Arizona Considers $1M Liability Coverage for Ridesharing Services

By ASTRID GALVAN | March 31, 2014

Arizona has joined a number of states debating how to regulate so-called ridesharing programs that have popped up around the country and riled traditional taxi and limousine establishments.

An amendment to an unrelated bill being debated in a Senate committee last week would categorize the tech-startup programs as “transportation network service,” exempting them from certain rules that apply to taxi and limousine companies. Members of the Senate Committee on Commerce, Military and Energy approved the amended bill with a 4-1 vote on March 19.

The amendment to House Bill 2262 is yet another attempt to regulate the relatively new service, which allows members to hail rides with a swipe of smartphone on sites like Uber and Lyft. A similar bill in the House was approved in a committee but later died.

The amendment was celebrated by proponents of ridesharing programs, who say they should not be subject to the same regulations as cabs in part because they do not pick up people from the street, but rather members of the service who request a driver.

The amendment would require ridesharing programs to provide a minimum $1 million insurance coverage for drivers and to conduct a criminal background and driver’s license checks. But it would also exempt them from regulations that apply to taxi drivers and would prohibit cities, counties and towns from enacting their own regulations. The amendment does not require the companies to provide insurance coverage at all times that a driver is on the job, as many in the insurance and tax company industry believe they should.

“The concept that we’re dealing with right now on this legislation is a relatively new concept and one that we are trying to put some regulatory framework around,” Uber and Lyft lobbyist Wendy Briggs said. “This is an alternative form of transportation, cheaper, faster than a taxi. And I would advocate (they are) much safer.”

Uber is a San Francisco-based startup that now operates in 80 cities in the United States and in six continents. Lyft is a similar company that uses a mobile app to connect riders with drivers who charge them based on a donation instead of a fare.

Traditional transportation companies say the proposed rules are unfair and that the companies present safety risks to passengers. The debate has taken shape in the form of legislation in Colorado, Georgia, Maryland and other states that are trying to figure out how to regulate something so technology-driven.

Mike Pinckard, president of Total Transit, a parent company of Discount Cab, said he welcomes the competition that ridesharing companies bring, but that they should be held to the same standards as all transportation services.

Pinckard said he thinks the companies should be required to provide insurance coverage for their drivers at all times, not just when they are picking up a passenger. Uber already insures drivers with $1 million policies, but only from the time the driver accepts a pick-up to the time the driver drops off the passenger.

That means a driver who is working out on the road but has not yet received a request for a ride is not insured by the company unless the driver’s personal insurance denies the claim, in which case Uber provides its contingent policy. The issue became especially heated nationwide after a 6-year-old girl was killed in a crosswalk by a driver logged into the Uber app in San Francisco on New Year’s Eve. The girl’s family contends that Uber is financially responsible because the driver was waiting for customers. Uber says it isn’t liable because no passengers were in the car.

“If a driver was involved in an accident in an activity-based scenario, you’re gonna have disputes and litigation until the cows come home,” Pinckard said. “All we’re saying is get insurance.”

Briggs maintains rideshare programs are safer then cabs because consumers get information about the driver and the car they are being picked up in through the phone application.

“You’re talking about an ability to get people to point A to point B, whether it’s the elderly going to dialyses or in New York they use this to get their kids from point A to point B,” she said.

David Childers of the Property Casualty Insurers Association said rideshare drivers are incentivized to be out and available when rides are requested, and they are not just sitting at home waiting for ride requests.

“That would mean Friday and Saturday nights in Old Town Scottsdale. Near the airport. High-traffic areas that pose an entirely different risk than risks associated with taking your kids to school. They have a responsibility to provide coverage for their drivers,” Childers said.

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