Legal Update: Ride Sharing
Updated: Nov 19, 2019
As a result of a final budgetary push in Albany last April, ridesharing finally made its way to Upstate New York this year. Buffalo, Rochester, Syracuse, and Binghamton now have the benefit of ridesharing opportunities like Uber and Lyft that were previously only available in the New York metropolitan area. As a result, more claims will be presented involving a ridesharing component. However, although the enabling statutes are in place, many of the particular rules, regulations, and other details for this new area of law are still a work in progress. Understanding the Language Uber and Lyft are referred to as “Transportation Network Companies” (TNC). A TNC is licensed and operates in New York State and uses only a digital network (i.e., app) to connect “TNC passengers” to “TNC drivers” who operate a “TNC vehicle” to provide a “TNC prearranged trip.” A TNC prearranged trip begins when a TNC driver accepts a TNC passenger’s request through use of the digital network controlled by the TNC. The trip begins at the moment of acceptance, and ends when the last requesting passenger departs the TNC vehicle. The nexus of the process is the TNC digital network: a TNC driver receives connections to potential passengers and related services through the app, and a TNC passenger uses the app to arrange for transportation. Insurance Coverage TNC drivers are not employees of the TNC and are using their own motor vehicles. The TNC is not the owner or operator of the vehicle and is not the employer of the TNC driver. This structure does not fit within the existing framework for insurance coverage and motor vehicle liability law in New York State. The TNC law thus presents a new paradigm: no vicarious liability can be attributable to the TNC for the potential negligent acts of the TNC driver, and the TNC driver is an independent contractor whose own auto policy may not cover TNC activities. So, where does coverage come from? The TNC statute creates and establishes financial responsibilities for TNCs and drivers. The TNC is mandated to provide a “group policy” that recognizes the TNC driver and provides financial responsibility while the driver is both logged into the TNC’s app and engaged in a TNC prearranged trip. The “group policy” is fundamental. The group policy includes mandatory bodily injury, property damage, no-fault, uninsured motorist, supplementary uninsured/underinsured motorist, and motor vehicle physical damage coverages. The driver’s own insurance carrier(s) can provide an additional layer of coverage in the form of TNC endorsements and TNC umbrella coverage (should the driver choose to purchase same), and carriers are now offering coverage to TNC drivers to be purchased as an add-on to their existing automobile policies, but the TNC group policy is mandatory. The statute provides for both first-party and third-party benefits under the TNC group policy. Coverage under the group policy is not conditioned upon an unavailability of coverage from the driver’s insurer; rather, it is understood that the driver’s insurer may in fact exclude all TNC coverage. Standard no-fault coverage under the group policy is applicable to any passenger or pedestrian involved in a TNC transaction. The statutory scheme for liability coverage is as follows:
During “Phase I,” when the TNC driver is logged into the app but has not yet received a passenger request, coverage is $75,000/$150,000. During “Phase II,” when the driver accepts a request and is heading toward pick-up, there is a single liability limit of $1,250,000. The same limit is provided for SUM/UIM coverage. During “Phase III,” when the driver is actually transporting passengers (e., from the moment of pick-up to the moment that the last passenger departs the vehicle), the same liability limits apply as for Phase II. The TNC must also offer workers compensation insurance to a TNC driver under the New York Black Car Operators’ Injury Compensation Fund. The Superintendent of the New York State Department of Financial Services has yet to promulgate rules to address a number of questions. For example, it is common for TNC drivers to work for both Uber and Lyft simultaneously. It is uncertain what coverage may apply when a driver is logged into multiple TNC networks simultaneously but has not yet engaged a TNC prearranged trip (i.e., during Phase I), or when a driver has engaged with one TNC (e.g., Uber) but still has the app open for another TNC (e.g., Lyft). Another significant question is when a TNC’s involvement may be identified after an accident. The TNC statute sets disclosure requirements and provides for the establishment of an information exchange. The statute also provides that the TNC driver’s name and operating license number must be on the passenger’s e-receipt. Within a very brief time, Uber and Lyft have become ubiquitous in Upstate New York. As more claims are presented that have a ridesharing component, this area of the law will continue to be developed. Having a foundation of the process is critical to understanding what will undoubtedly be a growing area of both tort and coverage law.