Uber, a California-based company, is an on-demand car service whose free smartphone application (app) allows customers to obtain rides from drivers who sign up with Uber. The drivers, who use their personal vehicles to provide the rides, pay to be listed on the app. They are not Uber employees, but must have insurance and pass certain background checks Uber conducts.
Customers seeking a ride choose a vehicle type and mark their location on a map. The app notifies them of available drivers and estimated arrival times. Fares differ by location. Customers pay for the service by credit card through an Uber account.
Uber differs from many taxi services because its vehicles are personally owned and its drivers are not company employees. Taxi and livery companies view Uber and similar services as a threat to their operations because the on-demand firms don’t incur the same overhead, salary, and regulatory costs they do. Uber believes that the taxi companies are trying to stifle legitimate competition.
Several states have decided to regulate these new companies. Colorado became the first state to regulate these companies by statute in June 2014. California has addressed the issue through administrative regulation. Both states have created a new car service category of “transportation network company” to regulate Uber and its ilk. Virginia recently ordered Uber and Lyft to stop operating in that state. (In Connecticut, PA 14-199, § 19, requires the Department of Transportation (DOT), in consultation with the motor vehicle and consumer protection departments, to study on-demand car services and submit recommendations on their regulation to the Transportation Committee by February 1, 2015.)
According to Uber’s website as of March 14, 2014, it offers the following insurance for its “UberX” program (basic service).
- Commercial insurance policy of $1 million of liability coverage per incident.
- Uninsured/underinsured motorist coverage of $1 million per incident.
- Contingent comprehensive and collision insurance of $50,000.
- Contingent coverage between trips of $50,000, $100,000, and $25,000.
Uber’s blog states that Uber drivers “must go through a rigorous background check … which includes county, federal and multi-state checks. These checks go back seven years, the maximum allowable by California law.” Uber says it also regularly checks driver histories.
For more information, read the full report.
