The issue of ridesharing has exploded in recent months. Concerns about whether the drivers have proper insurance are just one of the questions raised by regulators, insurers and consumer groups. Insurance fraud is a side concern for now, but is growing with the rideshare industry.
News coverage has mostly focused on state and local oversight of ridesharing, and complaints by local taxi drivers and companies about their new competitors. In the past several weeks taxi drivers here in Washington D.C. demonstrated against the ridesharing firm Uber’s growing presence in the nation’s capital.
Cabbies are worried that the largely unregulated rideshares will cripple the mainstream taxi industry. Ridesharing firms should meet the same regulatory standards as taxis and other for-hire vehicles, the cabbies argue.
State insurance regulators, state attorneys general, consumer groups and local taxi commissions increasingly are vocal about insurance and oversight issues. The California insurance commissioner has actively voiced insurance concerns. A big question is for rideshare drivers to manage auto coverage so a private vehicle is covered when it’s operating both privately and as a commercial rideshare.
I have a friend who owns a livery service. He’s affiliated with Uber. He has an app on his smartphone that when turned on tells Uber he’s available to pick up passengers.
We talked while he drove me to the airport recently. He has a proper state license and insurance for livery use of his vehicle. Still, he’s unsure when Uber’s auto policy protects him when driving an Uber passenger, and whether Uber’s insurance covers him while driving to or from picking up a passenger.
This raises questions about insurance fraud. At least one insurer has been reported to denying several damage claims by San Francisco rideshare vehicles the insurer says were personal vehicles used commercially. Several fraud-related issues thus arise from this new industry:
- Do ridesharing drivers and cars have adequate insurance to act as a commercial driver and vehicle?
- Does a rideshare driver’s personal-auto insurer know that the vehicle also is being used commercially?
- Is the driver lying to his or her personal auto insurer that the vehicle is used commercially for part of the time?
- Is the driver filing a fraudulent personal auto claim for a loss that occurs when driving commercially?
- What protections do injured passengers have if the personal auto insurer denies claims because the vehicle was used as a rideshare outside the scope of the policy?
Ridesharing reveals how 21st technology is outstripping laws and regulations that have been mainstays for at least a century. Consumers can use a smartphone to arrange a ride without hailing a taxi from a street corner.
Clearly we are heading into a new era. Taxis are heavily regulated. Laws and regulations must be updated and adapted to ridesharing — it is here to stay. Fraud fighters must ensure that ridesharing companies do an honest business with their insurers — and the consumers entrusted to their care.
About the author: Howard Goldblatt is director of government affairs for the Coalition Against Insurance Fraud.