The concept of using a personal auto for something other than personal use is not new. Perhaps your son or daughter found summer employment at the local pizza parlor and handles its deliveries, or for additional income you have a daily newspaper route and use your own car for transportation.
Believe it or not, you likely need to extend your personal auto insurance policy coverage to include these activities or be provided coverage under the commercial auto policy of the business that compensates you for such services.
The line between business and personal insurance coverage is not always clear. When personal and business uses of a vehicle converge, coverage confusion is sure to arise.
A more recent and innovative example of extending the use of a personal auto has taken off in dozens of states and hundreds of communities. Transportation Network Companies (TNC), such as Uber, Lyft and Sidecar, employ drivers for an innovative approach to public transportation. Through an app connection, passengers are linked to drivers who use their own cars for transporting customers. Passengers pay for the ride through their credit card on file with the ridesharing company.
Innovative, most certainly, with positives that far outweigh the negative, such services could:
- Curtail the number of DUI-related crashes
- Provide a much-needed transport service alternative to those who may find it difficult in their current market
- Offer a new stream of employment opportunities
Regulation of rideshare services across the nation
The safety of TNC customers, drivers and their vehicles is typically in the hands of local/city government who regulate local transportation service operations. Many of the safety issues relate to insurance, whether directly or indirectly, which has led to the insurance industry stepping up to help educate local governments to ensure that passengers, drivers and even pedestrians are provided with the necessary insurance protection for every TNC what-if situation that might arise.
In some parts of the country, instituting statewide regulations may also be an option such as in California and Illinois. Some states like Ohio have home rule laws that may prevent or limit statewide regulatory activity. In such states, the focus is on educating local officials and residents on insurance coverage needs as ridesharing proposals and ordinances surface.
TNC activity in Ohio
Ridesharing services have launched in several Ohio cities including Columbus, Cleveland, Cincinnati and Toledo.
Earlier this year, the Ohio Department of Insurance (@OHInsurance) issued a consumer alert highlighting potential insurance gaps for Ohioans serving as TNC drivers.
The insurance industry and their trade associations have made themselves available to local officials to provide insurance guidance as they develop regulations for technology-driven transport services.
New Columbus regs
On July 21, Columbus City Council passed regulations regarding the operation of peer-to-peer transportation network companies and their drivers. The city ordinance becomes effective 30 days from its approval. While city officials were thorough in efforts to ensure most safety aspects, the Ohio Insurance Institute (OII) (@OIIOrg) and Property Casualty Insurers Association of America (PCI) (@PCIAA) share concerns for the potential gap in insurance coverage, which could lead to costly and unnecessary litigation.
How to best address potential insurance gaps
As both OII and PCI note in their statements, primary coverage is the responsibility of TNCs during any and all business-related activity involving their drivers.
To best address possible gaps in coverage, the commercial auto insurance policies of Uber, Lyft, Sidecar and other ridesharing service providers should apply from the ‘app on to app off’ activities of their drivers. This is the best way to alleviate questions regarding coverage protection for a TNC driver while in the process of securing his next customer or a pedestrian who may be accidentally injured during the process.
Cities and states that take this comprehensive approach while developing their peer-to-peer transport ordinances will better meet the ultimate goal of insuring the safety of all who are enjoy the added convenience of an app-driven ride.
Provided courtesy of Ohio Insurance Institute