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5/28/2014 - Ride-sharing programs cause confusion for motorist liability

Ride-sharing programs are more popular than ever.

With everyone having places to go and prices at the pump stubbornly high, ride-sharing programs are growing in popularity as individuals increasingly seek out fellow commuters who are traveling to the same destinations they are, enabling them to save money and use less gas at the same time.

The concept of these programs is fairly straightforward. Through transportation networking firms (TNF), commuters arrange a personal ride with a car in the area. Drivers then partner with these TNFs by using their own personal vehicles to get individuals to their various destinations for a small fee.

Where things get complicated is determining what happens when there's a car accident. In other words, if there's a crash and there's damage that results, which policy covers the repairs: the ride-sharing company's commercial auto insurance or the motorist's personal car insurance?

This is an issue that more states are addressing in order to protect consumers. For example, in Illinois, the state senate passes legislation making it clear that when drivers are "on the clock" and offering their services for TNFs, it's the company's commercial insurance that is primary, not the motorist's personal plan.

"This legislation is a positive step forward and sets a reasonable standard to ensure that the public is protected if there is an accident while allowing this innovative new market to continue to grow," said Jeffrey Junkas, regional manager for the Property Casualty Insurers Association of America. "Additionally, it establishes a uniform statewide solution to ride-sharing regulations. Addressing the insurance gap regarding when the TNF's coverage applies was important because a driver's personal auto policy typically excludes damage or losses arising when the car is used in a commercial activity like a ride-sharing program."

Traffic death involving TNF motorist sparked legal challenge
This coverage-related issue for ride-sharing programs received national attention after Uber, one of the more popular ride-sharing car services, was brought to court by a man whose daughter was struck and killed by a driver who worked for the transportation network. The company refused to provide insurance protection because it said the driver "was not providing services … during the time of the accident."

In the aftermath of this incident, insurance commissioners have reached out to the public, advising them to get in touch with their insurer if they render services for TNFs to see how their auto insurance policies might be affected.

"I encourage anyone who drives for a transportation network company to contact his or her insurance agent, broker or company to identify potential gaps in coverage," said Therese GoldSmith, Maryland insurance commissioner. "Consider whether a commercial auto policy is appropriate to protect you as the driver, your passengers, and any vehicles should an accident occur."

For more information on how working for a TNF may affect personal car insurance, talk to a local Selective agent.

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