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Michigan lawmakers approve Uber, Lyft laws

House Bills 4637, 4639 and 4640 set liability limits for on-duty, ‘transportation network company’ drivers with and without passengers; No Fault benefits for passengers; coverage exclusions; bills go to Governor

lyft-car

Photo by Praiselightmedia / CC BY-SA 4.0

We know that app-based ride-sharing services like Uber and Lyft have been doing business here in Michigan for a while.

However, what we haven’t known is how and whether our insurance laws – concerning No Fault benefits and liability in the event of a car accident – apply to protect passengers of and people injured by car accidents caused by outfits like Uber and Lyft.

Well, based on the Michigan Legislature’s actions over the last week or so, it appears we’re a lot closer to having answers.

On December 7, 2016, the Michigan House of Representatives approved concurred versions of House Bills 4637, 4639 and 4640 (meaning the bills have been passed and agreed upon by both the House and the Senate), which, together, will impose a set of No Fault and liability insurance regulations on ride-sharing services in Michigan that heretofore haven’t existed.

Specifically, the bills address the three major issues of coverage that Uber and Uber-type drivers must carry on their vehicles while they’re on duty, ride-sharing-use exclusions from auto insurers and No Fault benefits for injured passengers of an Uber, Lyft or other “transportation network company.”

Here are the highlights:

  • No Fault and liability insurance coverage that an Uber driver or driver of an Uber-type vehicle must have in effect while on-duty: The driver must have a minimum of $1 million in “[r]esidual third party automobile liability insurance” for bodily injury and property damage for when he is transporting passengers. When the driver is just on-duty, i.e., “logged on” to the “transportation network company’s digital network,” then the required minimum is $50,000/$100,000 for personal injury liability and $25,000 for property damage liability. In both scenarios, the driver must also be covered for No Fault PIP and proportion protection insurance (PPI).
  • Coverage exclusions in personal car insurance policies for Uber-type use of vehicle: Insurance companies can write their personal auto policies in such a way that if their insured uses his or her personal vehicle to drive for Uber, Lyft or some other app-based, ride-sharing service (“transportation network company”) and is injured in a car accident while doing so, then all coverage that would have otherwise been provided under the policy is excluded, i.e., unavailable.
  • Insurer of an Uber or Uber-type vehicle providing No Fault benefits to a passenger injured in an automobile accident: An Uber or Uber-type passenger who is injured in a motor vehicle accident involving the Uber or Uber-type vehicle she is riding in collects No Fault benefits (such as medical-expense reimbursement and wage loss benefits) from the auto insurer for the Uber or Uber-type vehicle only if the passenger has no other source of No Fault benefits, e.g., she doesn’t have her own policy, nor does her spouse or a resident relative.

The next step for House Bills 4637, 4639 and 4640 is that they will be forwarded to Gov. Rick Snyder for his consideration.

What’s in House Bill 4637

House Bill 4637, which Rep. Tim Kelly (R-Saginaw Township) introduced on May 26, 2015, was passed by the House of Representatives on June 17, 2015 (on a 71 to 39 vote), passed by the Senate December 1, 2016 (on a 31 to 4 vote) and the House concurred version was approved by House on December 7, 2016 (on a 94 to 12 vote). Accordingly, the House-concurred version of HB 4637 provides:

  • A “primary automobile insurance” policy “shall” be “maintain[ed]” (by either the driver, the company or both) which “covers the [Uber or Uber-type] driver while he or she is logged on to the transportation network company’s digital network or while he or she is engaged in a prearranged ride.” (Pages 19-20 of the House-concurred version of HB 4637)
  • The coverage for when a driver is “logged on,” but not transporting passengers, includes: “Residual third party automobile liability insurance … in the amount of at least $50,000.00 per person for death or bodily injury, $100,000.00 per incident for death or bodily injury, and $25,000.00 for property damage”; No Fault “personal protection insurance” (PIP); and, “property protection insurance” (PPI). (Page 20 of the House-concurred version of HB 4637)
  • The coverage for when a driver is transporting passengers, includes: “Residual third party automobile liability insurance with a minimum combined single limit of $1,000,000.00 for all bodily injury or property damage”; No Fault “personal protection insurance” (PIP); and, “property protection insurance” (PPI). (Pages 20-21 of the House-concurred version of HB 4637)

What’s in House Bill 4639?

House Bill 4639, which Rep. Brandt Iden (R-Oshtemo) introduced on May 26, 2015, was passed by the House of Representatives on June 17, 2015 (on a 73 to 37 vote), passed by the Senate on December 1, 2016 (on a 33 to 3 vote) and the House concurred version was approved by House on December 7, 2016 (on a 91 to 15 vote). Accordingly, the House-concurred version of HB 4639 provides:

  • An auto insurance company “that issues an insurance policy insuring a personal vehicle” that is used by an Uber or Uber-type driver “may exclude all coverage afforded under the policy for any loss or injury that occurs while” the driver (while driving the covered vehicle) “is logged on to a transportation network company’s digital network or while … [the] driver is providing a prearranged ride,” i.e., transporting passengers. (Pages 2-3 of the House-concurred version of HB 4639)
  • The auto insurance coverages that may be excluded include: residual liability; No Fault “personal protection insurance” (PIP); and, “property protection insurance” (PPI); “uninsured and underinsured motorist coverage”; and, “comprehensive” and “collision” coverage. (Page 3 of the House-concurred version of HB 4639)

HB 4639 is “tie-barred” to HB 4637.

What’s in House Bill 4640?

House Bill 4640, which Rep. Tom Barrett (R-Potterville) introduced on May 26, 2015, was passed by the House of Representatives on June 17, 2015 (on a 70 to 40 vote), was passed by the Senate on December 1, 2016 (on a 33 to 3 vote) and the House-concurred version was approved by House on December 7, 2016 (on a 93 to 13 vote). Accordingly, the House-concurred version of HB 4640 provides:

  • A “person” who suffers “accidental bodily injury while … [a] passenger” of an Uber or Uber-type “motor vehicle” (i.e., “a transportation network company vehicle”) “shall” NOT “receive the [No Fault] personal protection insurance [PIP] benefits to which the person is entitled from the insurer of the [Uber or Uber-type] motor vehicle [i.e., “a transportation network company vehicle”] … unless the passenger is not entitled to personal protection insurance benefits under any other policy … ” (Page 2 of the House-concurred version of HB 4640)
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