Q: “I see a lot of news about Uber and other Internet car services concerning insurance. I just saw that Uber added a $1 safety fee to their charges. What is this for?”
A: Gerrard, your question is very timely. The issues you have raised are currently being debated at the Board of Supervisors, state Legislature and California Public Utilities Commission. The CPUC is charged with protecting consumers and ensuring safe, reliable utility service and infrastructure at reasonable rates through regulation.
On Dec. 20, 2012, the CPUC took up the task of trying to define and regulate these new services, opening up a proceeding to evaluate their safety and encourage innovation in transportation. You can search “CPUC rideshare 12-12-011 order” on the Internet for a full listing of the proceedings and orders.
On Sept. 23, the CPUC issued an order stating that companies such as Uber, Lyft, Sidecar and others, labeled as transportation network companies, were not merely apps for ridesharing. The CPUC said that pursuant to Public Utilities Code Section 5360, the TNCs were in the business of transporting passengers in exchange for compensation. The CPUC also declared that they were common carriers, meaning that they owed passengers the “highest degree of care,” which is greater than the degree of care owed by people who are driving their private vehicles not in commerce. The CPUC also put in place many safety requirements such as driver screening, initial vehicle inspection, etc. The CPUC set up a second phase, now underway, to discuss the issues of insurance.
As part of the 2013 order, TNCs were required to maintain insurance policies with a minimum of $1 million in per-incident coverage for incidents involving vehicles and drivers while they are providing ride services. Uber and the other companies read this as narrowly as possible, claiming that this only applied when either a driver had a passenger in the car or when a driver accepted a request for a ride.
Then on Dec. 31, Sophia Liu, her mother, Huan, and her brother Anthony were run over about 8 p.m. at the intersection of Ellis and Polk streets by an UberX driver who was logged on to the system but didn’t have a passenger in the car. Sophia died from her injuries and her mother and brother were seriously injured. Uber immediately stated that the driver was not carrying a passenger at the time and, therefore, despite the fact that he was signed on to the app, he was not “providing transportation services.” Uber denied any and all responsibility for the incident.
As a result of the Liu tragedy, it became apparent that the public needs greater protection and that clarity in the scope of insurance coverage is needed.
Currently, the CPUC has opened Phase 2 of the proceedings on insurance.
Two bills were introduced in the Assembly, AB 2293 and AB 2224. AB 2224 would require TNC drivers to carry commercial insurance at all times and AB 2293 would require TNC companies to maintain $1 million in coverage from app sign-on to sign-off.
These bills would provide coverage for those injured not only when drivers are engaged with a customer (as desired by the TNCs), but also those injured in any manner, whether they be pedestrians or other drivers, while the driver is engaged in commercial activity. AB 2224 would do it through a requirement that commercial insurance be purchased for the vehicle (like a taxi), while AB 2293 would cover the entire period that the driver has the app open. This is the position advocated by the insurance commissioner, the Consumer Attorneys of California and all of California’s insurance associations. I am participating in these hearings and I have become a party to the CPUC proceedings in an effort to promote safety and accountability of TNCs.
The $1 safety fee is Uber’s way of passing off the cost of doing business to the consumer. Many find this troubling as Uber keeps its 20 percent profit off the cost of a ride while shifting the cost for safety to its drivers and customers. I think in the absence of Uber paying for safety out of its profits, it is a necessary and reasonable fee to protect the passenger, and the public, from the inevitable injuries these services are causing daily on our city streets. If you don’t want to pay extra for safety, I suggest that you take a cab as the cost of insurance is built into taxi rates.
Christopher B. Dolan is owner of the Dolan Law Firm. Email questions to firstname.lastname@example.org.