Written by Gary Reinhardt, Esq.
Have you used a Transportation Network Company (TNC) yet? That is the fancy, statutory name for “ride share” companies such as Uber and Lyft. As most are aware, a TNC relies on its drivers to use their personal vehicle. The prospective passenger contacts a TNC driver through the use of a smartphone app. From there, the driver acts as a typical taxicab although personal experience has shown these cars to be cleaner and the driver to be nicer. Payment for the ride is made via credit or debit card already entered into the TNC’s digital platform.
The TNC concept is fairly new and courts have yet to sort out the morass of legal and insuring issues these ride shares cause. State statutes set out a comprehensive regulatory framework for these companies, including requirements that essentially label these TNC vehicles and require minimum insurance limits.
Starting with Va. Code Ann. § 46.2-2099.48, the Virginia legislature sets out what a TNC and its driver must do to operate in the Commonwealth. This statute requires that all TNC drivers carry “proof of coverage under each in-force TNC insurance policy, which may be displayed as part of the digital platform, and each in-force personal automobile insurance policy covering the vehicle.” This same statute limits a driver from driving more than 13 hours during any 24 hour period. The statute also requires that a TNC vehicle have a different color decal on the license plate, the year decal that shows you have renewed the vehicle registration. Virginia TNC vehicles will have a black decal with yellow “VA” letters and yellow numbers.
Most (if not all) personal liability policies contain the “public livery exclusion.” This excludes liability coverage for bodily injury or property damage “arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance.” This overly complicated language means that no liability coverage exists in a ride for hire or taxi-type situation. However, the exclusion only operates while the vehicle is being used in that capacity. At other times, coverage is not impacted (car and vanpools are excepted from the exclusion).
This is where the TNC driver issues get sticky. When does a TNC vehicle begin “being used?” Is it when the driver logs into the digital platform and begins his driving to be nearby for fares? Does it begin when he gets an assignment? Or, does it begin when he picks up a fare and end at drop-off?
Looking back at the Virginia Code, we find some guidance. Va. Code Ann. §46.2-2099.52 provides insuring requirements for TNCs. “From the moment a TNC partner (the driver) accepts a prearranged ride request on a transportation network company’s digital platform until the TNC partner completes the transaction on the digital platform or until the prearranged ride is complete, whichever is later” the TNC company (Uber, Lyft) provides primary liability insurance of one million dollars to the driver and his vehicle. The statute even requires the company to provide UM/UIM coverage “from the moment a passenger enters a TNC partner vehicle until the passenger exits the vehicle. The minimum amount of uninsured motorist coverage and underinsured motorist coverage for death, bodily injury, and property damage shall be $1 million.” The TNC company also has the “exclusive duty to defend” itself and its driver from any liability claim. This same statute provides protection for the personal carrier, too: “Nothing in this subsection shall be construed to require a personal automobile insurance policy to provide primary or excess coverage. Neither the TNC partner’s nor the vehicle owner’s personal automobile insurance policy shall provide any coverage to the TNC partner, the vehicle owner, or any third party, unless the policy expressly provides for that coverage during the period of time to which this subsection is applicable or the policy contains an amendment or endorsement to provide that coverage.”
With a passenger in the vehicle the coverage is fairly obvious. However, Va. Code Ann. §46.2-2099.52 requires the TNC company to provide primary liability coverage as long as the driver is logged into the company digital platform and eligible to pick up passengers. This includes times before accepting an assignment to pick up a passenger and after dropping off a passenger but still seeking fares. Oddly, the minimum limits of liability coverage at this time are just $50,000. Looking at Uber’s website, for instance, it provides just this minimum amount of liability coverage during the non-passenger, logged in times.
Forcing a TNC company to provide primary liability insurance at those specific times suggests that the legislature considers a driver logged into the TNC company digital platform to be using the vehicle as a “public livery.” Certainly, a driver should admit that at some point his vehicle would be “used” as a public livery, otherwise the driver would not have logged in.
During any claims investigation and particularly in those situations where the driver-insured does not know his passenger’s name or how to reach the passenger, make sure to photograph the license plate of the vehicle. If it is a TNC vehicle, it should have the required sticker for a TNC vehicle. Also, review the insured’s insurance application to see if the insured disclosed his driving work on his application.
Next, contact the insured’s TNC. TNCs are required, by statute, to cooperate in claims coverage investigations and “facilitate the exchange of information, including the dates and times of any accident involving a TNC partner (driver) and the times that the TNC partner (driver) logged in and out of the transportation network company’s digital platform.” TNCs also have required records regarding their driver and the vehicle authorized for use in the TNC business. These records should confirm or refute if the insured vehicle was “being used as a public or livery conveyance” at the time of the accident.
Because TNCs provide primary liability coverage and the insured is actively seeking fares by being logged in, the insured vehicle may be “being used as a public or livery conveyance” whenever the driver is logged in. This is something to consider anytime an insured with a black license plate decal is involved in an accident whether with a passenger or not.