Dont Hail That Cab Insurance and Other Issues Surrounding Ridesharing Presentation to New York County Lawyers Association January 20 2015 Andrew R Holland Partner Insurance and Financial Services Practice ID: 769535
Download Presentation The PPT/PDF document "Don’t Hail That Cab: Insurance and Ot..." is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Don’t Hail That Cab: Insurance and Other Issues Surrounding Ridesharing Presentation to New York County Lawyers’ Association January 20, 2015 Andrew R. Holland, Partner, Insurance and Financial Services Practice
What is Ridesharing? Matching of people who need rides with people who have cars Through the use of mobile phone based apps May be on-demand or with others going the same route (riders or drivers)Different than carsharingLending of car to someone other than the owner for compensation 2
What is a TNC? Transportation network company An entity that uses a digital network to connect TN drivers to riders for the purpose of providing transportationDefinition of TN drivers includes use of a personal vehicleLegislation authorizing and regulating TNCs has been adopted in a number of jurisdictionsAn attempt to ensure safety while preserving ridesharing benefits Shifts many of the administrative burdens from drivers (who are not professionals) to the TNC itself (e.g., registration, vehicle inspections) Authorizes (and/or requires) procurement of an insurance policy by the TNC itself covering its drivers 3
How Did Ridesharing Evolve? The concept began with college ridesharing boards and organized car pooling Lyft’s founders also recognized the terrific waste of capacity Most car trips are solo driversTechnology allows this extra capacity to be put to useNow competes with traditional taxi and livery servicesEvolution from one driver – one passenger on demand service to preset destination and multiple passengers 4
How is Ridesharing Different than Taxi and Livery Service? The majority of ridesharing drivers have other full or part time employment Not “professional” drivers Majority drive 10 – 15 hours a weekDo not have commercial auto coverage, commercial driver’s license or commercial vehicle registration 5
Three Stages of Ridesharing Activity The app is turned on in order to receive passenger requests A passenger request has been accepted and the driver is on their way to pick up the passenger The driver is transporting the passenger to a destination6
Why Is Insurance an Issue? Insurance is always an issue when property and liability are at risk Activity at issue is a hybrid between personal and commercial exposure ISO personal auto policy excludes liability arising out of a vehicle being used as a public or livery conveyancePart-time, independent contractor nature of drivers and exposures may make individual underwriting inefficient and uneconomicTo date, only the non-admitted market has addressed the need for coverage Underlying activity being insured raises legal and regulatory issues at both the state and municipal level Risk of cancellation of driver’s personal lines policy 7
What Are the Insurance Issues? Does the driver’s personal auto policy cover any of the three periods?If the TNC provides coverage for drivers –Is this a permissible group for P&C coverage?Must the carrier be admitted in all states? Rate and form filings?Is the TNC “selling” insurance to its drivers? Does it matter whether there is a charge to drivers (or passengers) for coverage? Is a producer license required? Are drivers required to take the insurance coverage? If multiple policies, interplay of no-fault coverage 8
How Are Ridesharing Drivers Insured? Personal lines policies Endorsement to add coverage for ridesharing activity Individual commercial policiesTNC procured coverageMay be on a contingent or excess basisSpecial considerations with respect to coverage for period one 9
How is the New York Market Different? In New York City, Lyft operates “Lyft Pro,” using drivers licensed by the Taxi and Limousine Commission Professional drivers, holding commercial licenses, driving cars with commercial vehicle registrations and carrying their own insurance coverage NYC TLC minimum financial responsibility requirement is $250,000; Lyft’s policy offers $1 million in other states 10
Lyft’s Entry into the New York Market Lyft began operating in Buffalo and Rochester, NY in April 2014. Lyft announced plans to enter the NYC market in July. NYDFS contacted Lyft to discuss insurance related concernsThe NYC TLC, NYDFS and NYAG filed for a TRO/PI against Lyft.That litigation has been stayed; Lyft’s upstate operations have been suspendedLyft presently operates in NYC under a TLC model Lyft is exploring options for operating under its traditional peer-to-peer model in New York 11