Uberx, Sidecar & Lyft Blow More Smoke

Today's lesson in sophistry comes from the dynamic TNC trio's defense of requiring their customers to sign terms or agreements waiving their liability rights ( The Warmth of the "Sharing Community" vs Lyft & Sidecar's Terms of Service) before being allowed to ride or drive in one of their vehicles.

As I've said before, excluding space travel, Uberx, Sidecar & Lyft offer the only forms of public transportation – bus, shuttle, taxi, limo, airplane or train - where passengers and drivers must waive their rights to collect compensation for negligence before getting into a vehicle. 

TNC spokesmen, while not addressing my statement directly, give four main arguments in favor of compelling their customers to sign these agreements: 

1. That the terms are standard for software companies.
2. That the TNC'S are app and not transportation companies.
3. That the liability limitations only apply to software problems.
4. That taxi apps like Flywheel and TaxiMagic also have similar terms for their passengers to sign.

Number One 

The argument is that because somebody else does something it's cool for you to do it too. (i.e. "Why should I have insurance? He doesn't.") Here the argument goes that because software firms deny liability to their customers, it's okay for Uber, Sidecar & Lyft to do the same. This, of course, avoids the question of whether or not this is a good idea at all. There are two ways in which I think it is not:

1. This is essentially a way to avoid taking responsibility for a companies' services or products. There was a time when companies were proud of their creations and backed up the quality of the things they made with guarantees. This is clearly not the case in today's "innovative" software world.

 Thanks to the TNC trio, I've started reading terms and agreements before I download anything and it's not a pretty picture. Almost all computer based companies – Apple, Adobe, Netflix, etc –  do indeed deny liability for most forms of negligence on the part of their products, services or employees.

 How does this work out in practice? A friend of mine spend three years traveling, researching and writing a book that ended up on a Mac Air. Her computer froze and the password was forgotten. It turns out that Apple will not allow the owner of a Mac to re-set her or his own password.

Since there was no way to override the password, we took her Mac to Apple's "Genius Bar" and asked them, three separate times, not to do anything that might erase the data. They said that this was extremely unlikely to happen but made my friend to sign an agreement that waived liability before they would do any work. They also promised to avoid using any procedure that might lead to losing her data. Then, the "geniuses" took the computer and erased her book.

Of course it could be argued (and repeatedly has been by her) that my friend should have backed up her work. In addition, she has recovered some earlier versions from other places and there is a possibility that people smarter then Apple's "geniuses" may be able resurrect the book.

Nonetheless, it was Apple's bizarre rule of not allowing Mac owners to re-set their own passwords that ultimately lead to the destruction of my friend's data.  Grounds for a suit?

2. In any case, the obvious difference between Apple's and Uber, Sidecar & Lyft's denial of liability is the fact that the TNC's expose their customers, not to data loss, but to injury or death – conditions from which people don't always recover.

Number Two 

The TNC'S claim that Uberx, Sidecar & Lyft are just software companies that connect passengers and drivers. 

I think the easiest way to dispute this is to note the difference between taxicabs and (for the moment) the illegal passenger transportation networks run by the dynamic trio.

Legal taxicabs will be on the streets of San Francisco regardless of whatever app or dispatching service they may or may not be using.

TNC vehicles ONLY WORK THROUGH TNC APPS. 

If the Uberx, Sidecar & Lyft apps did not exist, the TNC vehicles would not be rushing around in traffic. They'd just be private cars, mostly parked at home.

Number Three 

The TNC's came up with the argument that their limitations of liability only apply to the TNC customer's software especially for the CPUC's Party Meeting. At least I hadn't head it before.

All I can say is that this not clear from reading the TNC's terms and conditions. 

Does this sound like the TNC'S are ONLY talking software?

1. YOUR USE OF THE SERVICE.
2. 
   
3. SIDECAR DOES NOT WARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR ANY RIDE YOU REQUEST OR PROVIDE THROUGH THE SIDECAR SERVICE, NOR DOES SIDECAR WARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR ANY PROPERTY DAMAGE, INCLUDING TO YOUR VEHICLE, PERSONAL INJURY, UP TO AND INCLUDING DEATH, THAT OCCURS AS A RESULT OF THE RIDE OR YOUR USE OF THE SERVICE.

