For much of the past year, we at R Street have been active in trying to promote reasonable, effective compromise on ride-sharing regulations. The goal all along has been to arrive at a model that allows transportation network companies like Uber, Lyft and Sidecar to operate, ensures that basic coverage requirements are met and preserves the greatest possible flexibility for new insurance products to come to market that meet the needs of this emerging risk.
If the rumblings we’re hearing from a number of state houses across the country prove to be accurate, we’re about to see a major step in that direction.
Today, we learned from sources familiar with the deal that a joint legislative framework for ride-sharing insurance requirements will be supported both by Uber and by State Farm, Farmers, USAA and the American Insurance Association. (Lyft may also soon join the deal). The model already has been discussed in ongoing legislative debates in Tennessee, Maryland, Washington state and Kansas and could be expanded to debates in more states in the coming weeks.
According to 2014 SNL Financial data, State Farm, Farmers and USAA combine to write 33.7 percent of the private auto market in Kansas, 31.5 percent of the market in Tennessee, 31.3 percent of the market in Washington state and 28.2 percent of the market in Maryland. State Farm is also a major writer of commercial auto insurance in all four states, as are a number of AIA members, such as Zurich and Travelers.
Under the model, primary insurance coverage would have to be in-force during all three periods of the ride-sharing experience, including the hotly contested “Period 1,” during which a driver is logged in to the TNC application but has not yet matched with a fare. Required liability limits during that period would be $50,000 in per-person bodily injury, $100,000 in per-incident bodily injury and $25,000 in physical damage.
The model would recommend state law be agnostic about whether the coverage is procured by the TNC, the driver or a combination thereof, so long as consistent terms are applied. That’s a provision we at R Street are particularly happy to see, as the roll-out of new insurance products targeted toward TNC drivers – particularly to cover Period 1 – has been rapidly accelerating. Just this past week, Geico announced plans to introduce its end-to-end TNC product to the Maryland market, one of the states where the model could gain traction.
The coverage limits in Period 2 (when a driver is en route to pick up a passenger) and Period 3 (when a driver is actually traveling with a passenger) would match those currently required of limousines in each state. Importantly, this would mean that comprehensive and collision coverage would not be required, as recently has been proposed in some states.
Insurers also would be ensured a right to subrogation, in cases where they feel they paid out a claim that ought not have been covered. That provision, one hopes, would reduce significantly instances of upfront claims denials, instead moving such disputes to litigation between a driver’s personal insurer and the carrier offering coverage to the TNC.
We haven’t seen the final language, as yet, but this has to be considered good news, both for the health of the insurance market and for the emergence of these exciting new service platforms.
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