D.C. Taxicab Commission Releases Recommendations on Ridesharing Services
by Tom Simmons
Ridesharing services such as UberX, Lyft, and Sidecar have been getting a lot of attention in the press lately. Ridesharing services are essentially just taxi services with a technological twist without the regulations ensuring passenger safety. They utilize smartphone apps to connect car owners (usually amateur drivers) with people looking for a ride. The potential passengers drop a pin showing their location, and any drivers logged into the app respond, pick up the potential passenger, and ferry them to their destination.
These ridesharing services only started operating in the D.C. area early last year, but have quickly gained a strong following of city-dwellers who have sworn off traditional cabs completely. Because of the open questions surrounding the service’s liability, it would benefit anyone utilizing these services, or anyone representing someone injured in a collision involving s ridesharing vehicle to pay attention as these questions are answered.
Ridesharing services hold themselves out as merely a booking service, whose only function is to connect people seeking a ride with people available to give rides. They specifically claim not provide transportation services in an attempt to avoid any of the regulatory requirements that come with such a designation. If they are not providing transportation services then they do not have to worry about driver training, or worry about being liable for injuries sustained in a collision with a ridesharing vehicle, and most importantly, they don’t have to purchase insurance coverage for the ridesharing vehicle. A recent case filed in San Francisco seeks to hold Uber liable where an Uber driver struck and killed a pedestrian, while waiting to pick up a passenger. Indeed, when the discussion has turned to requiring ridesharing services to purchase insurance coverage for ridesharing vehicles, the companies have adamantly stated that such a requirement would put them out of business, and that it is the driver’s responsibility, not theirs, to obtain adequate insurance coverage.
Add to this mix that ridesharing services attempt to preemptively limit its liability by requiring users to waive any potential claims against them as part of its terms and conditions, and you are setting up anyone injured in a collision involving a ridesharing vehicle for a long and complicated legal battle. A provision taken from Uber’s terms and conditions, but similar to those provided by other ridesharing services states:
You acknowledge that third party transportation providers providing transportation services requested through uberx may offer ridesharing or peer-to-peer transportation services and may not be professionally licensed or permitted… You expressly waive and release the company from any and all liability, claims, causes or action, or damages arising from your use of the application or service, or in any way related to the third parties introduced to you by the application or service.
The biggest concern I have with these services is that they are connecting passengers with amateur drivers, who likely are only carrying personal automobile insurance. This is problematic because personal automobile policies contain a livery exclusion, which excludes coverage for injuries sustained while the vehicle is being used for hire. This means no insurance coverage for passengers. In the event of any injuries, the driver’s insurer is going to immediately deny coverage leaving the injured party looking to the ridesharing services, which have made clear they are going to resist any attempt at being held liable for injuries caused by a ridesharing vehicle.
Ridesharing services have been operating in the D.C. area since early last year, and like most cities where these services have launched, D.C. is playing regulatory catch up. In September 2013, the Council enacted The Emergency Act, which allowed ridesharing services to operate temporarily in the District if they:
Submit proof that they are licensed to do business in the district, maintain a registered agent, and maintain a website with contact information, and
Maintain an excess liability insurance policy that provides a minimum of $1 million per incident coverage for accidents involving a ride sharing vehicle and operator in transit or during a ride-sharing trip.
These requirements were only meant to be temporary until permanent ones could be implemented. The D.C. Taxicab Commission also created a panel to study the issue and recommend regulations for ridesharing services. The panel released its report on January 24, 2014. In addition to dealing with how to ensure a level playing field between ridesharing services and taxicabs, the report focused on driver selection and and insurance coverage requirements. Some of the recommendation dealing with insurance coverage and liability are:
The owner of the vehicle maintains insurance in compliance with private motor vehicle insurance requirements,
The ridesharing services maintains an umbrella policy with a minimum of $1 million per incident coverage per accident regardless of whether the driver maintains insurance adequate to cover any portion of the claim,
Require the umbrella policy to cover the vehicle and driver while in transit, while signed into the app, or otherwise providing service,
The ridesharing service must conform its terms and conditions must conform to the circumstances that must be covered by the umbrella policy, and make no other effort to disclaim liability that must be covered.
These recommendations, if implemented, would help ensure that ridesharing services are delivered in a safe manner, and that there is sufficient insurance coverage to protect people injured by ridesharing vehicles. Even though D.C. currently requires ridesharing services to have excess liability coverage, it is not clear exactly who would be covered, or when the coverage would trigger – the issue in the case out of San Francisco is whether the coverage kicks in as soon as the driver logs into the app, or not until a passenger is physically in the car. What is clear is that the ridesharing services have shown that they will aggressively resist being required to purchase insurance and has shown an unwillingness to cover people injured while using the service unless forced do so either through litigation or regulation.
Because of how new these services are, and the lack of regulatory guidance where they are currently operating, there are still many unanswered questions regarding liability insurance coverage, and what will happen once the regulatory bodies have a chance to catch up. I’ll definitely be keeping an eye on this as D.C. decides how to best regulate these new ridesharing services. Although they also also operate in certain areas in Virginia and Maryland, these states haven’t taken any action yet. This could be leaving people involved in a collision with a ridesharing vehicle – whether a passenger, pedestrian, bicyclist, or other driver – completely uninsured.