Commentary: ‘Rideshare’ Needs Rules

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A lyft driver picks up a fellow "rideshare" or transportaiton network company (TNC) supporter after the City Council Public Safety Committee meeting May 7, 2014. Photo by Iris Dimmick.

Iris Dimmick / Rivard Report

A Lyft driver picks up a fellow "rideshare" or transportation network company (TNC) supporter after the City Council Public Safety Committee meeting May 7, 2014.

I get it. San Antonio’s transit system leaves much to be desired. We don’t exactly have a state-of-the-art bus or rail system, and even if we did, we are so spread out as a city that either of those would still rely heavily on walking to stations. Transportation Network Companies (TNCs) seem almost tailor-made for this city full of young people with little expendable income and a tendency to binge drink.

Over the past several days, I have read commentary and news articles on all major and alternative news sources in this city. The overwhelming consensus is that the TNCs must be allowed to operate because they are easier, cleaner, nicer, more modern, cheaper, and safer with regard to their ability to reduce drunk driving. The crowd has spoken and spoken quite clearly. The people want TNCs and they want them now and forever. Who cares about licensing, fees, background checks, insurance, or the inevitable failure of traditional taxi services? Let the free market decide and let the chips fall where they may.

In this rush to condemn our city council for “outdated thinking” and outright “cronyism,” I feel we may have lost sight of a few of the real concerns here that come about when so-called “rideshare” services come to town. Let me just say that the term “rideshare” implies something very different from what TNCs are in the business of providing – which is why I choose not to engage in equivocation by using that term. While column after column cart out one straw man after another, nobody seems to be talking about the drivers of these services, their relationship with their insurance companies, and their relationship with their respective TNCs.

Recently a high-profile case in California put the TNC model to the test when a driver who was “on call” ran through a cross walk and killed a 6-year-old girl. The family of the girl reported seeing the glow of a mobile device on the driver’s face just before the accident. Uber argued that its insurance has no responsibility in the case because its insurance only covers the times when a driver is on their way to pick up a fare or when the passenger is actually in the vehicle. The driver in this case had a personal insurance policy on the car, but the insurer argued otherwise. Since the driver was “on call” and driving around an area likely to bring in customers, he was clearly using the car commercially and his insurance policy was voided.

Let’s take a minute to examine the sorts of risks these drivers are taking. In order to drive for Uber or Lyft, you must show proof that your car is insured. This is all well and good, except for the fact that just about every single insurance policy that you or I or anybody else with a personal use vehicle has does not cover commercial use of the vehicle. Now Uber would have us believe that the insurance they provide for their drivers covers any gaps that may come up, but the case of the 6-year-old girl in the cross walk illustrates just how huge the gaps can really be. I realize we have a new technology and a new business model, but it appears the real innovation is a company that is making billions by convincing young people to assume incredible amounts of risk for the sake of a few bucks.

It’s safe to assume that every Uber or Lyft driver in this city would lose their insurance policy the second their provider found out they were driving for a TNC. Many insurance companies want nothing to do with it. Hybrid personal-commercial insurance policies have not been introduced into the market yet. They stand to lose millions even if they successfully argue that their policy does not cover the accident. I’m even willing to bet those insurance companies would argue that accepting a contract with a TNC automatically voids their policies, presumably putting countless unknowing uninsured drivers on the road. Whatever you do, if you see one of those pink mustaches on the road, keep your distance.

Again, I recognize the need for options, but I don’t get a fuzzy feeling inside knowing I’m saving a few bucks on a ride home from the bar by aiding in the exploitation of naive college kids trying to earn a few extra bucks. Uber and Lyft rely on drivers who will hide their commercial driving from their insurance companies, and that’s where they fail the smell test.

All of that doesn’t even begin to approach the issue of what would happen if our taxis were unable to compete and tourists who don’t have a smart phone no longer have a way to get from the airport to downtown.

Let’s stop pretending City Council is packed with either greedy politicians looking for campaign dollars from the “Big Taxi” or old-fashioned Luddites who have to call their grandson every other day to show them how to use the remote control. City Council members have real issues to consider, and this is just one step in the process.

