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Information & Education for the Ground Transportation Industry
Information & Education for the Ground Transportation Industry

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Uber’s Florida fight: Whose insurance pays and when
Posted: 2:44 p.m. Friday, March 13, 2015


By Charles Elmore - Palm Beach Post Staff Writer


The case of a 6-year-old girl killed on New Year’s Eve highlights what insurers say is a knotty problem for proposed Florida legislation to regulate booming ride service Uber, which just won a temporary operating agreement in Palm Beach County.

“The last thing Ang Jiang Liu saw before her daughter died was a driver looking down at his cellphone,” plaintiff attorney Christopher Dolan in California told The Palm Beach Post. “Lives are at stake. I’ll come to Florida and tell them how bad it is. It’s that dangerous.”

Sofia Liu was struck and killed on a San Francisco crosswalk on the last day of 2013. Lawyers for her family assert she was hit by an Uber driver who was logged on to the company’s smartphone application but was still awaiting a request to pick up a rider. In the business, this is sometimes called “period 1.” Among the questions in the ongoing case: Was the driver on the job and, therefore, Uber’s responsibility? Or was he, as Uber argued, not an employee but covered at that moment only by his personal car insurance policy?

The trouble is, some groups representing insurance companies in Florida say, many personal auto policies exclude “livery” service, meaning accepting money to give rides. They see a “gap” in a bill that passed a state House subcommittee Tuesday, HB 817 sponsored by Rep. Matt Gaetz, R-Shalimar.

Gaetz told The Post Friday, “It’s no surprise Big Insurance wants force a massive insurance mandate.”

Only after a driver agrees to accept a rider does a minimum of $1 million in liability coverage apply, the bill says.

Before that, the measure says, drivers who have logged on but not accepted a request for service must meet lower requirements for private motorists under state law — $10,000 liability for injury to one person and $20,000 for two or more. Gaetz said the bill does provide for a ride service’s coverage to kick in if the driver’s insurance will not pay.

“If somebody is sitting in their car with an open app, I have yet to be convinced that activity requires more insurance than anyone else on our roads,” Gaetz said.

California imposed minimum requirements for “period 1” coverage after a hard-fought legislative battle last fall, but the bill that has made the most progress so far in Florida’s legislative session needs amending, insurers say.

“We must close the gaps in coverage to ensure the public and the driver are protected throughout the entire time the vehicle is being used for hire,” said Logan McFaddin, state government relations counsel for the Property Casualty Insurance Association of America.

Uber’s thriving business model has attracted more than 10,000 “partners” or drivers in South Florida alone, Florida general manager Matt Gore said.

Gore said the company wants “common-sense regulation” that preserves choice and competition for consumers.

Ride services like Uber and Lyft have attracted throngs of enthusiastic users and drivers in Florida, even before rules to govern the emerging industry have been entirely worked out. Users say the service tends to be cheaper than cabs and provides faster and more reliable response especially in places like Loxahatchee or the Acreage. They say it lets users see a picture of the driver on their phones, track the progress of routes and rate drivers. Uber backers say its innovative business model should not be shackled with excessive regulation to protect an entrenched taxi industry that resists competition.

It’s a mistake to let Uber evade safeguards that protect consumers and the public, others say.

“It’s time to deflate the tires on this hell-on-wheels idea,” said Walter Dartland, executive director of the Consumer Federation of the Southeast. “It’s unwise and dangerous to ignore the risk that consumers face from barely regulated service providers.”

Taxi services raise another issue: They say Uber uses an insurance carrier that isn’t backed by a state fund to cover claims if it fails. Remote possibility? No, because it’s a risky business and nine insurance companies covering vehicles for hire in Florida have become insolvent in the last 24 years, and several were A-rated before they went under, said John Madiedo Jr., president of Professional Insurance Center Inc. of Tampa. He says his firm provides coverage for about 60 percent of taxi services in Florida.

As he tells it, state law requires vehicles for hire to use an “admitted” carrier whose claims are backed by a state guaranty association, so if carriers fail claims are still covered. But Uber’s use of “surplus lines” insurer James River Insurance Co. could leave claims unpaid if the insurer fails, Madiedo said.

“The insurance issue is a public safety issue,” said lawyer-lobbyist Neil Schiller, representing Yellow Cab of Palm Beach County.

Uber officials responded James River has strong financial ratings and “admitted” carriers generally do not offer the coverage they need.

