.
5. Uber sets the percentage that a driver can keep from a ride.
6. Uber refuses to let their drivers accept tips.
7. Uber sets the prices for the customer (and thus their own profits) based on distance, time and hocus-pocus.
8. Uber subjects their customers to "surge pricing" (i.e. price gouging) whenever they can get away with it.
9. Uber sends their drivers to difference areas of the city at different times of day depending upon the amount of business in these areas.
10. Uber keeps a sizable support staff to keep track of both their drivers and the amount of business in different areas (i.e. where to surge.)

Uber actually takes much more control over their drivers than a cab company does. Cab companies will only fire a driver for at fault accidents, major customer complaints or a bad driving record.

Uber will fire drivers for those reasons but in addition they also will fire drivers,

• If they fail to pick up a high enough percentage of rides that are sent to them by their app. (Thus directly effecting Uber's profits.)
• If the drivers are not likable enough to score 4.7 on a 5.0 gregariousness scale.

In short, the burden of proof for "NOT being a transportation company" clearly falls on Uber. 

And, oh yes – Uber is now charging its customers a $1 "Safe Rides Fee" to pay for background checks and insurance. They win a point on this one. No other transportation company does that.

Wonder when the safe background checks are gonna start?

End Note:Update on Uber safety:

In case you haven't seen the investigations done by NBC on Uber's dubious safety record (which includes hiring drivers with criminal backgrounds and falsely telling their drivers that they do not need commercial livery insurance when they driver for Uber) here are links to,

http://www.nbcbayarea.com/investigations/Is-Uber-Keeping-Riders-Safe

http://www.nbcchicago.com/investigations/Ride-Service-May-Pose-Risk-to-Passengers

http://www.nbclosangeles.com/investigations/Risky-Ride-Uber-Investigation

There is some overlap but each clip contains addition information on how dangerous riding in an Uber really is.