The California Public Utilities Commission is looking to reconsider the regulations it set in 2013 on the issue of insurance coverage for rideshare companies that connect drivers and passengers via their mobile devices. The CPUC’s proposed changes are opposed by major players in the industry, including Lyft and Uber.
Rideshare companies, or “transportation network companies,” have exploded in popularity recently, especially in California’s urban areas and particularly in San Francisco. They provide an alternative to traditional taxi services and public transportation by allowing prospective passengers to request rides through a smartphone app. The app shows nearby drivers, from which the prospective passenger can choose. The app then sends the requested car the GPS location information of the passenger, who is picked up by the driver in their personal, non-commercial vehicle. Payment is also managed through the app when the ride is complete. Traditional taxi cab services have claimed that rideshare companies unfairly take away their business.
In late 2013, the CPUC, which regulates passenger carriers pursuant to Article XII of the California Constitution and the Passenger Charter-party Carriers’ Act, issued a decision adopting rules and regulations applicable to TNCs. These regulations included a requirement that TNCs provide at least $1 million in commercial liability insurance. Since then, and partly in reaction to a fatal accident that occurred while a rideshare driver was waiting for a passenger request to come in — but not while he was carrying a passenger — the regulation has been criticized for too narrowly limiting the time under which a driver is covered by the TNC’s insurance.
Now, the CPUC is considering revising the regulation to require $1 million coverage during any time that a driver is available to accept rides (i.e. have their app open on their mobile device), not just when a driver is carrying a passenger. Rideshare companies have submitted comments to the CPUC arguing that this will lead to drivers abusing the app to increase their insurance, and put rideshare companies on the hook for accidents unrelated to their rideshare services.
In addition to granting a rehearing on insurance issues, the CPUC will also be reconsidering its TNC regulations pertaining to mandatory drug testing, license plates and whether Uber and certain of its subsidiaries fall within the CPUC’s definition of a TNC.