A new product from US insurer Farmers Insurance that promises to address the “insurance gap” for ridesharing companies such as was approved in California this week.
The coverage is triggered when a driver turns on the on-demand transportation smartphone app and awaits a match.
It will satisfy the minimum liability requirements enacted by the US state last year, which ask drivers to carry US$50,000 in coverage beginning July 1.
Under the regulations, ridesharing companies must provide commercial liability insurance when a driver is logged into a scanning app but not en-route to pick up a customer.
The approval marks an important turning point in the maturity of one of the nation’s largest insurance markets.
Functionally, the Farmers policy is similar to the collaboration between Uber and Metromile, a US auto insurance firm offering pay-by-the mile coverage, which gives drivers a personal insurance product in addition to commercial coverage while they drive on their own time or wait to be matched with a passenger.
The coverage, which offers optional comprehensive, collision, uninsured and underinsured insurance, comes as the Australian insurance industry debates the best way to cover the emerging risk of ride-sharing.
Industry representatives – both on the insurance and ridesharing sides – welcomed the development.
“This is significant because now we have one of the major [insurance] carriers entering the marketplace,” Chris Dolan, the attorney who represented the family of six-year-old Sofia Liu, told the LA Times
Liu was struck and killed by an Uber vehicle in San Francisco last year while the driver was logged into Uber’s app, but not en-route to pick up a passenger.
Spokespeople for Uber, Lyft and Sidecar also called the development “encouraging” and expressed the hope that the Farmers product would be the first of many options for the ridesharing market.
Yet the policy’s approval doesn’t mean all potential insurance issues with ridesharing companies are solved, says Stan Doerrer, an attorney with Grenier Law Group.
“One thing is clear – every week in every state, you can read crazy factual scenarios about personal injury claims you could never predict,” Doerrer told the LA Times.
“I think there are going to be factual situations that happen that will reveal more and more gaps than we know now.
“We don’t even know what other gaps there could be.”