Illinois Rideshare Bills Vetoed; Insurance Groups Urge Override

By | August 27, 2014

Illinois Gov. Pat Quinn has vetoed legislation that would have imposed statewide regulations on commercial ridesharing companies, also known as transportation network companies (TNCs).

Quinn said he vetoed House Bill 4075, also known as the “Uber bill,” because it would have prevented local governments from adopting rules that fit their respective communities.

“The principle of home rule is an important one,” Quinn said in an announcement released by his office. “I am vetoing this legislation because it would have mandated a one-size-fits-all approach to a service that is best regulated at the local level.”

Quinn pointed out that transportation services traditionally are regulated at the local government level and HB 4075 would have limited the ability to adopt local alternative approaches to regulation.

He cited as an example the ordinance that was passed in Chicago, which governs public safety requirements for ridesharing companies and includes regulations on licensure, insurance, background checks, vehicle inspections and operating hours for drivers. That ordinance was to go into effect on Aug. 26.

Quinn also vetoed another ridesharing regulation related measure, House Bill 5331. In his veto message for both bills, Quinn said it is premature to enact a statewide regulatory model for rideshare companies.

“At this point there is not yet enough evidence to make a judgment about the effectiveness of local ordinances in dealing with the challenges of ridesharing technologies,” Quinn said in the veto letter addressed to the Illinois House of Representatives.

TNC drivers use their personal automobiles to transport riders. Customers use smart phone apps to order rides through companies such as Uber X, Lyft, Sidecar and others.

The Illinois Transportation Trade Association, a lobbying group for the taxicab industry, supported the legislation establishing statewide regulations for rideshare companies and has filed suit against the city of Chicago over its ordinance, which the association says doesn’t go far enough.

The bills aimed to address a perceived gap in insurance coverage – when a TNC’s commercial insurance policy is in effect and when a driver’s personal auto policy prevails.

HB 5331 would have required rideshare dispatchers to “carry commercial liability insurance in the amount of $350,000 combined single limit per accident.”

HB 4075 would have provided that the private passenger auto “insurer of a motor vehicle used in a commercial ridesharing arrangement may deny coverage during the time the vehicle is made available for dispatch or used in a commercial ridesharing arrangement.” It also would have required that commercial rideshare drivers and vehicle owners be made aware of that provision.

HB 4075 had 10 sponsors in the House and nine in the Senate. HB 5331 had three House sponsors and one one in the Senate. According to the Associated Press the measures’ sponsors are considering a possible override vote.

That’s something insurer groups that supported the legislation would like to see happen. The Illinois Insurance Association and the Property Casualty Insurers Association of America said they are disappointed about the veto of the bills, which they say would have protected consumers by closing the gaps in insurance coverage that leave drivers, passengers and the public vulnerable if an accident occurs.

“PCI is deeply disappointed in this veto because it is vitally important that the vehicles used by commercial ride-sharing services are properly insured and the public is protected,” Jeffrey Junkas, Illinois regional manager for PCI, said in a statement released by the organization. “These bills sought to create a comprehensive, uniform statewide approach to protecting consumers and provided a firm foundation for innovation. They offered clear insurance rules that don’t leave policyholders or accident victims in the lurch because of coverage disputes. They also would have helped to avoid the creation of a confusing and costly patch work of local regulations.”

Kevin Martin, executive director of the IIA, said his group welcomes new transportation choices but that “consumer safety is of utmost concern. We supported the provisions in the state house bills as they would have helped to prevent all Illinois drivers from subsidizing the riskier driving activities of a small number of drivers and the companies that facilitate these programs.”

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