Uber and Lyft could have to comply with new auto insurance requirements, pending legislation
New auto insurance requirements may put some pressure on ride-share service, such as Uber and Lyft. The Senate Banking and Insurance Committee has supported new legislation that would introduce new requirements on companies that use mobile applications to connect drivers with passengers. These services have become quite popular in large cities and serve as an alternative to taxis. Over the past year, these services have been the subject of concern because of the auto insurance coverage they offer their drivers.
Legislation would force ride-share companies to bolster their auto insurance coverage
The new legislation has yet to reach the House of Representatives, but has already gathered significant support from several legislative bodies. The policies that companies like Uber and Lyft offer do not provide coverage until a passenger is in a vehicle they have hired. This means that while the driver is traveling to their customer, the company’s coverage is not active. Instead, drivers are covered by their own auto insurance policies, which presents certain risks. The new legislation would require policies to be active as soon as drivers are paired with a passenger, even if that passenger is not yet in the vehicle.
Opponents suggest that there is not insurance gap for drivers
Opponents of the legislation believe that there is no coverage gap, as all drivers must have their auto insurance policies. Opponents argue that new insurance requirements will force companies to increase costs. Currently, ride-share services offer rates that are somewhat lower than traditional taxi services, but this may no longer be the case if the new legislation is approved by the federal government.
Legislation could offer protection to consumers and ride-share companies
Supporters of the legislation believe that it is necessary in order to protect consumers that are using ride-share services, as well as the drivers that work for these services. The legislation may also protect ride-share companies if their drivers attempt to procure passengers outside of their mobile apps. This is not an uncommon practice among drivers, as they will seek to offer services to their passengers and bypass the mobile apps that are used to procure these services normally.