Uber, AB 2293, and Insurance Liability

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  • Valued at more than $50 billion and operating in over 66 countries and 449 cities worldwide, Uber is the fastest growing transportation network company (TNC) in the world. The San-Francisco based, app-driven company is so successful that they're singlehandedly giving the taxi industry a run for their money. Between 2014 and 2015, the average percent of all total paid car rides through Uber rose from 15% to 46%, almost half of the taxi service market – and experts believe their numbers are bound to go up even more.

    The rapid ascendance of Uber can be explained by the "disruptive" benefits they offer over traditional taxi cab companies: 1) their app makes it easy to flag down a driver for pickup, 2) they offer flexible work schedules and consequently attract a steady workforce, and 3) they offer cheaper rides.

    However, Uber's thriving business model hasn't been without its issues. For one, the company was accused of skirting liability in accident cases by classifying their drivers as independent contractors, not employees. These accusations weren't inaccurate – Uber would provide coverage only for accidents that occurred while the driver was transporting a passenger. That all changed after a slew of injurious and fatal accidents, including the death of a 6-year-old girl in San Francisco, drew government scrutiny to Uber, forcing them to reconfigure their insurance policy.

    AB 2293 and Uber's New Insurance Coverage Requirements

    Passed on September 17, 2014 and enacted on July 1, 2015, Assembly Bill No. 2293 established the following insurance coverage requirements for TNCs and their drivers, eliminating previous ambiguities like the "insurance gap" problem:

    1. The driver or the TNC is required to maintain, at a minimum, a $50k/$100k/$30k liability insurance policy from the moment the driver turns on their app.
    2. The TNC is required to provide $1 million worth of insurance once the driver has accepted a request or picked up a passenger to the moment the passenger leaves the vehicle.
    3. All drivers must carry proof of insurance.

    These insurance coverage requirements apply to accidents involving injuries to not only passengers but also bystanders like pedestrians, bicyclists, and other motorists.

    Some Ambiguities Remain

    Uber's new insurance policy has resolved a lot of questions regarding liability, but still some troublesome ambiguities remain. What if a driver is logged into different rideshare apps (say Uber and Lyft) at the same time when an accident occurs? What if a passenger is assaulted by the driver? Should Uber drivers be considered employees or not? The rideshare phenomenon is still relatively young and regulatory agencies are only beginning to catch up. In the foreseeable future, these questions will most likely be raised in a court of law and regulations will become more precise at addressing specific situations.

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