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Ridesharing Critics Urge Caution As D.C. Regulation Put On Hold

Monday, July 14, 2014 - 10:21 AM

Uber (Joakim Formo/flickr)

New regulations for the app-based, on-demand ridesharing services UberX, Lyft, and Sidecar in Washington are being put on hold until the fall.

Legislation being crafted by D.C. Council member Mary Cheh (Ward 3) will not be finished until after the council returns from its summer recess in mid-September, leaving riders in limbo over whether the drivers, who use their personal cars as taxis, are carrying adequate liability insurance coverage.

“I want them to understand there is ambiguity. There is risk. In the face of that, they can make a decision. My own decision, my own personal decision, would be not to use these services,” CM Cheh said in an interview with WAMU 88.5.

At issue is whether the tech companies’ insurance policies would drop down and provide coverage in the event of a crash if and when a driver’s personal auto policy does not kick in, the “livery exclusion” written into standard policies.

At a May council hearing, representatives of UberX, Lyft, and Sidecar argued their excess (or umbrella) policies were sufficient. They testified that requiring primacy commercial insurance would be cost-prohibitive and scare prospective drivers away, especially those who intend to drive only a few hours a week. Now, in mid-July, Cheh is leaning toward the stricter mandate the tech companies oppose.

“We have a proposal and we are trying to work out some compromises between the ridesharing folks, the taxicab commission, and other activists who are interested in what we do,” Cheh said.

“We think we've cobbled together a good bill, but the problem is we don't have time between now and recess to get it enacted. That means there will be this period of limbo over the summer. That may create some issues in terms of how the taxicab commission goes about enforcing rules, whatever rules they are going to enforce,” she added.

For its part, the D.C. Taxicab Commission does not have the authority to shut down UberX, Lyft, and Sidecar, and all three services continue to operate in Washington today. The commission, which shares Cheh’s view that current levels of liability insurance are lacking, intends to enforce rules against ridesharing drivers picking up street hails.

“We are in the process of developing a regulation that would accommodate these kinds of [private sedan] businesses, but we are timing our work on this to coincide with the council,” said commission chairman Ron Linton, who is seeking to limit rideshare drivers to 20 hours per week.

Meantime, “they are not intended to do street hails. That’s the law as it exists,” Linton added.

When it comes to whether a rideshare passenger would be covered if injured in a crash, the chairman said, “The District of Columbia Taxicab Commission cannot ensure the users of that service that they are reasonably protected.”

Uber and its tech competitors are fighting regulators across the country. Officials in 18 states and D.C. have issued warnings to consumers about potential liability insurance gaps. In Virginia, the DMV issued a cease-and-desist order shutting down UberX and Lyft but is now working to lift that restriction so the companies can legally operate there.

In response to CM Cheh’s contention that consumers should tread carefully, Uber said its policies are industry-leading and its top priority is safety.

Our $1 million policy per incident kicks in regardless of whether the driver's personal insurance applies and it is covered at every point along the trip,” said Uber spokesman Taylor Bennett. “There is no ambiguity as it relates to our insurance policy or the safety of the Uber platform. The drivers are covered at every point in the duration of their trip.”

Insurance industry lobbyists say rideshare passengers injured in a crash caused by an UberX or Lyft driver may not find there is no coverage at all. Instead, there may be ambiguity over who is responsible for any claims, bringing in lawyers and potentially sending a dispute to court while an injured passenger waits indefinitely for compensation.

Uber’s competitors in the traditional taxicab industry say there is only one way to guarantee passenger safety.

“Stay away from this until the date these companies and their drivers possess primary commercial auto liability insurance coverage” said Dave Sutton, a spokesman for the Who’s Driving You? campaign, an effort of the Taxicab, Limousine, and Paratransit Association.

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