Or this?

LYFT HAS NO RESPONSIBILITY WHATSOEVER FOR THE ACTIONS OR CONDUCT OF DRIVERS OR RIDERS. ... RESPONSIBILITY FOR THE DECISIONS YOU MAKE REGARDING PROVIDING OR ACCEPTING TRANSPORTATION REST SOLELY WITH YOU. IT IS EACH RIDER AND DRIVER’S RESPONSIBILITY TO TAKE REASONABLE PRECAUTIONS IN ALL ACTIONS AND INTERACTIONS WITH ANY PARTY THEY MAY INTERACT WITH THROUGH USE OF THE SERVICES. LYFT MAY BUT HAS NO RESPONSIBILITY TO SCREEN OR OTHERWISE EVALUATE POTENTIAL RIDERS OR USERS. USERS UNDERSTAND AND ACCEPT THAT LYFT HAS NO CONTROL OVER THE IDENTITY OR ACTIONS OF THE RIDERS AND DRIVERS, AND LYFT REQUESTS THAT USERS EXERCISE CAUTION AND GOOD JUDGMENT WHEN USING THE SERVICES. DRIVERS AND RIDERS USE THE SERVICES AT THEIR OWN RISK.

But, then, I'm not a lawyer.

Number Four

The TNC smoke about Flywheel and Taxi Magic's terms and conditions being similar to their own is true but misleading. The difference is the difference between a legal taxi and the illegal cabs sent out by Uberx, Sidecar & Lyft. 

San Francisco taxicabs are already fully insured for $1,000,000 with primary insurance by the taxi companies. And, the driver is protected by Worker's Compensation.   If a taxicab driver is negligent and in some way harms a customer or a pedestrian, the customer is clearly covered by the company's insurance. Therefore it is unnecessary (and might be confusing) for taxi apps to also cover the same taxis.

The vehicles used by TNC drivers, on the other hand, are privately owned and covered by personal liability insurance with coverage that can be as low as $15,000 – $30,000. Furthermore, the drivers are falsely told by Uberx, Lyft & Sidecar  (in the words of the later), "Because this is ridesharing, special insurance is not required..."

However, the Personal Insurance Federation of California (PIFC) at the hearings on ridesharing last spring stated, "The issue before the CPUC is not ridesharing, but instead using a private passenger vehicle in a livery service. This is clearly not covered under a standard policy; if an accident occurs, coverage would not exist." 

(BTW. Despite the fact that the CPUC has since agreed with the PIFC's position, the TNC trio continue to give their new drivers the same fraudulent information.)

Uberx, Sidecar & Lyft, of course, now have their famous $1 million excess liability policies with coverage that "... begins when a Sidecar (etc) driver has accepted a ride through the passenger app and continues until the passenger exits the vehicle at the end of the ride."

The excess policies do not cover collision. Nor do they cover the driver or any third party like a pedestrian while he or she working as a TNC but doesn't have a customer. 

Uberx, Sidecar & Lyft have led the public to believe that the TNC driver's personal insurance will automatically take over the moment the driver drops off the customer. This is almost certainly not true for two main reasons:

1. When the TNC driver is looking for rides, he or she is still working as a commercial driver and thus: "If an accident occurs, coverage (under a personal liability policy) would not exist."
2. More important, not to mention more interesting, is the fact that personal liability insurance companies almost certainly will not insure a vehicle for personal liability if it is being used as a commercial vehicle at all.

This is based on a truism culled from hundreds of years of insurance underwriting experience. The truism question in goes, "If people can cheat, some of them will."
(See News From the Lyft Lounge).

It would often be impossible to tell if a TNC vehicle was being driven commercially or not. In the words of the PIFC, "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." Or, I might add, looking for a passenger to transport.

