Now that state legislators are working to codify new insurance guidelines for Transportation Network Companies -- the once-exciting car-hire services that have since been maligned as a public safety concern -- the California Public Utilities Commission may follow suit.
Yesterday it announced a new proposal to modify its September regulations for companies like Uber and Lyft, whose current excess liability policies have raised skepticism within the insurance industry. Critics, such as Luxor Cab general manager Charles Rathbone, say these policies won't kick in unless a driver's personal insurance supports for-hire use of a vehicle -- and most don't.
That's the contention of California's five major casualty trade insurance associations, which collectively represent about 100 percent of the state market for commercial and personal auto insurance. They insist that personal insurance, by definition, excludes commercial use of a vehicle for a TNC.
That turned out to be true in at least one high-profile case -- a July lawsuit against Uber Technologies, Inc. and its contracted limo driver, Djamol Gafurov, for injuring a pedestrian at the intersection of Hayes Street and Divisadero. Uber distanced itself from the suit, citing clauses in its terms of service that absolve it from accidents caused by drivers.
Lyft, meanwhile, maintained that its excess liability policy serves as an adequate safety valve when a driver's personal insurance doesn't apply.
Still, the spate of TNC incidents thus far have all placed drivers -- not technology companies -- at fault, even if they instilled a tide of negative sentiment against Uber and Lyft. Uber, meanwhile, has been coronated as one of the wealthiest start-ups in history.
But the CPUC might finally put a roadblock in its path in deciding to draft new regulations. Insurance companies are asking for laws to clarify that an Uber driver is in fact an Uber driver as soon he turns on the app -- that he doesn't occupy some kind of liminal space between trips, as Uber has often claimed.
They've also asked the CPUC to come up with a TNC insurance rubric that more closely resembles that of other commercial livery services. Otherwise, individual California drivers will wind up subsidizing these obscene wealthy companies, warns Kara Cross, general counsel of the Pacific Association of Domestic Insurance Companies.
As Uber and Lyft disembowel traditional taxi companies in San Francisco -- and nationwide -- they'll face the onerous and unglamorous challenges of becoming a new default municipal taxi service. And that includes heavier regulations.