Ridesharing Suffers Major Setback In Seattle — More Bad News To Come?

ridesharing auto insurance

Photo from Anne Ruthmann

Ridesharing providers like Uber, Lyft, and Sidecar were just hit with an enormous setback in the city of Seattle.

In a unanimous vote to stay a driver cap that was enacted in February, city council members limited the number of cars to 150 for every company. To put this in perspective, Uber alone employs 1,000 drivers within the city’s borders. We’re not sure what the maxes are for Sidecar and Lyft — Uber is the biggest of the lot — but the decision will likely result in massive job losses across the board.

According to TechCrunch, the main reasons cited for the cap were related to public safety concerns, which the ridesharing companies have been trying to combat for a while now.

In addition to extensive background checks on all drivers, they have gone as far as expanding their insurance limits to whenever a driver is logged in to the mobile app, even when they’re not accepting rides.

Before the change, drivers’ personal policies were assumed to carry the burden of coverage in the event of an accident. It’s still not clear how this might shake out in every instance, but Uber does provide coverage “up to $100,000 for bodily injuries (at a max $50,000 per person) and up to $25,000 for property damage if an accident happens and the driver’s personal policy won’t pay out,” Engadget reports.

When drivers are actually on a trip, Uber’s policy kicks in to $1 million, considerably more than this new “gap” coverage.

Despite the unanimous vote to stay the cap, some council members do wish to abolish it. Tim Burgess, one council member, said that limiting these services “would be like prohibiting Netflix because [they] wanted to protect Blockbuster.” Council member Sally Clark took the opposite stance, criticizing the companies “for not communicating with regulators as well as they’ve pitched to their investors,” Engadget added.

 

Questions In Colorado

Earlier this month, we also detailed some of the issues that Uber and Lyft are facing in Colorado, where a bill is pending that provides a “livery exclusion.” In other words, “when a driver is not in the process of providing a ride, or on their way to pick up a ride, they are covered under personal auto insurance policies,” per our March 11 report.

To that end, Kelly Campbell, vice-president of state government relations for the Property Casualty Insurers of America (PCI), said, “Colorado’s [bill] is the furthest along in including the livery exclusion.”

She believes that “Driving to urban centers, or driving late at night – in places and at times where there are greater chances for collisions and other incidents that may trigger insurance coverage – can  be considered a ‘changed behavior’ for drivers, and therefore that behavior should take the liability out of the hands of personal insurers.”

 

In Summary

Ridesharing is definitely a new phenomenon that still has many outstanding questions regarding who pays for auto insurance coverage in specific accidents. While companies like Uber, Lyft, and Sidecar, have certainly stood out in major cities across America with their innovative new employment opportunities, they’re breaking new ground, and whenever that occurs, there is no precedent with which to learn. However, Seattle’s recent decision to stay the cap on how many active cars these companies can have, may be the first precedent in a future that the ridesharing industry as a whole won’t like. While the saga will likely play out on a state-by-state basis, many will be watching future developments in Washington State and Colorado to get a sense of what other local governments are doing. Do you think ridesharing companies create public safety concerns?

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