An Act To Regulate Transportation Network Companies has passed the Legislature and awaits the Governor’s signature. Transportation network companies (TNCs) such as Uber, Sidecar or Lyft are a rapidly growing component of the public transportation business. There have been a number of issues with TNCs that have been up in the air and now some clarity in North Carolina is imminent. There are many provisions in the new law which affects the TNCs at the corporate level. Most insurance agents are interested in the impact on the TNC drivers and the Personal Auto Policies (PAP) which the drivers have purchased.
The new law adds a section to the NC Financial Responsibility Act that pertains to TNCs drivers. First of all, the law required the TNC maintain primary automobile insurance that meets certain requirements. Primary means not contingent on the PAP policy denying coverage. Second, when a TNC driver is logged on to the TNC app, yet has not agreed to accept a fare from a passenger, the TNC must provide the driver with BI and PD liability limits of $50k/$100k/$25k. The TNC must provide UM/UIM limits at least equal to the BI and PD limits. Third, when the TNC driver is engaged in a “TNC Service”, which begins when the TNC driver accepts a ride request and ends when all passengers have exited the vehicle and all passenger property has been unloaded, the TNC must provide BI and PD combined single limits of $1,500,000. UM/UIM limits must be at least $1,000,000.
TNC drivers must carry proof of coverage satisfying the financial responsibility requirement at all time that the TNC app is open. The TNC driver must provide this information directly to interested parties in the event of an accident, including disclosing the fact that the driver was logged on to the TNC app at the time of the accident.
Another important point requires the TNC driver to notify the insurer of the vehicle and any lien holder on the vehicle of the intent to use the vehicle in TNC operation prior to engaging in TNC operation.
The law permits insurers to exclude TNC operations from all coverage parts of the Personal Auto Policy. Insurers who exclude TNC operations from their PAPs are also not required to provide defense in the event of a claim. If an insurer decides to provide TNC drivers with individual coverage for any TNC operations, such coverage is not cedable to the NC Reinsurance Facility.
ISO has produced PAP endorsement due to take effect in October that will provide coverage during certain phases of TNC operations. One endorsement will extend the PAP to the TNC operations when the TNC app is on but no ride request has been accepted. The second endorsement will provide coverage the same as the above endorsement, but also extend PAP coverage to the TNC operations between acceptance of the ride request and the loading of a passenger into the auto. The NC Rate Bureau has not indicated their plans for ride-sharing endorsements. However, because of the limits required for the operation between acceptance of the ride request and pick up of the passenger under the pending law ($1.5 million csl), it is unlikely that any PAP insurers would provide the required limits.
Until further notice, agents should counsel their PAP policyholders that there is no coverage under the current PAP for TNC ride-sharing activities. (Car pooling is still permitted.) Policyholders who intend to participate in ride-sharing activities should become familiar with the insurance provided by the TNC. It is all the coverage they have.
Stuart Powell, CPCU, CIC, CLU, ARM, ChFC, AAI, ARe, CRIS, has over 40 years experience in the industry, both as an independent agent and as IIANC’s resident insurance guru for the last 20 years. A valuable resource for IIANC members providing technical information, Stuart is well-known across the country for his vast insurance knowledge. He regularly teaches for numerous insurance organizations and is on the national faculty for the Society of Certified Insurance Counselors.
Questions? Contact Stuart at firstname.lastname@example.org or 888-275-8914.