San Francisco-based Uber says it stands ready to provide $1 million liability coverage when a driver is on the way to pick up or carrying a rider, but argues for limited backup coverage during “period 1” when it says a driver’s personal policy should take precedence.

“It’s the same as waiting at home for temp work,” Gore said.

But exactly when Uber drivers are on the job has sometimes been a disputed question.

Attorneys for Liu’s family in California say the driver was using the app and acting in “an agent and/or employee and/or partner” of the company.

Uber makes money on empty cars waiting for customers because that is the product it sells — available rides, Dolan said. He argues Uber should carry $1 million in coverage from “app on to app off,” more like taxis.

“Their whole product requires distracted driving,” he said.

The way the business works actually makes period 1 the most dangerous time, Dolan contends. Drivers have to be watching their apps to respond to service requests quickly or risk losing the fare, and some race to get to areas where “surge” prices are in effect for bad weather or other special conditions, he said.

He urged Florida legislators to set limits on the hours drivers can work because it’s not uncommon for some drivers to guzzle energy drinks and go all day or night, presenting a safety risk. Dolan also said the state should not to allow drivers to work for more than one service at one time — Uber and Lyft, for example — because responding to multiple apps when they should be looking at the road only raises safety risks and makes it more difficult to sort out whose insurance coverage should apply.

Taxi representatives rolled Denver TV footage at a Palm Beach County commission meeting Tuesday that seemed to show Uber drivers violating rules forbidding them to pick up ”street hails” or accept cash, and requiring them to pick up only customers who use the app. If Uber isn’t required to meet insurance standards more like those of taxis, they argued, it means Uber can fail to police its own drivers yet escape financial responsiblity for harm they might cause.

The Property Casualty Insurance Association of America says it supports an amendment to HB 817 by Rep. Bill Hager, R-Boca Raton. It requires a transportation network company not only to provide $1 million in liability coverage once the driver has accepted a request for service, but also liability coverage of $125,000 per person and $250,000 per incident from the instant the driver has logged on.

The Hager amendment was withdrawn last week but McFaddin’s group and others representing insurers want to see it taken up again. Gaetz said he will meet with Hager, who is also sponsoring a stand-alone bill, HB 757, yet to be heard in committee. A Senate bill by state Sen. Jeff Brandes, R-St. Petersburg, SB 1326, also awaits a hearing.

Hager said he has the Uber app and has used the service himself, and describes his proposal as neither pro- or anti-Uber but “virtually identical to the bill that passed and became law in Uber’s home state of California” last fall.

It is important that drivers for companies like Uber “understand their standard personal auto policy contains a ‘livery’ exclusion, which applies when the vehicle is being used for hire,” McFaddin said. “Therefore, most personal insurance policies will not cover any damages or losses if a vehicle is being used for commercial purposes.”

Answers from individual companies have varied somewhat.

Allstate spokeswoman Cathy Mayo said a customer’s personal policy does not provide coverage for transportation network drivers during period 1.

State Farm spokeswoman Michal Brower said drivers are covered under period 1 but her company supports legislation “that would provide clarification.”

The Personal Insurance Federation of Florida, whose charter members are State Farm, Allstate and Progressive, said it seeks legislative action to clear things up. One issue it wants to examine: Who has a duty to pay when both the ride service and driver have policies.

“Private passenger auto coverage is not intended to provide an indemnity for commercial activities, such as ‘trolling’ for fares or carrying passengers on a for-hire basis,” said executive director Michael Carlson.

By a 4-3 vote, Palm Beach County commissioners last Tuesday approved a deal that lets Uber operate through Sept. 30, but several officials said they hoped state lawmakers resolve insurance and other regulatory questions that would apply across Florida. The 60-day state legislative session ends in early May.

“I do hope the state takes it up and they pass it because that would take it out of our hands,” said county commissioner Priscilla Taylor, one of the yes votes on the deal.

From California, Dolan said Florida should not let Uber wriggle out of accountability.

“They don’t want to take responsibility when a car without a passenger hurts somebody,” Dolan said. “It’s the most arrogant company I’ve ever seen.”

http://www.mypalmbeachpost.com/news/news/ubers-florida-fight-whose-insurance-pays-and-when/nkWSg/#9009a067.257680.735670 

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Uber riders beware. Latest Security concern regarding the ride share company.

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