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Taxi alternatives need to take responsibility: When something goes wrong, they don’t want to pay.

Clifford's Notes, Chicago Lawyer May 1, 2014

By Robert A. Clifford

Uber, Lyft, SideCar — they’re better known as electronic cab-hailers and are now competitors to the traditional taxi system. They may sound convenient, but a closer look reveals a lack of regulation or insurance.

The way they work is that an app is loaded on a mobile phone where you can “hail” non-professional drivers on their smartphones willing to drive you wherever you need to go for a price set by the company, which receives a percentage of the fee. You provide your credit card information to register, and the fare is charged electronically with a mandatory tip; no cash exchanges hands. Depending upon the weather conditions and your location, it may be more than what a standard cab would cost.

The cab-hailing app is growing fast in many cities including Chicago. They like to call themselves “ridesharing companies,” which is a misrepresentation, as I told the Illinois Senate Transportation Committee at a hearing in Chicago on March 13.

That committee, along with Ald. Ed Burke, is concerned about the lack of insurance provided, not only for these drivers and their passengers but for pedestrians and even those who might be subject to their dangers on the road while drivers are seeking a customer. Burke said at a February hearing that he wants these companies to operate the same as cab companies. Uber, Lyft and SideCar have refused to turn over their insurance policies as of this writing, despite Burke’s request. Company representatives were invited to testify at the Illinois Senate hearing, and no one showed up. The Senate committee also decided to ask the full Senate to issue a subpoena to the three companies to turn over insurance documents.

No one knows the dangers of this new system better than the family of a San Francisco 6-year-old girl. She was struck and killed by an Uber driver who allegedly was “on the app” looking for a customer on New Year’s Eve. It was reported that the driver told the police at the scene that he was working for Uber. A lawsuit filed in this case contends that the driver already had picked up another rider that evening and was in-between customers.

Uber released a statement saying that the “the driver was not providing services on the Uber system during the time of the accident.” The company’s theory, in general, is that it is not a transportation provider but is a technology company, analogizing itself to YouTube, which does not bear responsibility for users’ videos that are posted, or Craigslist, which does not verify items for sale. Even if that is the case, does that absolve a company when something goes wrong involving the very product or service from which it profits?

Coincidentally, a day after I testified at the Senate committee hearing, Uber announced that it is now insuring its drivers whenever the “ridesharing app is turned on” — $100,000 for bodily injuries at a maximum of $50,000 per person and up to $25,000 in property damage if the driver’s personal policy won’t pay.

But that still doesn’t solve the complex issue of an untrained chauffeur driving his or her own car (whose own personal insurance does not cover livery service) and whose business is based upon driving while using a hands-on cellphone — not to mention the unfair competition to standard taxi drivers, who are required to go through training, fingerprinting, language proficiency tests and car upkeep (the taxi cannot be more than 5 years old). As it was stated at the hearing, if you call Uber, Lyft or SideCar, you could be picked up in a Model T or in a mobile home.

Illinois has a long-standing Ridesharing Arrangement Act, 625 ILCS 30/2 (1984), which limits charging for ridesharing to two rides a day. But no one is keeping track of this unregulated for-profit taxi arrangement by unprofessionals in Chicago. Burke pointed out that Chicago’s municipal code calls for these drivers to “be licensed by the city as a taxicab.”

This year, a lawsuit was filed in federal court in Chicago on behalf of taxi companies that alleges the rideshares are “illegal transportation providers.” Mayor Rahm Emanuel has suggested regulating these shared rides with an ordinance that would require the companies to carry sufficient liability insurance.

As of this writing, the city ordinance reportedly is in a draft stage, soon to be introduced to the city council. Among some of the suggestions are that drivers would have to pass criminal background checks and drug tests, and cars would have to undergo annual safety inspections. There is also talk about drivers paying their share of the city’s ground transportation tax. Chicago taxis are required to serve all parts of the city, and a certain percentage of the fleet must accommodate the disabled; not so with these so-called “ride shares.”

Proper and adequate insuring of drivers and passengers is an obvious necessity. The city of Chicago requires all taxi drivers to carry a minimum of $350,000 in insurance. If personal insurance is involved, typical personal insurance excludes coverage if you are turning your vehicle into a commercial business, which is exactly what Uber and those like it are doing — unlike pizza delivery drivers, who often use their own personal cars but are nonetheless insured by the company’s commercial insurance policy.

What is bothersome is to think that companies can offer a service that creates a risk — putting passengers and others into moving cars in busy urban traffic — yet they say they aren’t going to be held responsible for it, happily accepting the profit but not the loss when something goes wrong.

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