Ask Your Peers  Uber, Lyft and other "Ridesharing" Companies (Closed)

I have been reading quite a bit in the news about Uber and other ridesharing companies. I have been doing some of my own research in my area of NJ and these companies are present here. My question is: How can these companies be categorized as "ridesharing" companies when the majority of the people that have told me about using the service are the sole passengers in the car(s)? To me, the word "ridesharing" is just a guise to cloak what these services really are. You can call them what you want, but they are car services, limousine services or taxis. The name is just their way of circumventing the law that applies to "for hire" vehicles. It's not fair to the people in the passenger transportation business to allow these "ridesharing" companies to operate outside the laws that are there to protect the public. Stop arguing that Uber is creating jobs in NYC, when they are taking jobs away from those that are and have been operating legally in the "for hire" business.

A recent decision by the Department of Labor regarding independent contractors looks like it will hit these ridesharing companies and hit them hard forcing them to treat the drivers as employees and if so, may force them to provide benefits to their employee base.

I'm all for progress, but not at the expense of hurting the infrastructures in place and not protecting the general public from harm.

Anthony:

You can do with your car whatever you want. The third party involved is what I am talking about. PAP don't cover most of them, others are operating illegally and the drivers are often unchecked for criminal activity on a national basis. NYC already forced Uber to buy a radio base to continue to operate in the 5 boros, so they had to comply. CA has forced them to treat the drivers as employees.

I for one would not out my son or daughter in any Uber or other ridesharing car. There are no controls as to who is actually driving the vehicle. the only control Uber has is that there is a person at the other end of a smart phone that is driving the car. For all they know if could be a convicted felon who is the cousin of the person who signed on with Uber.

Once enough of the banks get stuck with uncovered losses, things will change as well.

We have around 20 carriers and all but 1 when you do the application it ask the question do they do any ride sharing or taxi service. If you answer No on it and they are I guess they could refuse to pay a claim then its your butt and your E&O. I put all of my Uber drivers with the company that doesn't ask that question. They might pay a little more but you didn't lie on the application

I'm surprised that on an insurance based website you don't mention insurance coverage. I asked a Uber driver if he had any special insurance. He replied nothing extra was required. If there is an accident and they have state minimums who pays your medical bills, lost wages etc?

I was involved with the changing of laws for ridesharing in Kansas. Google is your friend and see the issues. I've used Uber a few times and like the service.

I think that Uber as well as other companies that offer this service is just a representation of what America has become. Lets pay more for something because it is convenient. I think that it is a great concept, but if you look at what the cost, you are paying more than what you would pay taking a taxi.

There are many gaps in the coverage that Uber offers as well. Coverage is only triggered when someone uses an app and typically in this industry "hailing" a cab is typically done. According to Uber's contract, the only time their insurance is triggered is when the app is used, so this "hailing" of a vehicle would not provide coverage. So what happens to the passenger. PAP policies do not cover for "business" purposes. In my state, the city requires companies that write Taxi Cabs to pay regardless of fault in order to protect passengers in this case, but you are allowing Uber drivers, who many have no professional driving experience, to drive other people around for pay.

Also, Uber starts out with the "black car" service, and then quietly rolls out their Uber X, which is the car service who lets individuals use their personal car for pay. I insure several Uber drivers and it cracks me up. Many of the taxi cab owners had to go out and purchase new vehicles in order to comply with city requirements. It was hard for them, but they did it, then the city allows Uber to come in. Uber owners did not care about the taxi owners as it was dog-eat-dog for them. Then Uber X comes out and is competing against their own Uber'black car" service, and I am now listening to the Uber "black car" owners complain that they went out and purchased new cars and Uber X does not. Seems like they don't like what they serve out.

Uber is in a great position. They blanket the marketplace and win no matter what. It is like you own all of the restaurants in town. it does not matter what restaurant you go to because you own them all. I do think that the taxi cab industry has a bad name, some of it is deserved, but they need to be given a chance to be on the same playing feild as Uber, which they are not.

Very well said Brian.
As for the insurance side, Brian touched on it. There really inst strong insurance in place and Joel is right, the courts will eventually figure this all out.

I feel for the taxi companies. They have to spend ridiculous amounts of money just to offer the same service.

But the thing that really scares me is the 1099 aspect of employment that Uber is driving. As we all know in insurance, there are plenty of people who are "employees" but they are paid 1099 so the employer doesn't pay any payroll tax, social security tax or Work Comp insurance. Great for the business owner, crappy for the individual doing the work. When I was on the carrier side, we struggled constantly with nail salons and restaurants that wouldn't purchase WC insurance because they paid all the employees on a 1099. What happens to that 1099 contractor when they slip on water and blow their back out because someone was careless and left water on the floor? I use Uber and I like it but I really don't like the 1099 thing and I think Uber is really pushing that hard.

Good point Anthony,

In Louisiana, Taxi owners are not required to carry WC coverage, but to get around being designated as "taxis", the City Council labeled Uber drivers as "Limos". Limos are required to carry WC coverage. When I brought this up at a City Council meeting, they all looked at each other and mumbled and stated that they would talk about this and get back at a later meeting. That was 3 months ago.

I know that there are some really good Uber owners out there, but I am sure not one that wants to be involved in an accident and with my luck, find out that they do not have coverage because of a loophole. I think that the one thing that Uber has done and gotten the attention of the taxi industry that change needs to happen. When people are willing to pay more for a service that surely tells you something.

