Public or Livery Passenger Conveyance and On-Demand Delivery Services Exclusion
Includes copyrighted material of Insurance Services Office, Inc., with its permission.
August 29, 2016
Summary: In light of all of the ridesharing headlines in the news recently, ISO created two endorsements that are effective November 1, 2016: Public or Livery Passenger Conveyance Exclusion, CA 23 44 11 16 and Public or Livery Passenger Conveyance and On-Demand Delivery Services Exclusion, CA 23 45 11 16. This article reviews the forms and the background behind the endorsements. For an in-depth discussion of ride-sharing, see Ride-sharing and Car-sharing.
Topics:
According to the filing explanation, these endorsements are being implemented in order to address new exposures related to the transportation network and on-demand delivery services. They are designed to provide underwriting flexibility, and may help reduce an insurer's potential exposure associated with risk misclassification, particularly if the ridesharing or on-demand delivery participation was not reported at the time of application for the policy.
These endorsements modify insurance provided under the Auto Dealers Coverage Form, the Business Auto Coverage Form, or the Motor Carrier Coverage Form, and excludes from coverage under any of these three forms many practices of typical insureds who are working for or as a transportation network company. By accepting the endorsement, the insured is excluding coverage in order to obtain a smaller premium. These forms have been created by the Insurance Services Office in order to provide the insureds with a lower premium cost when certain risks are not being taken.
Forms CA 23 44 and CA 23 45 are virtually identical, with CA 23 45 adding a provision to each section that specifies that the exclusion also applies to an insured who is logged into a delivery network platform as a driver to provide delivery services whether or not the goods or products are located in the covered vehicle.
For reference in the remainder of this article, a transportation network company is a company that uses an online enabled platform (a transportation network platform) to connect passengers with drivers using their personal, non-commercial vehicles. Transportation network companies include Lyft, Uber, Via, Ola Cabs, and Wingz. As explained in more detail below, a transportation network platform is defined in these forms as "an online-enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation". A delivery network platform is a similar application that is used to coordinate deliveries. In the policies mentioned above, an auto can be defined as "a land motor vehicle, trailer, or semitrailer designed for travel on public roads", and any reference to the term insured means the named insured for any covered auto, and anyone else while using with named insureds permission a covered "auto" the named insured owns, hires, or borrows, exclusions apply.
A. Changes In Covered Autos Liability Coverage
The following exclusion is added:Public or Livery Passenger Conveyance
This insurance does not apply to any covered "auto" while being used as a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto".
Analysis
This exclusion precludes coverage whenever the insured is using the covered auto in order to transport people for money. Particularly whenever an insured is logged into their transportation network platform, no matter if there are passengers in the vehicle at the time. The reason for the strict exclusion of coverage for the insured while they are logged into the transportation network platform applications is because, if the insured is logged into the app, it can be assumed that they are either on their way to pick up a passenger, or have just dropped a passenger off and if it weren't for the ridesourcing application the loss would not have occurred. An example would be an employee is given exclusive use of a company car, and uses that vehicle as a ridesourcing vehicle on weekend nights and accrues a profit at the expense and liability of the company.
Changes in Covered Autos Liability Coverage CA 23 45
A. Changes in Covered Autos Liability Coverage
The following exclusion is added:Public or Livery Passenger Conveyance And On-demand Delivery Services
This insurance does not apply to any covered "auto" while being used:
1. As a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver whether or not a passenger is "occupying" the covered "auto"; or
2. By an "insured" who is logged into a "transportation network platform" or "delivery network platform" as a driver to provide "delivery services", whether or not the goods, items or products to be delivered are in the covered "auto".
Analysis
This language mirrors the language in CA 23 44, but specifies that not only does this exclusion apply during passenger conveyance, but also in cases where the insured driver is participating in on-demand delivery conveyances. CA 23 45 alters the language in CA 23 44 by adding a provision excluding coverage for an insured driver who is logged into a "delivery network platform" whether or not the goods or items that will be conveyed are located in the covered vehicle at the time the liability arises. This exclusion would prevent coverage in a case where a truck driver is using his commercial vehicle to provide extra delivery services via a delivery network platform between deliveries or by double dipping during other deliveries while his original employment provides his vehicle and insurance.
