Insurance debate may follow Uber euphoria in Cedar Rapids

CEDAR RAPIDS - Euphoria among city officials here at the arrival on Thursday of Uber's trendy, taxi-like service may yet need to endure a city debate over liability insurance as the city creates an ordinance to regulate Uber and similar operations.

Such is the case in the city of Des Moines, which has had Uber service since September and now is working to modify its taxi ordinance to incorporate Uber and other transportation 'networks.”

Jennifer McCoy, traffic engineer for the city of Des Moines, on Friday said a major sticking point between Uber and Des Moines over the city's proposed modification to its taxi cab ordinance is the city's concern that Uber's insurance coverage for Uber drivers does not adequately provide coverage.

Uber drivers drive their own vehicles and are summoned by customers via a smartphone app. The city of Des Moines, though, is concerned that Uber's level of insurance coverage is available once the driver answers a customer request for a ride, but is inadequate during times when the driver has the Uber app turned on while driving around waiting for a customer request, McCoy said.

At the same time, she said some Iowa insurance representatives have told the city of Des Moines that an Uber driver's own insurance coverage does not or might not protect the Uber driver if the Uber app on the phone is turned on and no Uber customer is in the car. In other words, the Uber driver might not have insurance coverage during that period, she said.

McCoy said the insurance issues in which Uber and Des Moines' proposed ordinance conflict also relate to the amount of insurance Uber is proposing to provide compared to the amount that Des Moines' taxi companies must provide.

The Des Moines City Council will discuss the city's proposed modifications to its taxi cab ordinance at a work session on Monday. The council could vote on a first reading of the modified ordinance on Dec. 22, she said.

Pooneet Kant, general manager of regional expansion at Uber, this week called Des Moines' proposed ordinance provisions among the 'most draconian” in the nation, and he said he was continuing to work with Des Moines on its ordinance.

Uber's official position is this: 'From the moment a driver accepts a trip to (its) conclusion, primary liability coverage is in place and applies up to $1 million coverage per incident.”

The company also said it provides secondary coverage between trips when the Uber driver has the Uber app open on his or her phone awaiting another customer.

However, in its statement, Uber said most Uber drivers' own personal auto insurance will provide coverage between trips, a position which Des Moines' McCoy said the city of Des Moines is not sure about.

Nick Gerhart, the Iowa insurance commissioner, this summer joined 19 other states in issuing a 'cautionary” statement about the 'potential risks” of drivers not having personal auto coverage when engaged in driving using an app from Uber and similar services.

'To be clear, the Iowa Insurance Division is not out to ruin these innovative programs,” Gerhart said in a guest column in The Gazette in August. 'However, all parties, including the drivers and riders in these programs, need to know what their risks are, and know how to mitigate those risks by finding the proper insurance coverage.”

Gerhart said the commercial use of a vehicle is 'almost always” excluded from personal motor vehicle insurance.

'That can mean that careful and thoughtful purchases of insurance protection are negated, and the risks of accidents are born by the app users,” he said.

He said drivers for Uber and other services need to understand how Uber's coverage works and the limits to it.

Maria Johnson, Communications Division manager for the city of Cedar Rapids, on Friday said the city still is early in the formation of its ordinance to regulate Uber and other transportation 'networks.” The city is looking to treat Uber and its service under a new ordinance and not under the city's taxi ordinance, she said.

The city of Iowa City is working on its taxi ordinance in anticipation of Uber bringing its service there, and Simon Andrew, administrative assistant to the Iowa City city manager, said this week that the proposed ordinance amendment generally follows Uber's position on insurance coverage.

The proposal states that Uber drivers and other 'network” drivers must have insurance coverage 'at all times the driver is engaged in a prearranged ride.”

The Iowa City Council is expected to discuss the proposal on Dec. 16, a city official said on Thursday.