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Ridesharing insurance gaps endanger public safety, free market

total transit cab greenThere are three rideshare companies in Arizona, not just two.

This point seems to have been lost in the current discussion over how to properly insure vehicles to protect the public. One rideshare company, Total Transit – homegrown in Arizona – has been providing rideshare services since 2014, in full compliance with state laws on insurance. The other two have not.

Mike Pinckard

Mike Pinckard

Which leads to the point that there has always been only one vital issue present in this debate: the proper and legal manner in which to regulate for-hire transportation vehicles, including rideshare vehicles, so that the public is protected and costs are not shifted onto other businesses and individuals.

As the president of Total Transit, I feel compelled not only to set the record straight, but also to emphasize that we bear no ill will toward the other ride-share companies. In fact, Total Transit has an app of our own, and already has more than 200 rideshare drivers on Valley streets. We believe in rideshare, and invested a great deal in furtherance of that belief.

Total Transit’s rideshare business follows Arizona’s current law to the letter.

Not only do we background check and drug test our operators, and comply with Weights and Measures vehicle inspections, but each of our rideshare drivers carries the same primary commercial insurance policy on the vehicle that our taxi drivers must carry under Arizona law.

This primary commercial policy covers the vehicle at all times, and protects the general public and our passengers in the event of an accident. Unlike the insurance provided by others – gaps in commercial coverage, inappropriate reliance on drivers’ personal insurance backed by a narrow, inexpensive contingency policy – our business model leaves absolutely zero gaps in coverage, no matter what a ride-share vehicle is doing.

As we see it, requiring primary commercial insurance on all for-hire vehicles during commercial activity is the only responsible way for Arizona to embrace innovation, make the best use of new technology and continue to ensure public safety. I hope that is exactly what the Legislature has in mind and what Gov. Doug Ducey will work toward during this legislative session.

Our direct competitors want to make this a political fight. After all, the Legislature is inherently a political body. But our elected officials and the public at large suffer when empty sound bites carry the debate. We badly need to have a fact-driven conversation about how Arizona can get rideshare insurance right, or we run the risk of becoming another California, which recently passed a loophole-filled law leaving the public in jeopardy when rideshare drivers speed their way to a fare, or pick up a fare without the use of the app.

Our competitors seem to believe the only activities they should be required to insure involves a dispatch being accepted and a passenger in the car. As a rideshare operator, I know that there’s more to our industry than that.

Drivers must drive their vehicles into position near potential passengers to get offered fares from the app. That’s how an app works. As independent contractors, drivers must also be allowed to build their own book of personal customers and generate income from any legal source they choose. That’s a true free market.

Accidents can and do happen in all of these circumstances, and the innocent victims of these accidents should be covered by proper insurance. Current Arizona law takes all that into account by mandating that every for-hire vehicle be covered by gap-free, primary commercial insurance.

Total Transit rideshare drivers have it. And more than 1,000 Arizona mom-and-pop, one-or-two-vehicle livery businesses have that same coverage – despite the fact that they aren’t multi-billion-dollar corporations. They drive legally, every day.

To refuse to insure these accident possibilities during commercial activity isn’t a matter of a market innovator standing on some business principle. The refusal to insure these basic scenarios has the impact of passing the cost of risk, one of the basic expenses of running any for-hire transportation business, along to the general public, small businesses and anyone else who must purchase insurance.

That’s wrong. It’s anti-free market and against the competitive model Arizona’s deregulated for-hire transportation market has cultivated for decades.

For-hire transportation companies and fellow rideshare operators like Total Transit aren’t against competition. We simply believe in the fundamental premise of keeping the public safe by ensuring the same levels of insurance cover every for-hire vehicle. We pledge to continue to fight for these principles and to keep the driving and pedestrian public as safe as possible.

Our Legislature and governor have the chance to make Arizona the model for the nation in this area. Let’s hope facts and true free-market principles lead the coming debate.

– Mike Pinckard is president of Total Transit, parent company of Discount Cab.

