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Relating to automobile liability insurance for transportation network company drivers.
No significant fiscal implication to the State is anticipated.
HB 1733 would require transportation network companies (TNC) to provide automobile insurance coverage for its drivers. This legislation would establish the minimum coverage limits for a TNC driver who is in the process of transporting a customer or is driving to pick up a customer.
If the insurance coverage is provided by the TNC, the TNC would be responsible for covering any claim against its driver.
Since a TNC driver uses his or her own personal vehicle to transport customers, a personal insurer for that driver would be allowed to exclude any coverage for damages that occur while the TNC driver is logged on to the TNCs digital network or is engaged in driving a customer. In other words, a personal automobile insurer would not be required to provide coverage for a TNC driver.
Lastly this legislation would include additional protections for a personal automobile insurer that would not require that insurer to investigate a claim that is specifically excluded under its policy.
While we understand HB 1733 is aimed at businesses such as Uber and Lyft, we cannot find a justification for this legislation. Currently, the Motor Vehicle Safety Responsibility Act in Chapter 601 of the Transportation Code specifically requires all drivers operating a vehicle in this state to maintain some sort of coverage in the event of an accident.
If the Motor Vehicle Safety Responsibility Act already establishes this requirement, it does not make sense for special legislation to address this “issue” for a particular segment of the transportation industry.
If a TNC chooses not to cover their drivers then that driver must be responsible for ensuring they have personal automobile insurance that will cover them. If the personal automobile insurer does not want to cover a person while they drive for a TNC then it is the prerogative of that insurer to make an exclusion for that. Ultimately, companies such as Uber and Lyft have an incentive to keep drivers working for them. If these TNC companies see that many of their drivers have personal auto policies that will not provide coverage while driving for them, then it is their incentive to issue adequate automobile coverage for its drivers.
Additionally, the author’s office says that this legislation would try to fix the coverage gap of when a TNC driver is not covered (under a TNC insurance policy) while driving around searching for a customer. For the most part, if coverage is offered by the TNC it is only in effect when the driver is transporting a customer in the car. These TNCs expect the driver’s personal insurance policy to cover him or her while searching for a customer to pick up. Once again, it behooves the TNCs to insure their drivers through this coverage gap period. Because failing to do so means that fewer and fewer drivers will risk this uncovered gap period while driving for them, which means they will not work for the TNC due to the risk. Once again, the free market resolves this issue without governmental interference.
Furthermore, insurance companies are free to come up with innovative new policies that cover these specific types of drivers as they become a growing share of the transportation for hire industry.
The explanations above shows how the free market would resolve this conundrum without the “aid” of government regulation. For this reason, we oppose HB 1733 because it violates our limited government principle, personal responsibility principle, and free market principle.