Commentary: Florida’s New Ridesharing Law Could Set Up Coverage Disputes

As the Sunshine State continues to attract millions of visitors each year who share clogged highways with commuters traveling throughout its ever-evolving metropolitan hub, it is no surprise that Florida has embraced ridesharing as one of the natural progressions of transportation options.

We have come a long way from when the rules were “Don’t get in strangers’ cars” and “Don’t meet people from the internet” to literally summoning strangers from the internet to get into their cars.

However, these drivers are part of a “virtual” workforce of ridesharing companies, also referred to as Transportation Network Companies (TNC’s) like Uber and Lyft. Aside from the driver’s name, picture, make, model of the driver’s car and license plate number, what else do you need to know? What if you get into an accident during the ride? Who is responsible for medical bills arising from any injuries sustained?

On July 1, 2017, Florida legislators enacted a new law, Florida Statute § 627.748, imposing new insurance requirements for ridesharing companies. The law also provides for new requirements for auto insurance coverage that impacts TNC’s and personal auto insurance companies. The statute provides up to $1 million in coverage for those involved in an accident. With such high coverage at stake, auto insurance companies may be exposed to a new wave of litigation.

Although on its face the statute seems straightforward, given the proliferation of TNCs, it threatens the insurance industry with a potential flood of litigation – not only between TNCs and/or TNC drivers and the TNC driver’s personal auto insurance policy, but also among insurance companies themselves.

Additionally, the statute permits TNC’s to lawfully classify their drivers as an “independent contractor” and not an “employee” of the TNC, which raises the question, which insurance carrier is responsible for the insurance claim should you get into an accident during the ride?

The statute poses many implications which include, but are not limited to, an insurance company’s inability to coordinate benefits or subrogate from workers’ compensation policies and the possibility that at times coverage requirements may exceed or extend the existing coverage carried by the TNCs and the TNC drivers.

The statute also stablishes minimum coverage requirements for TNCs. Most importantly, it mandates that such coverage must be primary and not dependent on the TNC driver’s personal auto insurance coverage.

Florida, being a no-fault state, requires all individuals who own a motor vehicle to have personal injury protection coverage (PIP). The new statute, however, states that insurance companies “may” deny coverage, including PIP, to TNC drivers. The caveat is that the statute allows the statutory exclusion of coverage only while the TNC driver is logged on to the TNC’s app or while on a prearranged drive.

This exclusionary language in the statute provides personal auto insurance companies with a way to decline coverage for the specific accident without having to cancel the TNC driver’s policy even if the personal auto policy does not reference such exclusion to coverage.

Nevertheless, while the statutory exclusion may seem to relieve the personal auto policy’s duties and liability, the statutory language includes ambiguities that may lead to much uncertainty in its application and potential litigation over coverage. As such, it may be wise for personal auto insurance companies to contemplate adding endorsements or revising their policy language based on this new law.

Given the statute’s wording and possible implications, it is recommended that insurers obtain legal counsel to determine if their existing policy language exposes them to further litigation because of the new statutory insurance requirements; or, in the alternative, if they should amend the policy language to minimize exposure.

Overall, the legislature’s attempt to mandate minimum insurance requirements for TNCs and their drivers throughout Florida will likely create coverage disputes. In the next couple of years, it will be interesting to see how TNCs, insurance companies, and the courts interpret the language of the new statute.

Reprinted with permission from the August 10 issue of Daily Business Review. © 2017 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.