Changes in Physical Damage Coverage CA 23 44
B. Changes in Physical Damage Coverage
The following exclusion is added:We will not pay for "loss" to any covered "auto" while being used as a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not the passenger is "occupying" the covered "auto".
Analysis
Generally collision and comprehensive coverage will cover most automobile loss, so long as that loss is not excluded in the policy form. This section of the endorsement excludes coverage for losses that occur while the insured is logged into the transportation network platform whether or not there are passengers in the vehicle at the time the loss occurs. This exclusion is added because a person using a company car, van, or truck for ride sourcing is more likely to suffer an automobile loss than if they were using the vehicle only for employment based transportation uses.
B. Changes in Physical Damage CoverageThe following exclusion is added:
We will not pay for "loss" to any covered "autos" while being used:
1. As a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto"; or
2. By an "insured" who is logged into a "transportation network platform" or "delivery network platform" as a driver to provide "delivery services", whether or not the goods, items or products to be delivered are in the covered "auto".
Analysis
This policy language mirrors the language in CA 23 44. The added section of the endorsement excludes coverage for losses that occur while the insured is logged into the delivery network platform whether or not there are goods or passengers in the vehicle at the time the loss occurs.
C. Changes in Auto Medical Payments
If Auto Medical Payments Coverage is attached, then the following exclusion is added:Public or Livery Passenger Conveyance
This insurance does not apply to:
"Bodily Injury" sustained by an "insured" "occupying" a covered "auto" while it is being used as a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto".
Analysis
Generally the auto medical payments insurance applies to medical costs incurred because of bodily injury sustained in a car accident. This exclusion prevents the insured from recovering medical payments when the bodily injury occurs to the insured while they are in a covered auto and the auto is being used to transport people or goods for a fee from one place to another, particularly if the driver is logged into a transportation network platform, regardless of whether or not there are passengers in the vehicle at the time of injury. This exclusion is included because with increased usage of the vehicle for public transportation purposes, comes a greater chance the vehicle will be involved in an accident, and the driver, or a third party, will sustain injuries.
Changes in Auto Medical Payments CA 23 45
C. Changes in Auto Medical Payments
If Auto Medical Payments Coverage is attached, then the following exclusion is added:Public Or Livery Passenger Conveyance and On-demand Delivery Services
This insurance does not apply to:
"Bodily injury" sustained by an "insured" "occupying" a covered "auto" while it is being used:
1. As a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto"; or
2. By an "insured" who is logged into a "transportation network platform" or "delivery network platform" as a driver to provide "delivery services", whether or not the goods, items or products to be delivered are in the covered "auto"
Analysis
The first section of this language mirrors the language in CA 23 44. The second section adds that coverage will not be provided for any insured driver who is logged into a delivery network platform as a driver, whether or not the goods were in the vehicle at the time of loss.
D. Changes in Uninsured And/Or Underinsured Motorists Coverage
1. If Uninsured and/or Underinsured Motorists Coverage is attached, and:a. Contains, in whole or in part, a public or livery exclusion, then the following exclusion in Paragraph 2. does not apply.
b. Does not contain a public or livery exclusion, then the following exclusion in Paragraph 2. is added.
2. Public Or Livery Passenger Conveyance
This insurance does not apply to any covered "auto" while being used as a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto".
Analysis
If the Uninsured or Underinsured Motorists Coverage is attached and contains a public or livery exclusion, then the conduct will already be prevented under the initial policy language. If not, this section excludes coverage anytime an auto is being used for transportation of passengers for hire, including anytime the driver insured is logged into a transportation network platform whether or not the passengers are inside the vehicle at the time of the loss.