From an insurance standpoint, it would make sense to require Uber drivers to obtain some sort of commercial coverage. They are operating on a for hire basis. I would assume most of these "new commercial" drivers probably don't carry higher insurance limits, for one most Uber drivers are attempting to supplement their income and are probably strapped financially and as a result skimp on insurance protection. Secondly there is really no oversight to what drivers limits are, we know as insurance professionals there would be no coverage from their personal auto policy if involved in an accident due to the commercial nature of the service. The conviencence of Uber dulls our intuition that if something bad were to happen would this drivers insurance protect its passengers. It is a great service which I have used on many occasions, and have experienced different levels of drivers some with nice new vehicles and others I was hesitant to enter their vehicle. Once the insurance industry realizes this service isn't going any where they could establish a specialty niche policy that at a minimum requires Uber drivers 500csl of coverage. It would certainly be fair for Uber to pay into this insurance fund since they are raking in 100's of millions of dollars without the liability exposure of its hired help.

Great comments by all here. Luckily my agency does not write personal lines, so I don't have to have every policyholder notified of the possible circumstances should they use their vehicles to do ridesharing.

I do have some limo companies I insure they use Uber and others to subsidize their business, but many have said that they may not continue with it as the $ they receive is not enough to cover expenses, especially the short rides. Some have reported getting $8 to take someone 15 miles to work in NJ. Their other complaint is that the riders input false ratings on their drivers to try and get "free or discounted rides". Some drivers have reported that the riders have offered extra cash if they disobey the speed limits or traffic signs and get the riders to their destination quicker. The ones that refused received poor ratings. So much for being a professional.

ISO has developed a few forms already to address this issue and it should be available online if anyone needs them.

I guess if you want cheap, you get cheap and what you deserve for that price. I'd rather take my family in a luxury vehicle to the airport or show than save $25 and ride in a Hyundai!

Here is a link to the ISO forms for PAP. I have no idea what carriers or states are doing this so far.

http://www.iamagazine.com/news/read/2015/06/12/iso-files-new-pap-ridesharing-endorsements

In Kansas, there is a requirement for comprehensive and collision insurance for drivers with the lien on their vehicle. This is on top of the million dollar coverage for the liability. The drivers also have to pass a minimal back ground check and finger printing.

My experience is that the uber rates charged are competitive with cabs. I've only used the service in D.C. and Amarillo. YMMV.

Why all the complaining about the problems with Uber's insurance coverage? I notice that a lot of you mention BAP policy versus PAP and the scope of coverage. You're all correct. Nobody has mentioned the fact that Progressive Commercial will cover Uber and Lyft drivers under their standard BAP. While it may not be approved in your state, it will be coming to your state soon.

The reality is that these markets are not going away. Instead of focusing on the perils associated with ridesharing, look for coverage solutions. Publicize yourself for being the odd duck. That way, each of you become the specialist in your individual market and sell these properly protected people.

Imagine the story you could tell if your Progressive Commercial policy took precedent over an Uber policy.

@David, I agree.

The issue I haven't figured out though is most the drivers I talk to will do this for a month or two in the summer (teachers off for the summer), and others who do it for "fun" when they feel like it. There is no stability to have long term customers, and no desire from the drivers to pay more. Many of them don't even realize they are making minimum wage when they take out self employment taxes and wear and tear on car, and gas.

Lastly, all the drivers I talk to do not care about the risk they take, and take Ubers promise to pay as good enough.

Joel has hit the nail on the head. These drivers don't care, it's a hobby and they'll all be out of business. The only fat cat is ride share companies. No money in it for the long term and too much work and exposure to boot. Good luck to those of you who want to write these risks.

Hi joel:

Do you use these people for your food trucks ? https://mfvinsurance.com/

They have a great program.

As someone pointed out above, this is as American as apple pie, at least it fits in with what America has become. it's the 'gig economy' where you get paid only for those exact times you work. no benefits, no unemployment, no health coverage, and not enough money to support a family even if you did it full time. meantime the taxi's, at least in NY, are heavily regulated, and their charges are set so that they have a chance to make a living wage and have some protection for the hundreds of thousands it costs to buy a taxi medallion in NYC.

and indeed the same is happening in other industries. what your opinion is can vary, but the fact is that the music industry has been decimated, the hotel industry is now being upset by AirbNb, retailers are closing because the folks selling out of their garage or basement on ebay and amazon don't have the overhead.

like anything else, some of this is very good for the consumer in terms of keeping prices down etc. but we are getting to the point that the average person is now FORCED to look for these 'bargains' because wages have been stagnant for 20 years now. it's a race to the bottom, and the only winners are a few big corporations.

"meantime the taxi's, at least in NY, are heavily regulated"
We, as agents, get in taxis all over the country and don't give insurance a thought. PAP with Uber got me questioning what coverage the taxis carry. I started asking taxi drivers what they had to carry. What a surprise. NY only requires 100/300 (and a lot of other places are the same). For a place w high income people riding in taxis constantly, imagine their shock if they are seriously injured and find out there is only 100,000 coverage. I suffered a shoulder injury when hit by a DUI and ended up with over 85,000 in medical bills. That was a reality check.