Virginia Approves Higher Liability Coverage Minimums for Uber and PTNCs
In February, the Virginia General Assembly addressed a number of issues related to licensing and regulating companies in the new “gig” economy — a labor market characterized by short-term contract or freelance work. Among the new entrepreneurial ventures disrupting “legacy” industries are transportation network companies (TNCs) such as Uber and Lyft. Some of these companies not only transport people but also transport goods commercially, so they also function as property transportation network companies (PTNCs). A major question for the Virginia Trial Lawyers Association was how much liability insurance these TNCs should have to carry. VTLA viewed the existing levels as much too low to protect the public and lobbied aggressively for mandatory minimums equal to those for other commercial carriers. Here is a brief summary of the issue.
At present, rideshare companies like Uber carry $1 million in liability coverage when they transport people. But what happens when similarly constituted companies, such as UberEats and GrubHub, deliver food from restaurants? These companies previously negotiated with the Department of Motor Vehicles to set their mandatory minimum coverage at $50,000. But as anyone who has been in a serious car accident knows, that minimum coverage is not enough to fully compensate a victim.
VTLA reasoned that the potential for a catastrophic accident is greater when a driver is racing to get in as many food deliveries as possible than when a driver is transporting a live passenger who could presumably voice an objection to reckless driving. So VTLA argued the property TNCs should be required to carry as much liability insurance as other commercial carriers.
VTLA asked for the level to be set at $1 million. The Virginia House approved a limit of $500,000, but the Senate version of the bill only called for $100,000. VTLA compromised at $750,000, but despite their aggressive lobbying, the final bill set the limit at $100,000 per person and $300,000 per incident. This is a significant improvement over the recent past, when Uber cars weren’t even insured by the company until a driver actually got a call. Still, the legislature has chosen to do what is good for the TNCs — not necessarily what is needed to protect the people of Virginia.
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