Will Your Car Insurance Rates Go Up Thanks To Lyft and UberX?
Tomorrow, the Colorado Senate will hear the second reading of Senate Bill 125, a proposed bill that would regulate Transportation Networking Companies (TNCs) like Lyft and UberX (not Uber) under the Public Utilities Commission (PUC).
Senate Bill 125 places certain regulations on TNCs such as how they are required to approve drivers (ie background checks) and vehicle inspections. More importantly the bill tackles the sticky question of: What type of insurance these drivers and the TNCs themselves should have? The Bill’s language spends little time on the insurance requirements; stating that TNCs must have one million dollar coverage “per occurrence for incidents involving a driver during a prearranged ride” and that the drivers must “maintain personal automotive liability insurance with a liability limit at least equal to the minimum requirement” of $25,000.
Doug Dean, the current PUC Director, and former state insurance commissioner, claimed that auto insurance premiums would increase for all Colorado policyholders! Another former state insurance commissioner, hired by UberX, said this claim is speculative and cannot be proven at this time.
Whether insurance premiums will increase may be hinged upon exactly when the TNC insurance kicks in. According to a recent Denver Post article, insurers say that the drivers’ personal coverage ends as soon as they log onto the TNC app. However, insurers also claim that the TNC million dollar insurance does not kick in until the driver has accepted a fare. That creates a huge gap of non-insured time; when a driver is logged in to the app, driving around waiting for a passenger. The sponsors of SB 125 along with the TNCs claim that the drivers’ personal auto insurance doesn’t expire until after a fare is accepted. Unfortunately it is not up to them, it’s up to the insurers or a savvy attorney to make the claim as to when the TNC coverage actually kicks in.
This is exactly the situation that took place on New Year’s Eve in San Francisco. An UberX driver killed a 6 year old girl while he was logged on to the UberX app, but he did not have a passenger in his vehicle. UberX’s insurance company has denied coverage because he did not have a passenger in the car.
Perhaps what Colorado lawmakers should consider is making sure that gap is covered. Until then, we may all face the possibility of auto insurance rates going up for all Colorado drivers.