*Featured/top image: A Lyft driver picks up a fellow “rideshare” or Transportation Network Company (TNC) supporter after the City Council Public Safety Committee meeting May 7, 2014. Photo by Iris Dimmick.

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15 thoughts on “Commentary: ‘Rideshare’ Needs Rules

  1. Thanks, Erik, for providing a nuanced and pointed refutation of the pro-TNC argument.

    Like you, I am dismayed by all the fallacies the ride share camp keeps using. Aren’t there more effective ways of preventing drunk driving fatalities than having TNC drivers escort these besotted folks from bar to bar? As you say, the most glaring weakness of the pro-ride share camp is that the major insurance companies will not insure these drivers for commercial purposes. If the ride share driver is at fault in an accident, good luck receiving compensation for any injury that may incur. These drivers, in essence, are independent contractors without any legal ties to the TNCs.

    I don’t see what is so onerous about paying a nominal fee, having a background check, and receiving some kind of yearly renewal of a license, like the City Council proposes. “Let the free market decide” is yet another false argument the pro-TNC camp uses, comparing apples (regulated cab companies) to part-time, unregulated freelancers (oranges).

    On a final note, I try to avoid taking taxis as much as I can, for all the reasons typically cited. I would much prefer the convenience and ease of a TNC. However, I am not going to support a TNC unless it starts addressing the real consumer concerns and stops using “trendy” sophistry.

  2. While I concede the insurance provisions in the city ordinance, as written, were opposed by Lyft and Uber, I haven’t read a lot of commentary, opinion pieces or columns since that specifically mention or oppose the requirement for commercial insurance since the ordinance past. So I question this reactionary article. I agree that insurance beyond the personal provision is required. In fact, I think, when implemented correctly, the requirement for commercial coverage is one of the least controversial rideshare regulations.

    As an example consider that tragedy in California, Uber and Lyft (reluctantly, conceded) have signed on to support the California state bill requiring TNCs to cover their drivers even without a fare on board ( Such is a reasonable requirement which, as California demonstrated, would have likely been supported by TNCs if it had been the limited aim of the city’s ordinance.

    What are unreasonable are the commercial insurance requirements placed directly on drivers, the excessive inspection requirements, the background check and the fees.

    I understand all of these further regulations make the playing field with traditional limo and taxi operators more level but that should hardly be a goal of regulation. They do little if anything for public safety.

  3. Thanks for a different perspective on Ride-sharing in SA… It helps to see a different opinion. However, I have to disagree with your reasoning… full disclosure, I am not an expert on this matter. Ill start off by saying that the insurance thing isn’t that big of a deal, other cities have figured it out and there are already many companies in San Antonio that have that same problem but go modestly regulated, if at all (pizza delivery drivers, movers, on-demand maids, remodeling laborers ect.).

    I think I speak for most people when I say that my main concern with these regulations isn’t that I won’t have an option to get a cheap ride anymore. My concern is that, by effectively kicking out ride-sharing companies, San Antonio is making our city look like a less attractive place to live. Even worse, we are making San Antonio look less attractive to large companies and corporations who may have considered setting up shop in SA. Why would the tech industry consider bringing jobs to San Antonio when they could go to the more tech friendly city of Austin? Its not just tech companies either…

    For years I have been hearing city officials say that we need to bring more jobs to SA and that keeping and/or attracting young professionals is the key to that goal. The few people that finish their education in San Antonio rarely stay here. I’ve heard city officials yammer on about how we need to start building around down town so that its more urban… because that’s what educated millennials are attracted to (its true). With more educated people comes more jobs and a better and smarter San Antonio economy.

    By getting rid of Ride-Sharing San Antonio is demonstrating that we are not willing to adapt to new trends and technology. Ride-sharing is an example of how technology is changing cities and the people that live in those cities. Its a glimpse into the future of business, transportation and entertainment. Maybe this sounds overly dramatic, but its hard to argue against. As anyone who has majored in business will tell you, the companies that are slow to adapt to trends and technology almost always fail. I’m just afraid that San Antonio will “fail” so to speak.

