Yasbel Perez – Ridesharing companies, like Uber and Lyft, also known as Transportation Network Companies (“TNC”), have taken over the transportation industry, going from zero to a billion-dollar industry in just four years. Due to such exponential growth, legislation has been playing catch-up in an attempt to regulate this industry. As a result, on July 1, 2017, Florida joined the majority of the states in passing new legislation—Florida Statute § 627.748—bringing uniformity of laws. The Statute imposes new regulations on TNCs that are sure to have a ripple effect not only on TNCs, but also on insurance companies.
For example, subsection (11) of the Statute sets forth how an individual can become a TNC driver and how to maintain driver-status. TNCs are now required to perform background checks for new drivers and are required to update the background checks every three years for every single driver. The background check includes driving history, a search of the National Sex Offender Public Website, and criminal convictions. The Statute also clarifies that, unlike taxis, TNCs are not “common carriers.” This is significant because the duty of care changes. Taxi drivers carry a higher duty of care than common carriers.
Additionally, Subsection 9 of the Statute also identifies TNC drivers as independent contractors – not an employee of the TNC, so long as a set of conditions delineated in the Statute are met. This will likely give rise to legal issues based on inconsistent standards between state and federal law. Meaning, even if a TNC driver is considered an independent contractor under this new Statute, he or she may not be classified as such under federal law. This classification also impacts insurance companies in that now there will be no room for coordination of benefits or subrogation from worker’s compensation. Consequently, if a third party is responsible for the injury, the insurance companies—in this case the TNC’s insurance company and the TNC driver’s insurance company—may not be able to coordinate to avoid duplication of benefits. Also, the TNC’s insurance carrier may not have a right of recovery against the negligent party’s insurance company.
The Statute also requires that, upon request, a TNC driver disclose to any party directly involved in the accident or their representative, auto insurers, and investigating police officers whether they were logged into a digital network or if they were engaged in a prearranged ride at the time of the accident. This is significant because it gives insurance companies the right to investigate, since coverage depends on whether a TNC driver is logged on to network. The statute, however, fails to delineate any real consequences in the event a TNC driver is not truthful, thus, leaving it open for courts to interpret. The digital network is an important aspect of this Statute, as it implements different coverage requirements depending on whether the TNC driver is logged on to the TNC’s digital network (period 1) or engaged in a prearranged ride (periods 2 and 3).
Under periods 2 and 3, the Statute requires TNCs to provide coverage of up to $1 million in the event that a TNC driver does not have the required insurance coverage. Such coverage, however, must not be dependent on the TNC’s driver’s own personal insurance coverage limits, nor on the denial of the TNC driver’s insurance claim. Thus, TNCs like Uber or Lyft cannot wait until the TNC driver’s personal insurance company denies a claim before the TNC’s insurance coverage kicks in.
Lastly, the Statute’s language allows insurance companies to deny coverage to TNC drivers, including personal injury protection coverage (“PIP”), while the TNC driver is logged on to the TNC’s network (period 1) or while engaged in a prearranged ride (periods 2 and 3). Under the Statute, a “TNC must disclose in writing to the TNC driver” of the insurance coverage afforded to the TNC driver under the TNC’s insurance coverage and that a TNC driver’s insurance “may” not afford coverage during periods one, two, or three.
As one can imagine, considering that Uber and Lyft have thousands of TNC drivers in Florida alone, this new legislation will bring about a new wave of legal disputes. It will be up to the courts to fill-in the gaps left behind by some of the uncertainties of the Statute.
Read the full text of Florida Statute § 627.748 here.
