UberX on Friday expanded the insurance coverage it offers to ridesharing drivers, a step toward easing the concerns of U.S. regulators and lawmakers and creating broader acceptance of the services.
Ridesharing companies such as UberX, part of black-car service Uber, allow members of the public to hail rides at the touch of a smartphone app. Mom-and-pop drivers rather than professionals typically answer their requests, in regular cars rather than commercial vehicles.
Until now, ridesharing companies’ policies kick in only when a driver is giving a ride or en route to pick up a fare. That left drivers exposed when they were between rides in what has become known as the ridesharing insurance gap.
UberX’s new policy is designed to make drivers more comfortable, along with regulators and lawmakers, many of whom are currently working through rules that would apply to ridesharing companies, Uber CEO Travis Kalanick said on a conference call with reporters.
“That allows them to be thoughtful as they work through the legislative options,” he said.
Rival ridesharing company Lyft said it will soon start providing additional protection to drivers when they are between rides, while Sidecar said it also plans to roll out similar coverage.
The issue of the between-rides insurance gap came to public attention after a high-profile accident on New Year’s Eve resulting in the death of a young girl. The driver involved, who crashed into her and her family at a San Francisco crosswalk, was between rides for UberX at the time.
Kalanick said the New Year’s Eve case did not fall into the gap because the driver’s insurance company has offered to pay up to the limits of the driver’s policy for that accident. He could not remember what those limits were, he said.
UberX’s new policy, which comes into effect only if a driver’s personal policy does not cover an accident incurred during a gap between rides, provides up to $50,000 in coverage per individual for bodily injury, per incident, capped at $100,000 total for the incident for bodily injury, plus $25,000 per incident for property damage.
Lyft did not provide details of its coverage to fill the insurance gap but said it would be rolling it out state-by-state in coming days, a spokeswoman said late Thursday. Sidecar’s would be coming “soon,” a spokeswoman said Friday.
Getting legislators and regulators on board with ridesharing is a key part of the ridesharing companies’ business plans, with many local officials specifically citing insurance as one of their concerns over the companies.
The services are coming under increasing regulatory and legislative scrutiny. On Monday, Seattle’s city council plans to vote on ridesharing regulation.
Ultimately, Kalanick said, insurance companies will offer specialized products for ridesharing drivers. For now, most insurance companies say ridesharing is not allowed under personal insurance policies, although in practice, many pay out claims arising from ridesharing accidents.
Covering drivers between rides creates a possibility that some drivers may turn on the UberX app to benefit from the expanded insurance, without intending to accept any rides. Kalanick said UberX is focusing on making sure coverage is broad and has not yet created any limits on how long a driver may log into the app without accepting rides.
Ridesharing stands apart from app-based car services that use professional drivers. Uber, for instance, relies on limousines for its main black-car service, while ridesharing unit UberX can rope in any driver with time to spare. Paid ridesharing companies operate in various big cities around the United States, where they typically come under heavy opposition from the taxi industry.
Kalanick blamed taxi lobbying for the roadblocks his company is facing in some areas.
“A lot of times you have particular city council members in the pocket of the taxi industry, straight up,” Kalanick said, and they take large campaign donations from the industry. “Guess what? Those folks typically end up being the folks who run the transportation committee.”
Taxi companies say ridesharing transportation lacks the safeguards they provide and makes for unfair competition.