Ridesharing is once again making headlines in the wake of a California Labor Commission ruling that Uber drivers are employees of the company, not independent contractors.
Did you know that ISO has already made two nationwide filings in response to the rise of ridesharing through transportation network companies such as Uber and Lyft?
Pertaining to personal auto and umbrella insureds who drive for these organizations, the filings include:
PAP Forms Filing PP-2015-OTNFR
“Introduction of a Reinforced Public or Livery Conveyance Exclusion and Related Optional Coverage Endorsements”:
PUP Forms Filing DL-2015-OTNFR
“Introduction of a Reinforced Public or Livery Conveyance Exclusion”: DL 99 12 10 15 – Personal Umbrella Liability Policy Public Or Livery Conveyance Exclusion Endorsement
Each filing goes hand in hand with a companion rules filing. The proposed nationwide effective date for these changes is Oct.1, 2015, though the actual implementation date could vary in specific states.
The PUP endorsement follows the reinforced PAP “public or livery conveyance” exclusion ISO introduced with the PP 23 40 PAP endorsement. At this time, no options are available to extend even limited coverage under ISO’s PUP to ridesharing drivers.
What do you need to know about the three PAP endorsements for ridesharing?
This endorsement revises the existing ISO PAP exclusion for the use of a vehicle as a public or livery conveyance. According to the filing explanation, the endorsement clarifies that the exclusion applies to any period of time that an insured is logged into a “transportation network platform” as a driver, whether or not a passenger is occupying the vehicle.
The endorsement defines a “transportation network platform” as “an online-enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.”
The new Part A – Liability Coverage “public or livery conveyance” exclusion reads as follows (new language italicized):
“5. We do not provide Liability Coverage for any ‘insured’:
For that ‘insured’s’ liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This includes but is not limited to any period of time that ‘insured’ is logged into a ‘transportation network platform’ as a driver, whether or not a passenger is ‘occupying’ the vehicle.
This exclusion (A.5.) does not apply to a share-the-expense car pool.”
The implication of the language “but is not limited to” is not yet known. ISO is also making the same revision to the “public or livery conveyance” exclusion that appears in similar form under Part B – Medical Payments Coverage and Part D – Coverage For Damage To Your Auto in the PAP. Since state-specific endorsements in most states provide statutory uninsured and underinsured motorist coverages, ISO is filing a similar change, to the extent permitted by law, to each state’s UM/UIM endorsements.
This optional premium-bearing endorsement would replace the PP 23 40. According to the filing explanation, it extends PAP coverage to an insured ridesharing driver for the period of time from when the driver logs into a “transportation network platform” up until a passenger has entered the vehicle.
The endorsement modifies the “public or livery conveyance” exclusions in Parts A, B, C, and D of the PAP and includes a schedule of the following information:
This optional premium-bearing endorsement would replace the PP 23 40. According to the filing explanation, it extends PAP coverage to an insured ridesharing driver for the period of time from when the driver logs into a “transportation network platform” up until the driver accepts a request through the “transportation network platform” to transport a passenger.
The endorsement differs from the PP 23 41 in that it does not cover the time period between accepting a ridesharing request and the passenger’s entry into the vehicle. It modifies the “public or livery conveyance” exclusion in Parts A, B, C and D of the PAP and includes the same schedule as above for the PP 23 41.
Neither optional endorsement extends PAP coverage while a passenger is in the vehicle, meaning a driver with only an ISO PAP must rely on whatever coverage is provided by their transportation network company. That may or may not include medical payments, UM/UIM coverage for the driver or passenger(s) and physical damage coverage.
Agents should take great care when providing advice to insureds about these endorsements. Even under the PP 23 41, the full driver exposure does not enjoy full coverage and the insured may not elect to extend limited coverage to all PAP coverage parts. If drivers are independent contractors, they are basically operating a business. Legal counsel might advise them to do so as a corporation or LLC and purchase a BAP rather than relying solely on a PAP.
Some situations could involve claims or suits filed against drivers that a CGL, BOP or other commercial policies would more appropriately address than a BAP. For example, a claim for slander, invasion of privacy or wrongful eviction might be unrelated to the use of an auto and unlikely constitute BI or PD. Since the driver is engaged in a business activity, a homeowners policy would likely not respond.
Bill Wilson is director of the Big “I” Virtual University.
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