Earlier this month the Pennsylvania Public Utility Commission gave conditional approval to the ride-sharing service Uber to offer “experimental” service across most of Pennsylvania, including Pittsburgh, for two years.
One of those conditions is that Uber drivers must be insured for all three stages of the ride-sharing process: turning the app on and making yourself available for hire; transporting the passenger; and, dropping off that customer.
So Erie Insurance is trying to fill the gap in coverage.
“We saw the ride-sharing industry taking off,” said company vice president Cody Cook.
He said traditional “business use” policies excluded people who use their own cars as taxis.
“We really wanted to try to close it (the gap) as quick as possible,” Cook said. “So what we have is the opportunity to remove the exclusion, the livery exclusion, that exists on personal auto insurance policies exempting coverage when customers are driving for taxi services like Uber and Lyft.”
However, State Farm, the largest auto insurer in Pennsylvania, is not offering a special policy for ride-sharing drivers.
"State Farm’s auto policy does not provide coverage for damages arising out of the ownership, maintenance, or use of a vehicle while it is rented to or leased to others by an insured. In this case, that would include use with Uber or Lyft," said State Farm spokesman Dave Phillips.
The PUC is requiring Uber to inform drivers that their personal insurance might not cover them. Cook estimates that premiums for ride-sharing drivers would be about 30 percent higher than what they pay for their personal policies.
PUC Commissioner Pamela Witmer said the PUC is requiring primary coverage for stage one and then for “stages two and three an additional million dollar coverage.”
The ride-sharing drivers are not employees of Uber. The company says it “partners” with the drivers and receives about 20 percent of the revenues. Phillips said in terms of coverage, ride-sharing is not to considered the same as car-pooling where expenses are shared.
"This would be considered a 'livery' exposure, which would be best covered under a commercial vehicle policy," he said.
But Erie’s policy will not be available in Pennsylvania just yet. The company is offering it first in Illinois and Indiana.
“We want to pilot this and understand what the consumer demand is before we roll it out in other states," Cook said. “However our typical time frame typically runs between three and six months. Obviously if we see demand, if consumer demand is high that may expedite our process.”
