Insurance Commissioner Teresa Miller Wednesday urged potential drivers for services like Uber and Lyft to consult with their insurance companies to ensure adequate coverage for themselves and passengers.
Transportation network services Uber and Lyft are licensed to operate in Pennsylvania, except for Philadelphia, and Yellow Z is licensed in Allegheny County, but Insurance Commissioner Teresa Miller cautioned drivers the changing insurance market for these services could leave gaps in their coverage.
“Recently, some major insurance companies have started offering insurance specifically for drivers for these transportation network companies (TNCs), and the TNCs themselves are required in Pennsylvania to offer some coverage when passengers are in the vehicles,” Miller said. “Still, there could be serious gaps in coverage which could leave drivers liable for significant costs and other legal issues in the event of a crash.”
The Public Utility Commission has granted Uber, Lyft, and Yellow Z two-year licenses for experimental service. Under these licenses, the PUC has defined four stages of TNC activity:
• Stage 0 is when the driver is driving for personal reasons and the App is closed;
• Stage 1 is when the driver opens the App and is logged onto the system;
• Stage 2 is when the driver receives and accepts a ride request and is traveling to pick up the passenger;
• Stage 3 is when the driver picks up the passenger, drives the passenger to the destination, and the passenger exits the vehicle.
In Stage 0, when the driver is using the vehicle for personal purposes, the driver is covered only by his personal auto policy. The TNC’s commercial policy will not provide any coverage in this Stage.
“The situation is much less clear once the driver opens the App and logs onto the system through the time a passenger leaves the vehicle,” Miller said. “So, it is vital for the driver’s protection that he inform his personal auto insurance company he is driving for a TNC, and carefully review both his personal auto policy and the TNC’s commercial coverage.”
In Stages 1, 2, and 3, the TNC’s commercial auto policy will be the primary insurance coverage, regardless of any insurance the driver has. Most personal auto policies exclude coverage for drivers involved in TNC activity through what is commonly called the ‘livery exclusion.’
TNC drivers should verify if their policy contains this exclusion. In fact, TNCs must ensure that their drivers at the time of sign-up agree to contact their personal auto policy company about the use of their personal vehicles for TNC service.
“The Public Utility Commission requires Uber and Lyft to clearly and adequately inform drivers, in writing, of the levels of coverage provided during Stages 1, 2, and 3,” Miller said. “However, the TNC may provide less coverage, lower limits, and/or higher deductibles than the driver’s personal auto policy.”
Miller said there are several important questions drivers should ask of their personal auto policy insurance company, including:
• Does my policy exclude coverage while driving for a TNC?
• If my policy does cover me while driving for a TNC, exactly what coverage is provided under these circumstances?
In addition, there are questions drivers should ask concerning insurance coverage provided by the TNC, including:
• What are my responsibilities, and whom should I contact in the event of an accident during Stages 1, 2, or 3?
• Does the TNC commercial policy provide comprehensive and collision coverage, or just liability coverage in case someone is injured?
• What are the coverage limits?
• What are the deductibles?
Miller added drivers with loans on their vehicles need to know the TNC’s commercial coverage may not comply with the lender’s requirements. This could result in the driver paying for what is commonly referred to as “forced-placed insurance.” This is an insurance policy a lender gets to protect its interest in the borrower’s automobile. The cost of this policy is passed on to the borrower, and these policies are generally more expensive than the driver’s personal policy.
“The insurance market, while still evolving, is showing signs of accommodating TNC drivers in this growing industry. But, drivers need to make sure they understand the coverages, limits, and deductibles that apply during various stages of TNC activity, and make sure they have adequate coverage,” Miller said.A list of questions TNC drivers should ask is available online.