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Should Uber drivers bear the burden for auto insurance?

June 24, 2015 by Steven M. Gursten

Michigan Senate Insurance Committee approves version of SB 184, which requires drivers – not companies – to carry $1 million in liability and No Fault PIP Insurance 

Should Uber drivers and drivers for similar app-based, ride-sharing services such as Lyft  – rather than the companies themselves – be responsible for securing the necessary auto insurance to protect themselves and their occupants if they cause or are involved in a motor vehicle accident?

Apparently, the Senate Insurance Committee thinks so – including $1 million in liability coverage as well as No Fault.

On June 11, 2015, the Committee approved amendments to Senate Bill 184, which was initially introduced by Sen. Rick Jones (R-Grand Ledge) on March 5, 2015, that would impose specific auto insurance requirements on Uber drivers and drivers for similar, Uber-like services.

In particular, under the Senate Insurance Committee’s version of SB 184 (“Substitute for Senate Bill No. 184” or “S-5”), an Uber driver or a driver for a similar service (referred to as “transportation network company driver[s]”) must have:

  • Liability coverage for “bodily injury and property damage liability insurance with a minimum combined single limit of $1,000,000.00 for all persons injured or for property damage” (for “vehicles with a seating capacity of 1 to 8 passengers including the driver”).
  • “Personal protection insurance [also known as No Fault “personal injury protection” insurance or “PIP” coverage] and property protection insurance as required by 1956 PA 218, MCL 500.3101 TO 500.3179.”

Readers of this blog know I find this entire issue fascinating, and I’ve been following and writing about the liability issues involved with this new technology and services like Uber closely.

This is an interesting and important development in the ongoing legal and public policy debate over whether Uber drivers or drivers of other ride-sharing services like Lyft, or the companies themselves, should be responsible for ensuring drivers have adequate insurance coverage. The coverage is needed to protect the following parties in the event of a motor vehicle accident that results in personal injury and/or property damage:

  • the Uber drivers,
  • their passengers,
  • other drivers and passengers,
  • pedestrians,
  • bicyclists,
  • and other innocent bystanders.

While I applaud the effort to ensure adequate auto insurance is in place for Uber and Lyft drivers, my own experience as an auto accident attorney leads me to conclude that the solution  best lies with the companies and not the drivers.

Analogizing to what I’ve seen occur with trucking companies and their truck drivers, Uber and similar companies have a far stronger financial incentive to comply with insurance requirements (i.e., avoiding and minimizing liability claims that cut into the bottom line).

And, the companies have greater leverage by far to secure the best, most comprehensive and most affordable insurance plan for all of its drivers than the drivers ever would.

Driving without auto insurance

As part of its approved version of SB 184, the Senate Insurance Committee imposed the following consequences for Uber or Uber-like drivers who fail to obtain the required insurance coverage:

  • An Uber or Uber-like driver “shall maintain the insurance … as a condition of maintaining a certificate of authority …”
  • An Uber or Uber-like driver who “does not satisfy both [of the insurance requirements above] shall not be issued a certificate of authority to provide transportation service as a … network transportation company driver …”
  • “If the insurance coverage required [as described above] is canceled for any reason, the certificate of authority issued to that … network transportation company driver shall be considered revoked without any further action …”
  • “[E]ach transportation network company driver … who operates a transportation network company vehicle … without meeting the insurance requirements provided in this act is subject to a fine of not more than $500.00. Each violation constitutes a separate offense.”
  • A “transportation network company driver, or an officer or agent of a … transportation network company driver, that requires or permits a driver or operator to drive or operate a … transportation network company vehicle in violation of this act, or a rule promulgated under this act [i.e., the auto insurance requirements] is guilty of a misdemeanor , punishable by a fine of not more than $500.00 or by imprisonment for not more than 90 days, or both.”

Related information:

How much insurance does Uber offer when transporting a rider?

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