Ridesharing Regulations Arrive in the Buckeye State

Cover Article

By Andrew L. Smith

n Dec. 22, 2015, Ohio Governor, John Kasich, signed are seen as cheaper, unfair, competitive alternatives. House bill 237, which allows the Public Utilities Uber is the largest ridesharing provider, valued at $50 bil- Commission of Ohio (PUCO) to regulate ridesharing lion. It is available in 58 countries worldwide. Uber averages Ocompanies in Ohio, including Uber and Lyft. The bill takes -ef 30 million rides per month and operates throughout Ohio, fect later this month on March 21, 2016. This article will explore including Akron, Columbus, Cincinnati, Cleveland, Dayton, the background of the ridesharing industry and the current and Toledo. Lyft is the second largest company. It averages more status of regulations across the country, with a focus on the new than two million rides per month, and is valued at $2.5 billion. Ohio bill. It is available only in 30 of the continental United States. Lyft also operates in Akron, Bowling Green, Cleveland, Cincinnati, Ridesharing Explained and Toledo. By way of background, “ridesharing” is a service arrang- ing one-time, shared rides on very short notice. This type of Insurance Coverage Gap? carpooling generally makes use of three technological advances: In 2013, an Uber driver hit and killed a 6-year-old pedes- GPS navigation devices to determine a driver’s route and ar- trian in San Francisco. The driver was not carrying a passenger, range the shared ride, smartphones for a traveler to request a but he did have the app turned on. At that time, Uber provided ride from wherever commercial insurance they are located, to its drivers while they and social networks were carrying passengers, to establish trust Ridesharing has been highly controversial, but not when the app was and accountability criticized as lacking adequate regulation, turned on and awaiting between drivers passengers. The family and passengers. insurance, licensure, and training. filed suit against Uber Unlike traditional in January 2014 in the taxi companies, San Francisco Superior almost anyone can drive for a ridesharing service. All a driver Court. See Liu v. Uber Technologies, Case No. CGC 14 536979, needs is a car and a smartphone app. California Superior Court, San Francisco. A settlement was Ridesharing has been highly controversial, criticized as lack- reached with Uber in July 2015, but filed under seal, of course. ing adequate regulation, insurance, licensure, and training. One Insurers and critics alike argued this created an “insurance of the main ridesharing firms, Uber, is banned in Berlin and a coverage gap” since a personal policy would not apply if the number of other European cities. Opposition may also come app was on, since the driver is engaged in commercial activ- from taxi companies and public transit operators because they ity. Uber’s policy wouldn’t apply either, since the driver is not www.CincyBar.org March 2016 CBA REPORT l 5

Cover Article Pro Seniors carrying passengers. Indeed, personal When a driver pulls away after drop- Ohio House Bill 237 automobile policies explicitly exclude ping a customer off, his or her personal Ohio House bill 237 becomes effec- the use of your personal vehicle for hire insurance becomes their primary cover- tive on March 21, 2016. Under the law: or commercial use, known as a livery or age; the ridesharing companies only offer commercial use exclusion. However, to secondary coverage. If a driver gets in • Ridesharing companies must obtain date, the Insurance Services Office (ISO) a wreck during such times, it can take a $5,000 permit from PUCO to use a has not released a standard ridesharing a long time to sort out which insurance digital network to prearrange rides exclusion. company is responsible. So far, there is between riders and drivers. Below is an explanation of the three little to no published, noteworthy case separate periods involved in a rideshar- law on point. Clarity may be provided • Ridesharing companies must ing transaction: in Sacramento, where a 24-year-old Lyft disclose how fares are calculated, passenger, Shane Holland, was killed in provide a receipt, conduct back- • Period One: The driver is logged an accident in November 2014. This is the ground checks on drivers, and into the app and driving around first time a Lyft passenger has died in an maintain records for two years. looking to obtain business. There accident. are no passengers in the vehicle. The • Ridesharing companies must insti- As a result of the so-called insur- tute non-discrimination policies, driver has not been contacted and ance coverage gap, since 2014, a total of has not accepted a ride request. accommodate service animals, and 29 states and numerous towns and cities provide a method for requesting • Period Two: The driver has been have implemented legislation requiring wheelchair accessible vehicles. contacted by phone or through the heightened regulation of the ridesharing app, has accepted the ride request, industry. Even more states are expected • Drivers must be 19 years or older, and is traveling to pick up the pas- to join this rapid trend in 2016. Most of pass criminal background checks, senger. the statutes are very similar in nature, and must not have committed any with the primary differences focusing type of serious vehicle-related of- • Period Three: The driver arrives, on the amount of coverage ridesharing fense in the last 13 years. picks up the passenger, and actually companies are required to provide. Is • The bill specifies drivers are not -em drives the passenger to his or her your state next? destination. ployees, nor agents of the companies, unless a written contract between

6 l March 2016 CBA REPORT www.CincyBar.org Cover Article

the driver and the company says • In all three phases, the ridesharing and Lyft are here to stay. In 2015, Uber otherwise. company’s coverage is primary and rides increased by 400% and Lyft rides does not require a personal auto in- increased by 700%. For the first time, The 13-page bill sets minimum levels surer to deny a claim before coverage Uber passed car rentals as business of commercial auto insurance drivers is available. travelers’ top mode of transportation for must carry: getting around town. This is a constantly While the insured driver would evolving industry and regulations will • In phase one, the period when the have a duty to cooperate with his or her continue to grow and change. rideshare app is on and the driver own insurer’s investigation involving an Ridesharing litigation will be sure to has not yet received a request for insurance claim, this in turn raises the follow in the Buckeye State. In December a ride, the ridesharing company, question of whether a similar duty would 2015, an Uber passenger in Columbus driver, or a combination of the two, apply to the third-party ridesharing was pulled under the rear wheel of an are required to obtain coverage with company. California answered this ques- SUV while entering the vehicle and died minimum liability limits of: tion in the affirmative in their statute. as a result. In September 2015, a woman • $50,000 of coverage for bodily Likewise, Ohio’s statute states as follows: was also allegedly assaulted by an Uber injury liability per person; driver here in Cincinnati. In a claims coverage investigation, Be sure to stay updated on the lat- • $100,000 of coverage for bodily a transportation network company est news, including the important new injury liability per accident; and and any insurer providing automo- House bill 237, which will drastically • $25,000 for property damage. bile insurance shall cooperate to change the way Uber and Lyft operate facilitate the exchange of relevant here in Cincinnati and throughout Ohio. • In phases two and three, when the information with directly interested driver has a rider in the car or has parties and any personal insurer of Smith is a senior associate attorney in the Cincinnati, accepted a request for a ride via the the transportation network com- Ohio office of Smith, Rolfes & Skavdahl Company app, the minimum liability limits LPA, who concentrates his practice in the areas of pany driver, if applicable. construction law, insurance defense, and bad faith increase to $1,000,000 because of litigation defense. Smith has extensive experience in bodily injury or death of one or more Conclusion state and federal court handling complex civil litigation matters. He is also the co-host of BearcatsSportsRadio. persons, or injury to property of oth- Ridesharing companies like Uber ers in any one accident. com and an avid UC Bearcats follower.