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Uber Ride-Sharing Service Granted Temporary License in Pennsylvania, but Debate Over Auto Insurance Coverage Continues

After much legislative debate, the popular ride-sharing service, Uber, won an experimental license to operate throughout much of Pennsylvania on November 13, 2014. The Pennsylvania Public Utility Commission’s 4-1 vote granted the company a temporary two-year license and will allow the app-based service to operate throughout most of the state, including the city of Pittsburgh. However, the license excludes operation in Philadelphia and several other counties in PA, including Clinton, Columbia, Lycoming, Northumberland and Union.

Uber made its debut in San Francisco about four years ago and has since exploded onto the scene in hundreds of other cities worldwide. Customers use the Uber smartphone app to summon a ride from one destination to another, much like a taxi, but in a private car with a private driver. Uber does not own the vehicles being used or employ the independent drivers, but instead “partners” with them in exchange for a percentage of their earnings.

Because the ride-sharing concept is still fairly new, Pennsylvania lawmakers want to create more regulations before making Uber a permanent fixture in the state. Uber’s experimental license was granted on several provisions concerning requirements for auto insurance, driver background checks, and financial reporting. The PA Public Utility Commission could revoke the temporary license if Uber fails to comply with the conditions set forth.

The topic of insurance protection, in particular, has been the concern of many people involved in the ride-sharing debate. Some feel that Uber has been dodging several important insurance-related issues. When riders use the Uber app to request a ride, how are they protected in case of an accident? Uber says it provides contingent liability coverage and commercial insurance coverage for passengers and drivers, but PA state regulators say the ride-sharing company also relies heavily on the drivers’ personal auto insurance policies, which doesn’t fully protect all parties.

For example, some Uber drivers wrongly believe that their personal auto insurance will automatically cover them in the event of an accident. However, when ride-sharing drivers are acting as independent contractors, most are actually not considered to be private drivers by their personal insurance companies and are therefore not covered. There are intricacies concerning which insurance policy applies at what time, and debate swirls around how much insurance Uber should provide, when it is in effect, and how drivers and riders access it.

Rides-sharing apps, like Uber, are an innovative, convenient and reasonably-priced way to get you to your destination. However, it is crucial to protect consumers from the potential risks of harm that may occur when using these services. Don’t expect the ride-sharing phenomenon to end anytime soon in Pennsylvania. Instead, expect more debate regarding laws and insurance regulations for ride-sharing companies in the future.

For more information on the insurance gaps in ride-sharing services, read this article published by the American Association for Justice.

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