Ride-sharing's great, but only with adequate insurance

Lyft and Uber should make sure everyone is covered

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Last week, the Pennsylvania Public Utility Commission issued a unanimous order that squarely and fairly resolved the issues that have come with the growth of the “sharing economy” and the emerging popularity of ride-sharing companies like Lyft and Uber.

The marketing behind those companies has been impressive. It sounds like one giant carpool of neighbors helping neighbors, as much a means of making connections as making cash. Maybe that will be the case. Personally, I’m not sure how many people want to be part-time cab drivers, giving strangers rides at all hours and in all conditions. It all sounds great until somebody throws up in the backseat.

To the PUC’s credit, it went past the hype —  who knows whether ride-sharing companies are the next Primantis or the next New Coke — and focused on the details. It came out with a balanced approval, allowing ride-sharing into the market but with conditions to ensure consumer safety.

One condition was that Uber and Lyft drivers have meaningful insurance. At the Insurance Federation, we’re insurance people — we represent the auto insurers who insure the drivers and cars that Lyft and Uber plan to use. So we harp on insurance more than most, even if that sounds like one of those details that only test the patience of consumers eager for new choices and innovations.

At the risk of sounding like a curmudgeon, insurance really is important — not just for the Lyft and Uber drivers, but for their passengers and for anybody in an accident with them. It doesn’t matter how innovative ride-sharing may be, cars are cars and drivers are drivers. Accidents happen, and when they do, consumers need to have readily accessible insurance.

The PUC recognized this last week, requiring that Lyft and Uber have primary insurance for their drivers whenever those drivers are out there looking for business. The PUC is making sure that whatever form of cab service people want, whether conventional cabs or the ride-sharing these companies market, they deserve insurance that is readily identifiable, accessible and accountable.

Lyft and Uber now go to the PUC for a more sweeping review, with hearings scheduled in Pittsburgh over the next few weeks. We hope consumers realize the importance of Lyft and Uber having primary insurance coverage for their drivers whenever they are open for fares.

The Lyft and Uber applications on file with the PUC fall far short of that: They either don’t offer to provide coverage or would provide it only if and after a driver’s personal auto insurer declines coverage. That’s going to happen, because personal auto insurers generally don’t cover a car and its driver when they become a cab and cabbie. But Lyft and Uber would force consumers to go through that needless and expensive step before they’ll think of providing coverage.

That’s not fair to anybody with a claim against Lyft or Uber: Passengers and others — whether drivers and passengers in other cars or pedestrians — would face a complicated process just to figure out who is paying their claim, much less what is to be paid. It isn’t fair to Lyft and Uber drivers, because they may lose their personal auto insurance or face rate hikes when their insurers find out (that’s one reason Lyft and Uber resist reaching out to their drivers’ personal auto insurers). And it isn’t fair to the rest of us, whose rates might rise if our insurers have to pay unforeseen losses caused by other insured drivers secretly moonlighting as cab drivers using their own cars.

We were encouraged not just by the quality and comprehensiveness of the PUC’s decision last week, but by the endorsement it got from Lyft and Uber, and we hope they quickly revise their applications to adopt the PUC’s conditions.

We heartily support innovations in transportation, and that includes ride-sharing. Let’s do it right, and right from the start — by including solid insurance coverage.

Samuel R. Marshall is president and CEO of the Insurance Federation of Pennsylvania (smarshall@ifpenn.org).

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