On Feb. 20, 2017, the legislature approved the Transportation Network Company Safety and Regulatory Act. The purpose of the act was to provide for the uniform regulation of digital network companies (such as Uber and Lyft), to protect the safety of their passengers and to require mandatory liability and UM/UIM coverage. P.L., 2017, c.26, effective May 1, 2017.
The act defines a “digital network” as any online technology that enables the prearrangement of rides between riders and drivers. A “transportation network company” is a business that uses a digital network to provide a prearranged ride between a driver and a rider. A “transportation network company driver” is a person who uses a personal vehicle to provide a prearranged rider to a rider. A “transportation network company rider” is a person who uses a digital network to obtain a prearranged ride from a driver.
A “personal vehicle” is a motor vehicle owned or leased by a driver that is used to provide prearranged rides. It is not a taxi, limousine, autobus, jitney, motor bus or any other vehicle for hire. It is not considered to be an automobile while a driver is providing a prearranged ride.
Thus, there are three parties to a digital network—the company, the driver and the rider. In practice, the driver logs into the network and waits for a call. The rider calls into the network and requests a ride. The company connects the rider with the driver in return for payment of a fee. The prearranged ride begins when the driver accepts a ride through a digital network, continues while the driver transports the rider, and ends when the rider departs the vehicle of the driver.
The act requires the transportation network company or the driver, or any combination of the two, to maintain primary automobile insurance coverage on the driver’s personal vehicle under two circumstances: (1) while the driver is logged onto the digital network but is not providing a prearranged ride; and (2) while the driver is providing a prearranged ride. The insurance requirements are different for each.
While the driver is logged onto the network but is not providing a prearranged ride, the company or driver must maintain at least the following insurance coverage:
- Automobile liability insurance for death or bodily injury of $50,000 per person and $100,000 per accident, and $25,000 for property damage;
- Full PIP benefits; and
- UM/UIM coverage of $15,000 per person or $30,000 per accident.
While the driver is providing a prearranged ride, the company or driver shall maintain at least the following insurance coverage:
- Automobile liability insurance for death, bodily injury and property damage of $1,500,000.
- UM/UIM coverage of $1,500,000.
- No PIP coverage for passengers but medical payments coverage of $10,000 for the driver.
In addition, a transportation network company or driver cannot assert the limitation on lawsuit option (the verbal threshold) as a defense in any action for damages arising from a prearranged ride.
Finally, an automobile insurance company who insures a private passenger automobile may exclude coverage for any loss that occurs while the vehicle is logged on to a digital network or is providing a prearranged ride. On the other hand, there is nothing in the act that precludes an insurer from providing primary or excess coverage for a driver’s personal vehicle.