TRANSPORTATION NETWORK AUTO ENDORSEMENTS
Coverage varies greatly among proprietary carrier endorsements
[R]esearch your carriers’ ride sharing coverage offerings and summarize them
in an easy-to-read format that you and your team can quickly reference.
By Marc McNulty, CIC, CRM
Way back in 2016, in a previous “Mind the Gap” installment, we first reviewed Uber- and Lyft-related coverage gaps in the personal auto policy. Two ISO endorsements (PP 23 45 and PP 23 41) had been introduced to remedy a relatively new ridesharing exposure created by transportation network platforms. While updates have occurred to both endorsements, the premise for each remains the same.
In short, the PP 23 45 provides the opportunity to purchase liability (including medical payments coverage and uninsured and underinsured motorist liability) and physical damage coverage if an insured is logged into a “transportation network platform” but has not yet accepted a ride request (and no passenger is occupying the vehicle).
The PP 23 41 form expands the coverage offering by allowing an insured to be logged into a “transportation network platform” and having accepted a ride request. Coverage ceases once a passenger occupies the vehicle.
Fast forward six years … insurance companies have now developed their own versions of ridesharing/transportation network endorsements and a quick examination of them reveals that the coverage offerings vary greatly. In the best interest of your agency and your clients, you should consider taking the time to research what your carriers offer and where gaps may continue to exist.
What is a transportation network platform?
Before we dive too deep into the weeds, let’s start with the ISO definition of “transportation network platform” as stated in the 09 18 edition of the PP 00 01:
“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.
In layman’s terms, it’s a service such as Lyft or Uber that allows people to get from point A to point B by utilizing a system where drivers use their personally owned vehicles to transport passengers for a fee.
This phrase is important to know because this definition—and a subsequent exclusion—was added to the aforementioned 09 18 version of the personal auto policy. The public or livery conveyance exclusion that existed for over 30 years had the following language added to it:
This includes but is not limited to any period of time a vehicle is being used by any “insured” who is logged into a “transportation network platform” as a driver, whether or not a passenger is “occupying” the vehicle.
In other words, if an insured is logged onto a “transportation network platform” app as a driver, liability coverage is excluded. Similar exclusionary language also exists in the medical payments, uninsured motorist, and coverage for damage to your auto sections of the PP 00 01, so drivers who are looking to make money via such a platform are now faced with several coverage issues.
Not a one-size-fits-all solution
For those who are new to our industry, it won’t take you long to realize that insurance companies like to develop and use their own policy forms. Yes, some carriers continue to utilize ISO forms, but you will almost certainly have some that create their own library of policy forms and corresponding endorsements.
This is where the fun begins.
After seeing how confusing this can be, I put together a chart broken down by carrier for our personal lines team that visually shows coverage for ridesharing endorsements. I broke it down by each of the following time periods that apply once a driver logs into a transportation network platform:
- Waiting for an assignment
- Driving to pick up the passenger
- Transporting the passenger
The chart shows green for when coverage is provided and red for when coverage is excluded. The result ended up looking like something one would find on Wall Street, with a lot of both colors but no real symmetry present.
Let’s examine three examples of policy language from my findings, all from national personal lines carriers using proprietary rideshare coverage endorsements that use language differing from the ISO PP 23 45 and PP 23 41.
Example 1: Most limited option. Our first example has the same intention as the PP 23 45, which provides coverage only up until the driver accepts a request for transportation from a potential passenger. The endorsement states that the transportation network platform liability exclusion doesn’t apply if:
- no passenger is occupying the vehicle.
- the driver has not accepted are quest for transportation through a Transportation Network Platform; and
The same language is then added throughout the endorsement to the other coverage parts (medical payments, uninsured motorist, and physical damage).
Example 2: Slightly more coverage. The next example is intriguing, as the ridesharing liability exclusionary language differs from the language found in the physical damage section. To elaborate, the ridesharing endorsement states that bodily injury and property damage are excluded for several instances, including ridesharing activity. However, it then gives back coverage as follows:
This exclusion does not apply to the use of a vehicle identified on the Declarations Page as having “Ride-share Use” coverage while the driver of that vehicle is logged into a ride-share application but is not yet en-gaged in providing a prearranged service.
It should be noted that “prearranged service” is defined within the endorsement. The definition states that it is the period of time when the driver has recorded an acceptance of a request to provide transportation services and is traveling to pick up a passenger or goods or is traveling to the final destination to deliver the passenger or goods.
Unlike some of the other ridesharing endorsements in the marketplace, this one does not use identical language in the physical damage exclusion section. Rather, it provides a carve-back for ridesharing by stating:
This exclusion does not apply to any vehicle identified on the Declarations Page as having “Ride-share Use” coverage while being used in connection with ride-sharing activity.
The endorsement then clarifies that physical damage coverage will not apply to losses during ridesharing activities that arise out of certain situations (e.g., vehicles that have a gross vehicle weight [GVW] of 12,001 or more, are designed to carry more than eight passengers, are towing a trailer, etc.). It also states that coverage is provided on an excess basis over any insurance provided by a transportation network company, which is an important item to note.
Example 3: The broadest coverage. Our final example is the most inclusive, as it builds upon a broad proprietary base form that provides coverage when a driver is logged into a transportation network platform and is waiting to be matched up with a fare. The exclusion carve-back reads as follows:
This exclusion does not apply when the auto is being used by you or a relative to pick up and transport people as arranged through an on-line-enabled application or platform designed to connect clients with drivers for the transportation of people.
The physical damage carve-back takes this language and even adds non-owned autos to it as well.
What about delivery of goods?
If you were paying close attention, Example 2 had language in the “prearranged service” definition pertaining to the delivery of passengers or goods. What I didn’t disclose earlier is that one of the reasons my endorsement chart looked like a stock chart is that I also included rows for the delivery of goods.
This additional exposure creates a whole new set of challenges, as some carriers provide no coverage at all for this in their ridesharing endorsements, some provide limited coverage, and others offer separate endorsements pertaining specifically to the local delivery of goods.
These issues can be complicated, so my advice to you is simple: Research your carriers’ ridesharing coverage offerings and summarize them in an easy-to-read format that you and your team can quickly reference. You may not need the information right away, but you’ll be thankful to have it when needed.
Marc McNulty, CIC, CRM, is a principal at The Uhl Agency in Dayton, Ohio, and has been with the agency since 2001. He divides his time among sales, marketing, technology and operational duties. You can reach Marc at email@example.com