Agents’ Update on TNC (“Uber”) Insurance Issues

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TNC stands for “Transportation Network Company,” aka Uber, Lyft, etc.  Agents who are struggling to help their clients understand the TNC type of auto insurance exposures need to have a clear grasp of the issues.  One concept that is beginning to firm up is the three different periods involved with operating under a TNC contract:

Period 1 – Insured is operating their vehicle with the TNC app open.  This indicates that the insured is open to accept a fare from the TNC app dispatcher.

Period 2 – Insured has accepted a fare through the TNC app dispatcher and is en route to pick up a passenger.

Period 3 – Insured has picked up a passenger and is transporting the passenger to their destination.

Once the insured has arrived at the passenger’s destination and the passenger as left the vehicle, the insured returns to a Period 1 status as long as the TNC app is open.

There is a lot of legislative activity and some insurance industry activity moving towards some possible solutions.  Many legislatures are considering the financial responsibility requirements for TNC users.  Additionally, several insurance companies have announced plans to introduce coverages for the TNC exposure.

There has been a TNC bill (SB 541) introduced in the current session of the North Carolina Legislature which is moving through the Senate.  In addition to defining several terms associated with TNC and specifying the permitting process for a TNC, the bill specifies the financial responsibility of the TNC and any TNC drivers. The bill, if adopted, would require the TNC to provide one million five hundred thousand dollars ($1,500,000) of liability insurance for bodily injury and property damage “during the TNC service for each vehicle utilized by a TNC driver.”  (The coverage provided by the TNC can exclude a TNC driver if the driver is covered by private insurance providing liability coverage equal to or greater than the amount required by the statute.)  Additionally, the TNC must provide liability insurance for each vehicle being used by a TNC driver “during the time such driver is available on the Transportation Network Company’s online-enabled application or platform subject to” the following limits:

  • Fifty thousand dollars ($50,000) for bodily injury to any one person in any one accident
  • One hundred thousand dollars ($100,000) for bodily injury to two or more persons in any one accident
  • Twenty-five thousand dollars ($25,000) for property damage in any one accident

The bill also requires the TNC to disclose to each driver the limits provided by the TNC and that personal automobile liability insurance may not provide coverage “while using the Transportation Network Company’s online-enabled application or platform.”

The following chart associated the three Periods with the proposed financial responsibility requirements in SB 541:

Period 1 $50k/$100k/$25k limits of BI and PD liability
Period 2 $1.5 mm of combined BI and PD liability limits
Period 3 $1.5 mm of combined BI and PD liability limits

As these TNC responsibilities and insurance coverages emerge, agents must clearly understand how insurance coverages attach to the three Periods described above.  It is possible that different limits could apply to different Periods and insureds should clearly understand the presence of any sub limits.  Additionally, agents must understand how the TNC-provided coverage will coordinate with the insurance company coverages.  For instance, who will be primary, and who will be excess.

Stay alert, this is a rapidly evolving situation.

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