GEICO's Ride-sharing Auto and On Demand Auto Form
April 17, 2017
In the past few years, ride-sharing has become increasingly popular. Individuals use their cars to transport passengers for a fee using a Transportation Network Company, which has a platform that connects riders with drivers and handles payments. Insurance coverage for such endeavors however is problematic, as standard policies do not cover such activities. GEICO is one of the first carriers to develop endorsements for such activities. This discussion focuses on their Ride-sharing Auto and On Demand Auto Form, BA 77 CW 01 16, which applies to Business Auto and Motor Carrier Coverage Form. As always, policy provisions apply unless modified by this endorsement.
Topics covered:
Additional Definitions
Section I
Summary
Definitions
B. Additional Definitions
1. When the phrase “private passenger type” appears in quotation marks it includes any covered “auto” you own of the private passenger, pickup or van type not used to carry persons for compensation or a fee, other than a “ride-sharing auto” or “on demand auto”.
2. “Ride-sharing auto” means a “private passenger type” “auto” used by you or a “family member” while logged onto a digital application or platform to accept and provide “pre-arranged ride” requests in connection with a “transportation network company”. “Ride-sharing auto” does not include a taxi, a vehicle used for limousine services, or other for hire vehicle.
3. “Pre-arranged ride” means the period of time that begins when a driver accepts a ride requested through a digital network controlled by a “transportation network company”, continues while the operator transports the passenger in the operator's vehicle, and ends when the passenger departs from the vehicle.
4. “Transportation network company” means a company or organization facilitating and/or providing transportation services using a computer or digital application or platform to connect or match passengers with drivers for compensation or a fee.
5. “On demand auto” means a “private passenger type” “auto” used by you or a “family member” to perform on-demand courier, delivery and/or services, such as grocery shopping, house cleaning, dry cleaning or other types of delivery services for profit, through the use of a computer or digital application or platform that connects a driver to provide these delivery services.
Analysis
This section deals with additional definitions needed in order to help understand how the coverage works. When “private passenger type” appears in quotes, its definition is any covered auto the insured owns of the private passenger auto, truck or van type not used to carry persons for a fee other than a “ride-sharing” or “on demand auto”. If an insured has a taxi company and has a fleet of taxis, they are not considered “private passenger type” vehicles per this definition. Only those vehicles not used for transportation of people or those vehicles used in ride-sharing or on demand auto uses are covered. Taxis are subject to significant regulations while ride-sharing vehicles have so far scooted past the regulations.
“Ride-sharing auto” is defined next, and is a private passenger auto used by the insured or a “family member” while logged onto a digital application or platform to accept and provide “pre-arranged ride” requests in connection with a transportation network company. This does not include taxis or limousine services. This is a critical coverage stage in ride-sharing; when the insured is actively open to accept rides, and is driving around town hoping to find someone willing to pay for a ride. This is the coverage most needed as most carriers do not want to tackle this exposure. This is often considered stage one of ride-sharing.
The next definition is “pre-arranged ride” and it is the period of time when a driver has accepted a ride request through a transportation network company and continues until the passenger departs from the vehicle. This is both stages two and three; two is when the driver is on route to that passenger, and stage three is when he is transporting that passenger. The ride isn't so much pre-arranged in the literal sense, implying that it was set up in advance, but that a ride has been agreed upon by a driver and a rider and the driver is on his way to the pick-up location.
“Transportation network company” is the company or organization that facilitates or provides services using a computer or digital application or platform to match drivers to passengers or vice versa for a fee. An example of a transportation network company or TNC is Uber, Lyft, and those types of organizations.
An “on demand auto” is a little different. This is a private passenger vehicle used by the insured or family member to provide on-demand courier, deliver and/or services, such as grocery shopping, house cleaning, dry cleaning or other types of delivery services for profit through the use of a computer network to provide such services. Such networks would be TaskRabbit, where an individual can hire someone to do everything from housecleaning to building furniture to running errands, AirBnb where you can rent your home to others when you are on vacation, or Glamsquad where you can hire someone to come do your hair at makeup at your own home. Basically the car is being used to transport the owner to the location of the job he has agreed to perform.
Section I
A. Changes In Owned Autos You Acquire After The Policy Begins
1. Section I – Covered Autos, B.2 is replaced as follows:
But, if Symbol 10 is entered next to a coverage in Item Two of the Declarations, an “auto” you acquire ownership of will be a covered “auto” for that coverage only if:
a. We already cover all “autos” that you own for that coverage or it replaces an “auto” you previously owned that had that coverage;
b. The “auto” is not used to carry persons or property for compensation or a fee, other than a “ride-sharing auto” or “on-demand auto”; and
c. You tell us within 30 days after you acquire ownership of it that you want us to cover it for that coverage.
Analysis
Section A addresses changes in autos that occur once the policy has been put in force. As it is possible for carriers to add vehicles not covered by the policy, it is typical to address newly added vehicles specifically. Coverage may be provided on a limited basis until the carrier is notified of the change. This form provides coverage on an acquired auto only if the carrier already covers all autos the insured owns, or it replaces a vehicle the insured owned but replaced with the vehicle in question. The insured trades in a 2010 Toyota Camry for a 2017 Toyota Camry, for example. Also, the auto must not be used to carry persons or property for a fee other than a “ride-sharing auto“ or “on-demand auto”. This is significant as in most policies such activity is firmly excluded. Also, the insured must notify GEICO within thirty days of the acquisition of the vehicle if the insured wants coverage on that vehicle.
Summary
The definitions used in this endorsement are essential to providing coverage for the well-known gaps in most coverages for ride-sharing activities. Even though many TNCs provide some coverage, there is still confusion among drivers as to whether or not their policy provides coverage at all times. This endorsement provides coverage during the critical period when the insured is logged onto the application looking for riders to pick up. Of interest is that this endorsement also provides coverage for “on-demand” use, which provides services to others such as grocery shopping for a fee. As the sharing and service economies expand, there will be greater need for such coverages by more carriers.