California’s Insurance Commissioner Dave Jones announced the approval an insurance product from Farmers Insurance on Wednesday that could fill a gap in insurance coverage for drivers of on-demand transportation companies like Uber, Lyft and Sidecar.
The new coverage applies when a driver turns on the on-demand transportation application and awaits a match.
Under the Public Utilities Commission’s original rules drafted in 2013, on-demand transportation companies were required to have insurance coverage for their drivers only when they are en route to pick up a passenger and when the passenger is in the car. No rules covered drivers scanning for riders, which advocates said left drivers and members of the public vulnerable, because it was unclear whether a personal insurance policy would cover a driver in those circumstances.
California enacted legislation last year requiring on-demand drivers carry such insurance, although the minimum liability coverage was whittled down from $1 million to $50,000 to ensure passage. The requirement takes effect July 1.
The Farmer’s product is similar to the collaboration between Uber and pay-by-the-mile auto insurance firm Metromile, which offers offers a personal insurance product to Uber drivers to cover the miles they drive on their own time or when they’re waiting to be hooked up with a paying passenger.
The new insurance coverage is expected to take some of the ambiguity out of insurance for on-demand drivers and give them more control over their insurance coverage.
“This is significant because now we have one of the major [insurance] carriers entering the marketplace,” said Chris Dolan, the attorney for the family of six-year-old Sofia Liu, who was fatally struck by an Uber driver in San Francisco last New Year’s Eve. The driver was logged into Uber’s app at the time although he was not en route to pick up a rider. The victim’s mother said he was looking at his phone when he struck her daughter.
Lyft spokeswoman Chelsea Wilson said the company is “encouraged by the creation of modern insurance products tailored for drivers who participate in peer-to-peer transportation,” and hopes Farmers' policy is one of many options approved for TNC drivers in California.
Sidecar’s spokeswoman Margaret Ryan and Uber’s spokeswoman Eva Behrend said much the same.
While Farmers’ new insurance product, which will be available to drivers May 28, will fill a gap in TNC insurance, accident and personal injury lawyers believe there are many more gaps to be filled.
When the new rules take effect July 1, on-demand transportation companies will only be required to provide commercial liability insurance when a driver is scanning for passengers, which means the drivers themselves and their vehicles aren’t covered in the event of an accident. Farmers' Insurance will offer optional comprehensive, collision, uninsured and underinsured insurance, but Dolan believes more products should be rolled out by more carriers.
Attorney Stan Doerrer of Grenier Law Group supports the idea of a multi-party solution where insurance companies work with regulators to come up with solutions to problems as they arise.
“One thing is clear — every week in every state, you can read crazy factual scenarios about personal injury claims you could never predict,” Doerrer said. “I think there are going to be factual situations that happen that will reveal more and more gaps than we know now.
“We don’t even know what other gaps there could be."