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Transportation Network Companies & Insurance

September 1, 2015

Jason Beever

Gorham Times

There is a smart phone application for almost everything now, including transportation apps such as Uber and Lyft that allow you to request a ride using your smart phone. These are becoming increasingly popular and also controversial.

Considered a type of ridesharing, a company that uses an online based platform to connect passengers and drivers for transportation services (using the driver’s personal vehicle) is now commonly called a transportation network company, or TNC.

Because TNCs are a new type of company and service, it has been difficult to determine what regulations the company and drivers need to follow, as well as what insurance coverages apply to them. When TNCs first gained popularity, there were many questions about proper insurance coverage, gaps in coverage, and who is liable in an accident.

During the past session, the Maine legislature passed LD 1379, an Act to Establish Transportation Network Company Insurance. This new law essentially requires TNCs like Uber to have a commercial insurance policy that covers their drivers while transporting passengers for a fee. Providing rides for a fee is called “public livery,” and coverage for it is specifically excluded in most standard personal auto insurance policies, hence the need for requiring TNCs to carry their own insurance.

Since TNC drivers use their vehicles for both purposes--business and personal--it was a challenge to make the distinction between when a driver was simply driving his or her own car and when he or she was driving as a representative of the TNC. Two of the most wellknown TNCs, Uber and Lyft, have clarified when drivers are covered by different types of insurance.

When a driver is driving with the TNC app off, the driver is not working and not accepting rides, so the driver’s personal auto insurance is the primary coverage. When the driver turns on the app in driver mode but has not yet accepted a ride, TNCs generally offer contingent liability coverage if the driver’s personal auto insurance does not offer protection. When a passenger is picked up, the TNC’s policy is the primary policy until the end of the ride, because the personal auto insurance policy excludes public livery.

Each insurance company has a different approach to claims from TNC drivers, as this is a relatively new type of risk. Consult with your local Independent Insurance Agent to further discuss this and other coverage issues to be sure you are adequately protected. Jason Beever is Managing Partner at Chalmers Insurance Group in Gorham. To contact your agent call 800-360-3000.

Jason Beever

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