In any case, I researched the question (see next post for details) by asking 10 different insurance companies if they would write personal insurance for Uberx, Sidecar & Lyft vehicles if they were covered by a $1 million per incident excess insurance policy. All the companies I talked to said that they would NOT write personal insurance policies for Uberx, Sidecar or Lyft vehicles – excess insurance policy or not.

This puts the TNC driver in the bizarre position of being insured ONLY while he transporting passengers. And, his personal insurance appears to be voided the moment he or she agrees to do so.

There is also a conflict between the limitations in TNC's terms of service and the $1million policies that Uberx, Sidecar & Lyft do provide

 "DRIVERS AND RIDERS USE THE SERVICES AT THEIR OWN RISK,"Lyft Terms.

SIDECAR DOES NOT WARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR ANY RIDE YOU REQUEST OR PROVIDE THROUGH THE SIDECAR SERVICE, NOR DOES SIDECAR WARRANT, ENDORSE, GUARANTEE, OR ASSUME RESPONSIBILITY FOR ANY PROPERTY DAMAGE, INCLUDING TO YOUR VEHICLE, PERSONAL INJURY, UP TO AND INCLUDING DEATH, THAT OCCURS AS A RESULT OF THE RIDE OR YOUR USE OF THE SERVICE.

What do we believe? The assurances of CEO's John Zimmer and Sunil Paul that their insurance policies (insurance policies that they will allow nobody except the CPUC to see or read) will cover everything and everybody; or, do we believe the limitations that Zimmer and Paul's own attorneys have written into the terms that they require all their customers to sign?

In any case, excluding space travel, Uberx, Sidecar & Lyft continue to offer the only forms of public transportation – bus, shuttle, taxi, limo, airplane or train - where passengers and drivers must waive their rights to collect compensation for negligence before getting into a vehicle. 

100,000 Uninsured Rides and Counting: In Good Hands with Lyft and Sidecar?

No matter what you may think of insurance companies, they are the best b.s. detectors in contemporary culture - out of necessity. Millions, if not billions, of their dollars depend upon the precise definition of words.

When I applied for positions as a "community driver" at Lyft and Sidecar, representatives of both companies told me that I didn't need commercial insurance because they were "not commercial enterprises." I called ten top rated insurance companies and asked them if they agreed with this statement. Not one of them did.

Progressive and All State would consider insuring my car as a business or commercial risk if I drove for Lyft or Sidecar. Geico, State Farm would not insure the car at all if I did so.

While it's true that auto insurance companies are required to cover a "vehicle used in an ordinary carpool on a ridesharing or cost sharing basis," none of the insurers I spoke with consider what Lyft and Sidecar do as ridesharing.

My Geico representative described ridesharing as "people sharing a ride back and forth to work or to an event or to the same location." The cost of the ride should be shared equally by passengers and driver. If the driver made a profit on the ride, it did not make any difference to her if you called the payment a "fee" or a "voluntary donation." A USAA rep simply said that he would not cover a car if it "transported individuals."

In comments to the California Public Utilities Commission, the Personal Insurance Federation of CA, which represents six of the largest insurance companies in the U.S. and who collectively insure the majority of personal lines auto insurance in California, explained the position of its members on the subject:

"It appears that the industry standard for personal auto insurance ... is to exempt from insurance coverage claims involving vehicles used for transporting passengers for a charge. Thus, in situations where a vehicle is insured as a private vehicle and is used to transport passengers for a fee, no insurance coverage would exist."

 " ... The issue before the CPUC is not ridesharing, but instead using a private passenger vehicle in a livery service. This is clearly NOT covered under a standard policy; if an accident occurs, coverage would NOT exist." (My capitalization.)

In short, the information that Lyft and Sidecar are giving their drivers and customers is false. If the vehicles using their apps do not have business or commercial insurance they are not insured and neither the drivers or the customers are covered if they are hurt in an accident.

What Million Dollar Guarantee?

Journalists have consistently missed the point about Lyft's and Sidecar's lack of insurance. But on September 4, 2012, reporter Zusha Elinson from the online paper, The Bay Citizen, wrote an article contrasting the low limits ($15,000-$30,000) of personal liability insurance to the $1,000,000 liability limits required of San Francisco taxicabs.