    • Thank you Marc for expressing this point of view. As a part of the tech industry in San Antonio, my colleagues and I discuss your points on occasion. Ever since we caught wind of the decision by the city council, we have discussed your same exact points with even higher frequency.

  4. So your message is we should give up on new technology and something the people love because of insurance. Sounds like just an excuse to me. After time the insurance companies will catchup to this new technology. And I don’t believe we should give it up because of the lame excuse of insurance. Regulations stifle business and this is a perfect example of it. Uber covers up to 1 million dollars for their drivers, that should be plenty.

  5. Public Safety is the main concern, not insurance regulation.

    We live in a city with approximately 20 DUIs on any given day. Focusing on one particular lawsuit in a completely different state distracts the conversation away from the principal concern, which is curbing any of those DUIs that occur on a daily basis.

    Failing to make efforts to do so, based on reasoning that is preoccupied with a lawsuit in another state, that may or may not presage something similar here, seems like a disingenuous stretch.

    Again, we need to curb DUI’s. This argument is a distraction.

    • I agree that curbing DUI’s is important, and I also agree that taxis don’t do a good enough job with that. In fact, they do a horrible job. Plus, I’ve loved my experiences with the TNC’s–I’m a believer. But, it’s becoming increasingly clear that Uber is actively lying to its “employees” and/or encouraging them to lie to their insurance carriers. The insurance companies say this, the government regulators say this, the police say this, the Uber drivers say this, and even most journalists say this–only Uber denies it. Curbing DUI’s is a necessity, but should it come at the cost of thousands of cancelled insurance policies? Of incurring massive liability for the folks who drive for Uber to make a little extra money? Of everyone who shares the road with those drivers? It’s really despicable practice on Uber’s part. I wish it weren’t so, and I’ve looked far and wide for alternative viewpoints, but they only seem to come from Uber itself. Very sad indeed. Many if not all of us have depended on our car insurance to deal with damage to the vehicles and bodies of ourselves and others. I don’t want to endorse any product that relies on people voiding their personal policies or committing insurance fraud. Just look at this article, which came out yesterday:

    • I think that many of us already agree that taxi cabs are no “safer” than TNC’s. Actually, I can think of a few scenarios in which they are less safe–and many scenarios in which they don’t do as much to prevent drunk driving as a TNC would. But, at least taxi cabs are required to have insurance. In many situations, most of the drivers for Uber, Lyft, and Sidecare have no effective insurance–or stand to lose their personal insurance or have trouble filing a claim. If they’re in an accident, people might be left with huge amounts of debt and no ability to pay for the care (and repairs) they need. How is that a good thing? How is that even an acceptable thing? No one likes taxis less than me, but it’s hard to stand behind the TNC’s with the current insurance structure in place. I keep waiting for a solution. . . .

  6. Mike C,

    Aside from an isolated lawsuit in another state, can you cite some actual examples of how this insurance issue has created the problems you’ve opined to be so critical, or are these “huge amounts of debts” merely speculation on your part. If this insurance issue is such a public safer crisis, please enlighten us how it is so. And to what extent does this insurance issue outweigh the 20+ DUIs that actually happen everyday in San Antonio, which routinely place citizens in harms way on a daily basis.

    Any evidence or examples you can supply, beyond mere conjure or speculation, in this regard, would definitely be helpful in assessing this argument.

    Furthermore, is insisting on additional insurance requirements at the expense of losing rideshare altogether worth the risk, when DUIs are the real public safety crisis?

