Editorial: How not to solve the ride-sharing industry’s insurance gap

Travis Kalanic
Uber CEO Travis Kalanick is seen at the 2014 TIME 100 Gala in New York.
(Evan Agostini / Invision / AP)

Pressed by taxi and insurance company lobbyists, state lawmakers may force Web-based transportation companies such as Uber and Lyft to insure their drivers more extensively. Their proposal, AB 2293, would require the companies to cover drivers not only when they’re picking up or ferrying passengers, but for as long as they are making themselves available to prospective riders. But the proposed solution would actually make the problem worse, setting up potential conflicts among insurers while raising costs unnecessarily for the transportation upstarts and their customers.

Like other innovators in the “sharing economy,” Web-based ride-sharing companies blur the lines between what’s personal and what’s commercial. That’s problematic for the typical ride-sharing driver, whose personal insurance doesn’t cover accidents that occur when a ride is being provided for a fee. With that in mind, the state Public Utilities Commission required these companies last year to carry insurance that would kick in if the driver’s did not, providing up to $1 million worth of liability coverage.

Insurers contend that the PUC left a gap because it required ride-sharing companies’ policies to cover drivers just when they were en route to or carrying a passenger. In their view, personal auto policies stop providing coverage the moment someone turns on a ride-sharing app. AB 2293 would require ride-sharing companies to provide the primary coverage for any driver for as long as their app was on. Moved by the story of a 6-year-old girl in San Francisco who was killed by a driver looking for Uber ride requests, the Assembly voted 71 to 0 last week to pass the bill and send it to the Senate.

One problem with the legislation is that many drivers have more than one ride-sharing app open simultaneously, setting up a fight over who’s liable in the case of an accident between hires. Another is that the bill would relieve auto insurers of the duty to cover customers who make personal trips with a ride-sharing app open. Some services, such as Sidecar, encourage drivers to blend the rides they provide into their daily routines. A solo trip to the mall shouldn’t be treated as a commercial activity just because the driver hoped in vain to give someone a ride on the way.


The PUC has been gathering comments from the public since late March on a possible expansion of its insurance requirements. Meanwhile, some of the ride-sharing companies are voluntarily obtaining broader policies, including more coverage for their drivers’ personal losses. In short, lawmakers don’t need to intervene on this issue. And what the Assembly has proposed would only add confusion to a situation that the PUC and ride-sharing companies are clarifying on their own.

Get our weekly Opinion newsletter