I’ve had an affair!…with Uber

July 14, 2017 at 9:49 am Leave a comment

This morning I’m telling the world I’ve cheated and I may do it again.

I have just taken my first Uber ride to work. I honestly felt like I was cheating on all of you medallion holders out there but the temptation of quick, simple and courteous service was too tempting.  If my experience is any indication you better make sure your loan loss reserves are in good shape.

Don’t get me wrong. This is not some starry-eyed infatuation. I know, for example, that as innovative as the Transportation network model is, credit union compliance people continue to be mindful of some of the unique issues raised by the service.  Just yesterday, our compliance Department fielded an interesting question: If insurance companies aren’t obligated to provide additional insurance for members who join Uber or Lyft how can a credit union protect its car loan collateral?

Here are some key points to keep in mind. The law authorizing TNC networks makes Crystal clear that insurance companies don’t have to provide insurance for persons acting as TNC drivers (N.Y. Veh. & Traf. Law § 1695 (McKinney).Does this mean that your collateral is at risk? No. The Association successfully argued that lenders need protection. Remember, car loans are getting to be longer and longer.

The law authorized insurers to offer additional coverage and allowed TNCs to have group plans. The insurance is available. Both the TNC’s and the drivers must ensure that it  is in place before logging onto the App. The driver I talked to this morning said that he was covered under a plan provided by the company. As an added protection TNCs are obligated to put potential drivers on notice that they need additional insurance (N.Y. Veh. & Traf. Law § 1694 (McKinney).

Keeping in mind that this blog is not a substitute for consulting with your legal counsel or your insurance provider, even with the legal protections NY has put in place I have suggested that you should put additional language into your car loan agreements stipulating that providing TNC services without adequate insurance constitutes a loan default.

If the system works as intended this language won’t be necessary but there are always glitches. At the very least it will put your member on notice that they can’t buy a car today and start offering rides tomorrow.

On that note enjoy your weekend. And remember, if you enjoy yourself a bit too much a ride home is just a couple of taps away.


Entry filed under: General, Legal Watch, New York State. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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