    • I had the same reaction as you to all this hullabaloo, Blayne, but then I simply read the dozens of articles–from the WSJ, NYT, Forbes, and others–about insurance companies saying that any drivers who have a personal policy and do rideshare have in fact broken the terms of their policy and are thereby driving without insurance. Read the Geico memo on the matter–they’ve begun investigating and cancelling the policies of holders they believe engage in rideshare. Read the driver threads on the “Uberpeople” site. If you believe that mandatory automobile insurance is a good state of affairs in this country–and I can’t believe you deny that–then you should be against what’s happening with the TNCs. If you believe having part-time or full-time drivers effectively operating without insurance is a fair tradeoff for reducing DUIs, that’s up to you. If you believe having drivers commit insurance fraud is a fair tradeoff for reducing DUIs, that’s up to you, too. The fact is that insurance companies, state regulatory agencies, lawmakers, and police are finally wising up to the fact that these drivers no longer have personal insurance, and the cancellation of policies will increase accordingly. Also, there is talk of criminal prosecution on multiple fronts. (Read that Buzzfeed article.) Once again, simply look at Uberpeople or look at the Geico memo or do a simple search of “uber insurance.” Many drivers have claimed that they have lost their policies or committed fraud in order not to. Sorry, that’s the way it is. I’d rather Uber bear the liability burden than the students and single mothers who have provided me excellent service each time I’ve used rideshare.

  7. Mike C,

    Aside from your lengthy, response you still provided no evidence this is a widespread danger or crisis to the public that outweighs the constant and imminent danger of DUIs in this city.

    The only link you did provide was to a uber “snitch” forum created by taxi and limousine drivers to push the issue in their favor, particularly in DC.

    I remain unconvinced and fail to see how this imminently affects the consumer-based public concerned with public safety, more so than over-priced taxis and local highways plagued by DUIs. This is a local matter before our city council. If it’s an insurance matter you are arguing then that should be dealt with at the state level legislatively. That’s way beyond our local government’s ability to legislate.

    Meanwhile, 7 more felony DWI arrests just on Christmas alone. Doesn’t include first or second timers.

    • Blayne, I think you and I both like the idea of TNCs, so I’m not sure where your adversarial tone comes from. I felt the same as you until I began a private conversation with Erik (author of this post) and did my own research. And I suggested that you read the Buzzfeed article I posted in my first reply: it’s by two journalists, one of whom has reported on the TNCs in depth. (Incidentally, the article has also been picked up by Reuters, which adds another layer of legitimacy.) The journalists spoke to insurance reps, state regulators, auto dealers, and drivers, and each and every one noted major insurance problems concerning coverage and liability. Once again, if you think it’s fine for an unknowing driver to have their insurance cancelled or to commit fraud, that’s up to you. The fact is that’s what’s happening, and Uber drivers are left holding the bag–unlike Uber and it’s $40 billion war chest/valuation. (I also suggested you look at the Geico memo, which is super clear on their policy.)

      Actually, I was just in Dallas this weekend, and I had an awesome Uber experience. Uber’s been approved in that city, but there are still major issues. I asked him about insurance, and he was totally unworried because he has a commercial rather than a personal policy, mainly because he drives livery during the day. He said he thinks the other Uber drivers are insane because of the liability issues involved in both the extent of the coverage Uber provides as well as because they will have their personal policies cancelled sooner or later. I asked why he thinks they sign up, and his reply was that they don’t read the fine print or hope against hope that they never get in an accident. He said another driver in that city was involved in an accident two days ago–with injuries to two passengers–that Uber is refusing to cover. (He advised that driver to hire a lawyer and go after Uber for violating the terms of their contract.) He also thinks that Uber’s car-financing system (read the Buzzfeed piece, once again) is predatory and illegal because it specifically encourages dealers and buyers to claim that the cars will not be used for commercial purposes, even though that’s the whole point of the program. (Just to add a bit of detail that might make my story more believable: my driver’s name was Freddie, he drove a Lexus LS430, and we gave him a 5-star rating on the ride from Oak Cliff to Deep Ellum–he was great, and he knew a lot about the business.)

      And, to play devil’s advocate, if you can give me the figures for how much DUI rates have declined in SA since Uber and Lyft started operating here many months ago, I’ll be impressed. I agree that the service should help, but I also know tons of people who grew up here and won’t walk to a bar that’s six blocks from their house. They grew up drinking and driving, and they continue to do it. It’s insane, but it’s part of the culture here in a way I can’t quite comprehend.

      And if it seems that a pro-Uber policy is a simple “young and progressive” principle, you’ll be happy to know that the Republican National Committee came out loud and strong in favor of the TNCs when they first emerged. They see it as a way of converting the youth to their crusade against “liberal government bureaucrats”:

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