Opinion: Florida Sending Mixed Messages About Uber Insurance Requirements


Insurance Journal, by Roger Chapin

Last month, California regulators said all “peer-to-peer” taxi drivers (i.e. Uber & Lyft) were required to have “commercial” plates, stating customers have inquired about this process and received inconsistent information.” A few days later the DMV said they were reevaluating their decision.

In Florida, regulators are giving the same conflicting messages when it comes to insurance for Uber and Lyft drivers. Even Uber’s own drivers are asking questions. And taxi companies just want to know which rules to follow to ensure an even playing field.

Of course Uber would like you to believe insurance is a non-issue. Why?  Because they know serious gaps remain in their drivers’ insurance policies and everyone from the driver, the passenger to third parties is at risk.  And if they or their drivers are forced to obtain additional insurance, well of course the cost of doing business goes up. What company or consumer wants that?

In Florida, despite the waffling from insurance officials, the law is clear: a person who is either the owner or a lessee required to maintain insurance under s. 627.733(1)(b) and who operates one or more taxicabs, limousines, jitneys, or any other for-hire passenger transportation vehicles may prove financial responsibility by furnishing satisfactory evidence of holding a motor vehicle liability policy, but with minimum limits of $125,000/250,000/50,000.”

Uber’s limits of $50,000/$100,000/$25,000 are lower than this requirement.  According to Uber’s website, they break down insurance coverage and liability into “periods”.  “Period 1” is when the driver is logged on to the app and waiting for a fare. This action clearly meets the definition of a vehicle for hire or “taxi”, yet it does not meet the minimum standards.  Too nitpicky?

And there are other areas of concern.  During “Periods 2” and “3”, Uber’s bodily injury (BI) and uninsured motorist (UIM) coverage rises to $1 million each.  Uber’s property damage (PD) coverage also rises to $50,000, but only if the driver’s personal insurance policy provides comprehensive and collision coverage.  Drivers without comprehensive or collision coverage would not be provided any PD coverage under Uber’s policy during Period 2 and Period 3.

Yet again, this does not meet Florida minimums, and occurs at critical times in which the driver is providing “for hire” transportation.  The devil is in the details.

Florida Statutes also require the company providing the insurance must be a member of the Florida Insurance Guaranty Association.  Uber’s insurance is provided by James River Insurance Co., based in Bermuda and not a member of the Association.  Scam or semantics?

Like California and most states, in Florida you are insured as either “commercial” or “personal”.  Uber may be able to switch “on and off” their coverage, but personal insurance carriers forbid the practice of using your minivan as a taxi one hour and the family car the next.  We know Uber breaks down the “periods of use” on their website.

However, they glaze over the most important period, when you are using your car for personal use (and declare you’re in good hands with AllState) by simply stating:  “During the time that a ridesharing partner is available, but between trips (Period 1), most personal auto insurance will provide coverage.”  To borrow another popular insurance slogan: “Did you know that your personal insurance company doesn’t care what Uber tells you on their website?”

There is no doubt the insurance market is moving closer to developing an insurance product that allows for “part-time” commercial use.  In order to adapt to the “new sharing economy”, they should, given we’re seeing more examples of the “commercialization of private property” everyday, whether it be cars as taxis, homes as hotels or kitchens as restaurants.

The question is not whether there will be a product for this type of part-time commercial coverage, because there will be. The question is whether drivers, homeowners or wannabe chefs will pay the additional premium for this type of policy?  While it won’t be as expensive as a straight commercial policy, it will certainly be more expensive than a personal one.

In addition to the insurance issues, another serious violation occurs when a driver who is financing or leasing their vehicle uses it for commercial purposes. Most personal car loans prohibit commercial use of the vehicle. Just as personal insurance lines prohibit, deny or cancel policies if holders violate the terms of the contract, finance companies can also declare an auto loan to be in default and repossess the car.  Again, Uber is misleading drivers in terms of the risks associated with using a personal vehicle for commercial purposes. Shocker.

Which brings us to the real policy issue: Will Uber ensure their drivers have appropriate insurance?  Will they ensure that drivers who have a loan on their car are in in compliance with their lender?  Today, drivers in Florida need commercial insurance.  Tomorrow maybe they will be able to apply for “sharing” insurance.  But until then, there remains a significant risk to all those involved.  Drivers are literally a minor fender-bender away from serious financial and legal ramifications and could have their cars repossessed at anytime.

If Uber is here to stay, and I believe they are, then they owe it to everyone involved to put on their big boy policy pants and ensure 24/7 insurance coverage at all times for their drivers. Quit playing games with background checks and vehicle inspections. Stop acting as if somehow they are different and rules don’t apply to them.

Will it cost them more? Absolutely. Will they continue to be able to offer per mile trips at a fraction of what traditional taxi companies that follow the rules of the road charge? Doubtful. Will they take away regulators and local government’s argument that enforcement is needed because they refuse to follow even the most basic public safety regulations? Yes. Will they earn the respect they so desperately want from everyone? Maybe, if it’s not too late.