Is Uber In Your Future?
No one appreciates a good ride more than I do, but I have been gun shy about trying out ride sharing services in cities where they are already available. On the one hand, the more people who are willing to give me a ride the better; on the other hand, I have visions of being picked up by an Uncle Buck in a Jalopy or a well-meaning soccer mom who sticks me in the backseat of her minivan with a screaming, cheerio-throwing two-year-old.
These so-called Transportation Network Companies also raise a host of insurance issues that will impact your credit union if it offers car loans. The networks are in operation in NYC, but the Attorney General and the Department of Financial Services successfully blocked them from expanding outside of the Big Apple. Resolving this impasse has emerged as a headline issue not only in New York State but across the country. DFS Superintendent Lawsky recently said he hoped a bill authorizing the networks would be approved by the end of this Session.
These systems use Apps from a company such as Uber or Lyft to connect passengers and drivers. A request goes out to a network of drivers who have signed up to give people rides. The passenger is informed when someone has agreed to give him a lift and the fare is negotiated between the passenger and driver.
The system seems like a win-win until you start considering the insurance consequences. Let’s say that one of your members took out a car loan recently and decided that to make extra money she would pick-up the occasional ride. One day, while taking one of her passengers home from work, she gets into an accident. No one gets hurt, but the car is totaled. Chances are your collateral is worthless. Your typical insurance policy has a livery cab exception to its coverage. Since your member was acting as a livery driver, insurance isn’t going to cover the accident. You could include a provision in your car loans prohibiting using the car for such purposes without additional coverage but such coverage isn’t easy to get and, if a member ignores this requirement, you won’t know until it’s too late.
To resolve the insurance conundrum, both Senator Seward and Assemblyman Cahill have put in bills to regulate insurance that Ride Sharing Networks would be responsible for making sure their drivers have. In addition, the Legislature is grappling with the issue of determining when a person is acting as driver for hire and when she is just a soccer mom who got into a fender bender.
None of these issues are insurmountable. Sometime soon expect Uber or Lyft to become available near you and to add yet another wrinkle to your increasingly complicated lending procedures. Here are some of the proposed bills.