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Texas Senate Passes Insurance Requirements for Transportation Network Companies
Wednesday, May 27, 2015 6:45 AM

The increasing popularity of transportation network companies (TNC), such as Uber and Lyft, have raised questions about adequate insurance coverage by TNC drivers and the need for insurance requirements that protect the public under this new business model.

HB 1733 by Rep. John Smithee (R-Amarillo) and Sen. Kirk Watson (D-Austin) addresses the issue of liability coverage by the driver’s personal automobile insurance from the time the driver logs onto the ride application until the end of the ride. Insurance for TNC drivers must allow the TNC driver to use a personal vehicle to transport riders for compensation.

Any driving that occurs outside these conditions must be covered by the driver’s own personal insurance or other commercial insurance. However, insurers are not required to include coverage for TNC activities in a personal automobile insurance policy, nor would they have a duty to defend or indemnify a claim under a personal policy while the driver is engaged in TNC activities. The TNC must provide insurance coverage in the event that the driver’s personal coverage lapses or provides insufficient coverage. 

The TNC must provide drivers with disclosures containing the details of the TNC’s blanket policy and its application before that driver accepts a request for a ride. These disclosures must tell when a policy applies and when it does not. In order to better make a determination of claims, TNCs must assist insurers in providing the precise time that TNC drivers are logged in and a clear description of the details of any blanket insurance policy on its drivers.

The Texas Credit Union Association supported amendments adding protections for lienholders to the bill, including uninsured/under-insured coverage and a requirement that insurance claims made under an insurance policy that covers TNC activities is paid to the person that repairs the car, or jointly to the car owner and lienholder.

The bill passed the Senate Tuesday by a 30 to 1 vote, and now goes to the governor.

Contact Jeff Huffman, president, Texas Credit Union Association, at 469-385-6488 or jhuffman@txcua.coop for more information.