The UBER Dilemma: An insurance perspective.

Does the taxi lobby’s  argument against TNCs hold water? The (not so new) business model: using a smartphone app to connect drivers with riders. New York has effectively legalized it and there is currently a bill pending before the Pennsylvania Senate to give TNC (transportation network companies) like Uber and Lyft legal authority to operate within the state, establishing a regulatory framework within which these TNCs may operate. New Jersey currently has a bill pending before its legislature that seeks to substantially limit TNC’s ability to serve its residents, potentially driving TNC’s out of the state and leaving the passengers to pay the higher prices, chilling competition and effectively creating a monopoly. The argument most used by traditional taxi companies against TNCs has been that they don’t provide sufficient or appropriate insurance coverage for the driver and the passenger. That argument has been effectively neutralized by both the TNCs as well as insurance companies as follows: UBER and Lyft self insure the driver and the vehicle for $1 Million while the passenger is in the vehicle, thereby protecting the actual ride related liability. Traditional taxi companies generally provide on average $125,000 in coverage for the ride. Uber will also provide insurance coverage in the uninsured/underinsured situation where the other driver involved in the crash is not appropriately insured. Uber and Lyft’s focus is to protect the passenger and have handsomely insured that portion of the ride when the customer may be at risk. Insurance companies, realizing that there is a gap in coverage for when the TNC driver has logged on and has been connected with a passenger but the rider isn’t in the vehicle yet, are now selling coverage to fill that gap. The driver is free to purchase this coverage that specifically protects him/her and the vehicle. So, the bottom line is that the traditional taxi companies’ insurance arguments simply don’t hold water.   Perhaps it is time to accept that the TNC business model is here to stay and will provide a competitive environment in a market that has been dominated by the traditional model. Arguing that TNC’s be regulated out of existence does not serve the free market economy or the passenger, who must be provided the free choice to select a TNC if they wish.   After all, is that the bedrock of our economy? Its time to take a look at the actual motives behind this resistance to change and take steps to preserve freedom of choice in our economy. See the following article for comments from both sides of the debate.