No one should be surprised by the exploding popularity of Uber, Lyft and other ride-sharing apps. Low prices, friendly drivers, clean cars, super-fast service — it's no wonder that customers are raving all over the planet.
But now that these young companies have demonstrated a serious business model, treating them like a serious, grown-up industry also makes sense. In the past few weeks, this has been happening — and then some.
In a battle that is fast becoming a full-employment act for Capitol lobbyists, lawmakers and regulatory authorities have been taking a hard look at whether Web-based ride-sharing companies need to insure their drivers more thoroughly.
Uber and Lyft introduce commerce into traditionally personal spaces. Using smartphones, they match prospective riders with drivers who ferry customers from point to point in their own cars or limos.
But because personal auto-insurance policies typically don't cover accidents when a car is being used for commerce, the business model has run into liability issues. Last year, the California Public Utilities Commission tried to address that with a requirement that these "transportation networking companies" back up drivers' insurance with commercial policies providing $1 million in liability coverage.
Companies interpreted the PUC's broad rule to mean that commercial coverage was required when the drivers had a fare in the car or were en route to an arranged pickup. Then, on New Year's Eve, an Uber driver who was logged on but had no request, struck and killed a 6-year-old girl in a San Francisco crosswalk. Spurred by the tragedy, the Assembly passed AB 2293, which would require the high-dollar coverage any time the app was on.
This is serious legislating for a marginal insurance question. But when a startup is valued at $18.2 billion, as Uber has been, investors aren't the only ones who see dollar signs. Drivers need to have commercial insurance while working. And in the "sharing economy," you punch the clock by turning on the app.
Uber and Lyft say the broadened insurance requirements are unfair. They claim the beneficiaries are obnoxious insurance companies and trial lawyers, and the requirements solve a non-problem, since the companies already insure their drivers for the period between "app-on" and assignment. Surely innovative companies can remind off-duty drivers to turn their apps off. If a driver has more than one app on at a time when an accident happens, share the blame.
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