By Kevin L. Connors, Esquire
Recently, the Pennsylvania Insurance Department issued an alert, urging drivers for services like Uber and Lyft to contact their insurance companies and insurance agencies to insure that the drivers and their passengers are adequately covered in terms of appropriate insurance policies and limits.
The Pennsylvania Department of Transportation has issued licenses to both Uber and Lyft, allowing the services to provide personal transportation services to customers, although the services have been excluded in Philadelphia and Allegheny County.
The alerts by the Pennsylvania Insurance Department affect regional offerings by insurance companies, that are providing transportation network companies (TNC’s), to offer automobile insurance coverage when drivers are transporting passengers for fees.
The concern is that there might still be some serious gaps in insurance coverage, leaving drivers exposed for significant costs and other legal issues in the event of an automobile accident.
Operating under experimental licenses issued by the Pennsylvania Public Utility Commission (PUC), the PUC has identified four stages of TNC activity:
- Stage Zero, is when the driver is driving for personal reasons and the TNC App is closed;
- Stage One, is when the driver opens the App and is logged onto the system;
- Stage Two, is when the driver receives and accepts a ride request and is traveling to pick up the passenger; and,
- Stage Three, is when the driver picks up the passenger, drives the passenger to a destination, and the passenger exits the vehicle.
In Stage Zero, the driver is covered by their personal automobile insurance policy, as the use is personal. The automobile policies offered by insurers for TNC purposes do not provide any coverage to the driver in this stage.
Less clear, is what coverage applies when the driver opens the TNC App, through which a passenger fare is applicable, being the passenger’s exit from the TNC-accessed ride. In that stage, it is critical for the driver to contact his/her auto insurance carrier, in order to insure TNC coverage, as well as adequate coverage in the event of an accident.
In Stages One, Two and Three, the TNC commercial automobile insurance policy is the primary insurance coverage, trumping the driver’s personal automobile insurance policy. As is well known, most personal automobile insurance policies exclude coverage for fare-related TNC transportation.
Obviously, insurers seek separation between personal and commercial use, in terms of the available coverage given the risk factors involved.
The TNC exclusion under personal automobile insurance policies is typically referred to as the “livery exclusion”.
As for the TNC’s, they are supposed to make sure that their drivers, when executing a sign-up agreement, have contacted their personal automobile insurance carriers, about using their personal vehicles for TNC services.
In Pennsylvania, the PUC requires TNC companies like Uber and Lyft to clearly and adequately inform their drivers, in writing, as to the levels of coverages provided during the various stages of TNC activity.
However, the PUC leaves it up to the TNC company to determine how much coverage needs to be provided, meaning that the TNC might require their drivers to carry less coverage, for TNC transportation, than the drivers might have already secured under their personal automobile insurance policies.
In the context of TNC transportation, insurance carriers might be asked by their policyholders to address:
- Does my policy exclude coverage while driving for a TNC?
- If my policy does cover me while driving for a TNC, exactly what coverage is provided under those circumstances?
Conversely, TNC drivers should question the TNC companies as to:
- What are my responsibilities, and whom should I contact in the event of an accident during Stages One, Two and Three?
- Does the TNC commercial policy provide comprehensive and collision coverage, or just liability coverage in case someone is injured?
- What are the coverage limits?
- What are the deductibles?
For the above reasons, it is critical for all stakeholders to understand what coverage is available, as well as what happens in the event of an accident.
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