3 comments

  1. I’m a taxi driver who agrees with Michael, but we need to go further than what was presented in the insurance committee on Wendsday.

    I’m no expert on the commercial insurance claims of ride share companies while app on. What is no doubt is the state minimum liability requirements while off app are not met. I say this because “off app” claims are denied and policies are canceled if known by insurance companies that vehicle is used part time commercial for hire. One insurance company will forward it to theit fraud department. Walks like a duck and quacks like a duck, it is a duck. In the Sate of Arizona all ride share vehicles are uninsured off app unless 24/7 insurance is not applied to the vehicle. Common work around is fraudulently lie or withhold information from the insurance carrier.

    The good news is the insurance industry is filling the void with hybrid policies that hopefully will take care of the gap. These policies do exist in other states but not in Arizona yet. In other states the hybrid policies only cost $20 extra a month to cover a personal vehicle while off app that is used part time commercial for hire.

    The bad news is what went trough the insurance committee was not adequate. They did spell out the details of what insurance is required but law enforcement need to have the tools to enforce the law. I’ve already seen in the field lack of enforcement of current law. Four Weights and Measures enforcers for the State will not do the job, local police need to be involved.

    ARS 28-141 pre-arranged ground transportation definition comes up short. There are two types of fares. Calculated or pre arranged. Calculated fares depend on application based on distance and time to calculate the fair. The updated law proposed pre-arranged ground transportation as regular route or specified points. In all cases pre-arranged ground transportation should have a known fare amount. Hardly ever does a cell phone application have a pickup and a drop off location with a predetermined fare amount. What is known is just the pickup location then the fare is calculated based on what occurs in the job based on distance and time involved. What was presented in the committee says cell phone apps are the same as predetermine ground transportation.
    I’m no expert in the legislative process just a taxi driver along with others who play by the rules. We watch those who don’t cut into our livelihood. Thank you Representative Fann for the opportunity to speak at committee and your patience with my nervousness. I’m sure I’ll be more confident in the future to articulate the injustice. Hopefully there will be amendments and changes.

  2. I’m a taxi driver who agrees with Michael, but we need to go further than what was presented in the insurance committee on Wendsday.

    I’m no expert on the commercial insurance claims of ride share companies while app on. What is no doubt is the state minimum liability requirements while off app are not met. I say this because “off app” claims are denied and policies are canceled if *known by insurance companies that vehicle is used part time commercial for hire. One insurance company will forward it to theit fraud department. Walks like a duck and quacks like a duck, it is a duck. In the Sate of Arizona all ride share vehicles are uninsured off app unless 24/7 commercial insurance is not applied to the vehicle. Common work around is fraudulently lie or withhold information from the insurance carrier.

    The good news is the insurance industry is filling the void with hybrid policies that hopefully will take care of the gap. These policies do exist in other states but not in Arizona yet. In other states the hybrid policies only cost $20 extra a month to cover a personal vehicle while off app that is used part time commercial for hire.

    The bad news is what went trough the insurance committee was not adequate. They did spell out the details of what insurance is required but law enforcement need to have the tools to enforce the law. I’ve already seen in the field lack of enforcement of current law. Four Weights and Measures enforcers for the State will not do the job, local police need to be involved.

    ARS 28-141 pre-arranged ground transportation definition comes up short. There are two types of fares. Calculated or pre arranged. Calculated fares depend on application based on distance and time to calculate the fare. The updated law proposed pre-arranged ground transportation as regular route or specified points. In all cases pre-arranged ground transportation should have a known fare amount. Hardly ever does a cell phone application have a pickup and a drop off location with a predetermined fare amount. What is known is just the pickup location then the fare is calculated based on what occurs in the job based on distance and time involved. What was presented in the committee says cell phone apps are the same as predetermine ground transportation.
    I’m no expert in the legislative process just a taxi driver along with others who play by the rules. We watch those who don’t cut into our livelihood. Thank you Representative Fann for the opportunity to speak at committee and your patience with my nervousness. I’m sure I’ll be more confident in the future to articulate the injustice. Hopefully there will be amendments and changes.

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