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Florida Looks to Pass Bill Reforming Insurance Requirements for App-Based Ride-Share Companies

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Computer, cellphone, and smartphone apps have led to job growth in ways not thought possible less than a decade ago. One of these developments has been the growth of Transportation Network Companies (TNC). Much cheaper than taxis, these companies pair up individuals needing rides with those who can provide them in their non-commercial vehicles. Common on the American market as a whole would be Uber, with a dominant position, followed by a number of other less popular transportation apps.

In practice, those who drive for TNC’s can treat it as their own business; in which one’s hours are entirely commensurate with his or her desires, and in short, many individuals use the rides to save money, while others also seek to make full-time and part-time income by driving as well. The transportation network form of the modern business model has proven to be quite a success in the case of Uber, perhaps the largest and best-known TNC operators, with the company holding an $18.2 billion market valuation.

But with the growth of these companies comes responsibility and accountability. For instance, if a car representing a TNC is in an accident, where is the potential liability? The two largest TNC’s companies, Uber and Lyft, require that their drivers meet minimal insurance standards. Taxi companies, apparently fearing the competition, accuse the growing TNC industry of operating unfairly, and not in compliance with labor codes. Hence, they claim that these upstart TNC companies need to be regulated.

Which is why the Florida House has introduced legislation that would require TNC’s to have minimum insurance coverage. Originally filed on November 2, the bill was passed by the House Highway and Waterway Safety Subcommittee by a 10-1 vote.

Should it reach Governor Rick Scott’s desk and be signed into law, House Bill 509 would require:

  • All TNC drivers to have primary auto insurance
  • Coverage required would include $25,000 for property damage
  • Coverage minimums of $50,000 for death and bodily injury per person
  • Liability coverage in place of at least $100,000 for death and injury per incident

The proposed mandatory minimum insurance coverage for alternative commercial drivers, such as those working as drivers on the Uber network, would take effect on March 1, 2017 should the bill pass in other forums.

The state government is playing catch-up; many locales such as Broward County have already passed ordinances that regulate TNC’s. Others, including the cities of Tallahassee and Gainesville, have also done so. Moreover, the legislation in the Florida House mirrors what these local jurisdictions have already passed.

Given that the TNC movement is new and growing, other questions will likely arise. For instance, should Uber drivers be allowed to pick up potential passengers? The state of California, for one, says no. But that question is not addressed in the pending Florida legislation. All of which means that there will likely be more legislation passed in the coming years that will further regulate the booming TNC businesses. Until then, many of the TNC companies are self-regulating. Uber, for instance, requires its drivers to provide license and insurance information, and to pass a stringent background check.

 

References

http://www.pciaa.net/industry-issues/transportation-network-companies

http://www.naic.org/documents/cipr_events_140819_tnc_issue_status.pdf

http://www.insurancejournal.com/topics/transportation-network-companies/