by Jerry M. Milton, CIC


I’m sure many of you have heard of Uber. It’s possible that some of you have even used the company. But, how many of you have heard of Lyft, Sidecar, Haxi, or Wingz? These are also ridesharing companies. They just haven’t received as much publicity as Uber.


Ridesharing is provided through transportation network companies that arrange shared rides on short notice. Ridesharing is like carpooling and is promoted as a way to better utilize the empty seats in a car. The driver shares the same destination as the passengers. Recent technological developments such as GPS navigation systems that determine a driver’s route and cell phones that allow a traveler to request a ride from wherever they happen to be have made these types of arrangements possible.


However, most of these services are not “ridesharing,” they’re “ridesourcing.” The traveler contacts the transportation network company, and a driver is dispatched. The companies provide a service similar to taxis, and the drivers do not share a destination with their passengers. These independent drivers operate through the same transportation network companies (Uber, Lyft, etc.) as the true ridesharing drivers.


“Ridesharing” or “ridesourcing” – it doesn’t really make a difference. Both have been controversial and criticized for inadequate regulation, insurance, licensing, and training. Strong opposition has come from taxi companies and public transit operators because they are seen as a competitive alternative.


Under this concept of ridesharing or ridesourcing, most drivers use their personal vehicles. Many of them probably have a Personal Auto Policy, which provides absolutely no coverage. The Personal Auto Policy excludes liability “arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.”* I wonder how many of those drivers know that?


Until recently, no state had enacted legislation regulating these companies. That changed in March 2015 when Georgia became the first state to pass a ridesharing bill. Maryland followed in short order and in April 2015 enacted a bill regulating transportation network companies such as Uber, Lyft, etc. **


The Maryland bill and the Georgia bill are similar. They both contain many of the items contained in an agreement reached by insurers and the transportation network companies. The bills require the transportation network companies to provide commercial insurance to cover any commercial activities undertaken by the drivers.


The Maryland bill contains insurance coverage limits that apply throughout the time commercial business is being conducted. The Georgia bill requires that the coverage begins when the driver accepts a request for the transport of a passenger.


Minimum liability limits are $50,000 for bodily injury or death of one person, $100,000 for bodily injury or death of more than one person, and $25,000 for property damage in Maryland; $50,000 for property damage in Georgia.


These minimum limits apply from the time the driver logs on to the mobile application networking system until a passenger accepts a ride. Once a ride is accepted, the minimum insurance requirement is $1,000,000 for bodily injury, death, and property damage. Any other state compulsory coverages must also be provided.


These bills should help close the insurance gaps that currently exist with these transportation network companies.


Please contact Gunn-Mowery with any questions.


* ISO recently made two countrywide filings – one with three PAP forms and another with a PUP form, all effective Oct. 1, 2015. The PAP forms include an exclusion endorsement, as well as coverage forms for drivers with an without a passenger. The PUP form is an exclusion endorsement.

** At the time that this story was published, several bills relative to transportation network company regulation and insurance were pending in the Pennsylvania legislature. Delaware lawmakers had yet to introduce any related legislation.


This article was printed in the July 2015 – Pennsylvania issue of Insurance Agents & Brokers’ publication, “PRIMARY AGENT”.