With ridesharing services, are you sharing liability, too? p3

We are continuing our discussion of transportation network company regulations in California. The state was the first to adopt regulations specifically for these ridesharing operations, and, it seems, those regulations are a work in progress.

The tricky issue is liability. The drivers use their own cars, and, initially, TNCs had not been buying commercial liability insurance to cover any accidents involving drivers carrying TNC customers. As we said in our Dec. 15 post, the driver’s insurance wouldn’t cover the accident either (no coverage for commercial enterprise). The state regulations required TNCs to purchase insurance.

That did not solve the problem, unfortunately. When a driver working for TNC struck a group of pedestrians, killing one little girl and injuring members of her family, the major shortcoming of the regulation became apparent: The insurance covered the driver while he or she was “providing services” to the TNC.

One survivor says that the last thing she saw before the accident was the driver looking at his phone. In a personal injury complaint, the family argued that the driver was “providing services” at the time.

Ridesharing services are largely based on a smartphone app that connects the driver to the company and the customer to drivers. When passengers need a lift, they log into the app to see if a TNC car is in the area. If one is, the customer “orders” the car. GPS lets the driver and the customer know where one another is.

At the end of the ride, the app calculates the fare and processes the payment for the driver (using a credit card registered with the company) and the customer. The customer receives the receipt by email.

The driver did not have a customer in his car at the time of the accident, nor was he on his way to pick someone up. The TNC and its insurance company argued successfully that the driver was not working for the service at the time of the accident.

The state needed to figure out exactly where “providing services” fell in the ridesharing transaction. The debate led was a three-tiered definition. We’ll talk about the specifics in our next post.

Sources:

Forbes, “Lyft’s First Fatality: Passenger Dies In Crash Near Sacramento,” Ellen Huet, Nov. 2, 2014

California Public Utilities Commission, “Order Instituting Rulemaking on Regulations Relating to Passenger Carriers, Ridesharing, and New Online-Enabled Transportation Services,” June/July 2014 (revised)