On September 6, 2012, Lyft and Sidecar announced that they too would provide their drivers with $1,000,000 liability insurance.


Lyft said that they would carry "excess liability per occurrence with an A++ insurer."

Sidecar offered a guarantee instead of insurance.

"The Guarantee provides for up to $1,000,000 in damages for covered losses in the event of an incident. These payments are subject to certain conditions, limitations and exclusion, the details of which can be found in our Program Terms available from Sidecar upon request."

"The Guarantee is not insurance and should not be considered as a replacement or stand-in for primary automobile insurance. The Guarantee does not cover certain excluded losses."

Both these policies (or whatever they are) would be what are often called umbrella policies because they would go into effect above the limits of the vehicle's existing insurance. If, for instance, an injured party was awarded $100,000, the driver's policy might cover the first $30,000 and the umbrella would cover the remaining $70,000.

Since few, if any, of Lyft and Sidecar's vehicles would actually be covered with "existing insurance" per state law, this raises a few interesting questions:

If a Lyft or Sidecar driver does not have the required commercial insurance and thus has no insurance, would the umbrella, the excess liability or the Guarantee, take effect at all? If they did, the driver would still be responsible for the first $30,000 or so in a bodily injury accident. If the umbrella did not take effect then the driver would be responsible for everything.

Given that people who use their own cars to make extra money aren't likely to have $30,000 handy, both the "excess liability" policy and the "Guarantee" are meaningless PR gimmicks.

Tracking down the Million Dollar Promises

During my three minute interview at Lyft, I asked their rep what A++ insurer provided the policy and if I could get a look at it. She told me with annoyance that no one had ever asked her that question before. I then asked her if she'd read the policy. My question clearly struck her as impertinent. "No," she snapped. "You can get it from the CEO."

This turned out to be a problem because Lyft's Facebook page showed no link to CEO John Zimmer. I did find a Facebook post from a speech he gave on transportation and asked my questions as a comment. When I checked back later, both Zimmer's post and my questions had disappeared.

I then wrote to Lyft and once again asked the name of the insurer and if there were any conditions or exclusions.

The next day I received this response from Lyft Admin:

"We appreciate the time you've taken to explore the Lyft community. We approve drivers through an ongoing assessment of several criteria including customer service orientation. At this time, we are adding you to our wait list and may contact you in the future as the community expands."

I'm still waiting for the name of that A++ insurer.

I found Sidecar's Guarantee on their webpage, clicked a link and asked to see the details of their conditions, limitations and exclusions.

I didn't get answer so I asked the same questions during orientation at Sidecar U three days later. The instructor referred me to Sidecar City Manager Chris Dally who gave me his card and assured me that he could answer my questions.

I called him the next day and asked about the exclusions.

"I'm not too familiar with what exclusion you're talking about," Mr. Dally said.  "... It is a little bit of legal speak in there ... It's pretty standard for terms and agreements and things like that ... The things I point you to are the terms of usage ... We'll let you know ... So I want to make sure you're feeling comfortable and again no driver should be doing this if they feel uncomfortable ..."

I asked if the Guarantee was an insurance policy.

"It's a guarantee," he said.

"Who guarantees it?

"It's a guarantee."

I followed up with an e-mail asking about the exclusions the next day.

Dally wrote back giving me the original support link where I'd started.

I tried it again. This time a guy name Max wrote back, also referring me to the original link and added:

 "I have forwarded this to our legal team to get more information for you regarding the Program Terms. You should hear back from us soon."

I'm still waiting.

Conclusion

The CPUC claims to have looked at Lyft's million dollar insurance policy and signed off on it - whatever that means. But CPUC apparently is not sharing this policy with anyone else at this time. In any case, as I've pointed out above, the policy is meaningless unless Lyft's drivers are already covered by commercial insurance.

The link to Sidecar's million dollar Guarantee can no longer be found on either the Sidecar webpage or their blog. This is appropriate because the "Guarantee" clearly never truly existed in the first place.