Changes in Uninsured and/or Underinsured Motorists Coverage CA 23 45
D. Changes In Uninsured And/Or Underinsured Motorists Coverage
1. If Uninsured and/or Underinsured Motorists Coverage is attached, and:a. Contains, in whole or in part, a public or livery exclusion, then the following exclusion in Paragraph 2. does not apply.
b. Does not contain a public or livery exclusion, then the following exclusion in Paragraph 2. is added.
2. Public or Livery Passenger Conveyance And On-demand Delivery Services
This insurance does not apply to any covered "auto" while being used:
a. As a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto"; or
b. By an "insured" who is logged into a "transportation network platform" or "delivery network platform" as a driver to provide "delivery services", whether or not the goods, items or products to be delivered are in the covered "auto".
Analysis
This language mirrors the policy language from CA 23 44, and also states that coverage is excluded anytime a commercial auto is used for transportation of goods, including when the driver insured is logged into a delivery network platform, whether or not the goods are inside the vehicle at the time of loss.
E. Changes in Personal Injury Protection Coverage.
1. Personal Injury Protection, no-fault or other similar coverage is attached, and:a. Contains, in whole or in part, a public or livery exclusion, then the following exclusion in Paragraph 2. does not apply.
b. Does not contain a public or livery exclusion, then the following exclusion in Paragraph 2. is added.
2. Public Or Livery Passenger Conveyance
This insurance does not apply to any covered "auto" while being used as a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto".
Analysis
If the Personal Injury Protection coverage contains a public or livery exclusion, then the next exclusion will already be included under the original policy language. If not, this section excludes coverage anytime an auto is being used to transport goods or people for hire, including any time a covered auto is being driven by an insured who is logged into a transportation network platform whether or not the passengers are in the vehicle at the time of loss.
Changes in Personal Injury Protection Coverage CA 23 45
E. Changes In Personal Injury Protection Coverage
1. If Personal Injury Protection, no-fault or other similar coverage is attached, and:a. Contains, in whole or in part, a public or livery exclusion, then the following exclusion in Paragraph 2. does not apply.
b. Does not contain a public or livery exclusion, then the following exclusion in Paragraph 2. is added.
2. Public Or Livery Passenger Conveyance And On-demand Delivery Services
This insurance does not apply to any covered "auto" while being used:
a. As a public or livery conveyance for passengers. This includes, but is not limited to, any period of time a covered "auto" is being used by an "insured" who is logged into a "transportation network platform" as a driver, whether or not a passenger is "occupying" the covered "auto"; or
b. By an "insured" who is logged into a "transportation network platform" or "delivery network platform" as a driver to provide "delivery services", whether or not the goods, items or products to be delivered are in the covered "auto".
Analysis
The policy language here mirrors that in CA 23 44, and adds a provision that excludes delivery network platforms and delivery services.
F. Additional DefinitionsAs used in this endorsement:
1. "Occupying" means in, upon, getting in, on, our, or off.
2. "Transportation network platform" means an online-enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.
Analysis
In order to remove the risk of misinterpretation, this endorsement defines some of the more obscure terms that are used within. This definition specifically defines transportation network platform which provides a network that connects passengers with drivers, who then provide a ride to a designated destination in exchange for compensation.
Additional Definitions CA 23 45
F. Additional Definitions
As used in this endorsement:1. "Delivery network platform" means an online-enabled application or digital network, used to connect customers:
With drivers; or
With local vendors using drivers;
For the purpose of providing prearranged "delivery services" for compensation. A "delivery network platform" does not include a "transportation network platform".
2. "Delivery services" includes courier services.
3. "Occupying" means in, upon, getting in, on, out, or off.
4. "Transportation network platform" means an online-enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.
Analysis
The definitions section mirrors that in CA 23 44, but adds that a delivery network platform is different from a transportation network platform in that the delivery network platform is used for the sole purpose of allowing drivers and vendors to prearrange delivery of goods in exchange for compensation while a transportation network platform is similar but it facilitates a connection between passengers and available drivers, who then provide a ride to a designated destination in exchange for compensation.