Uber Technologies Inc. has launched an aggressive public relations campaign to portray itself as a startup being choked by regulation, claiming that proposed safety and insurance requirements will stifle innovation. What Uber wants to stifle is compensation for Californians injured by drivers who are making money for Uber.
Uber is no longer a startup. During its rapid growth in the past three years, it has received more than $1.5 billion from some of the biggest players in the investment community. Uber now operates in 128 cities in 42 countries, and it grows daily with a market valuation of $18 billion.
Uber claims that it is in a new industry, but it provides transportation for hire, just as taxi companies have for decades. It wants to be promoted, embraced and, in effect, financed by others, including those maimed and killed by Uber drivers, the insurance industry, the state of California, and you, the taxpayer.
The company operates UberBlack, which uses professional licensed livery carriers who drive their own town cars and limousines. They are required by law to carry at least $750,000 in insurance. Another service, UberX, uses nonprofessional drivers in their personal vehicles. Those drivers are required to carry only the state minimum insurance, $15,000, but this personal insurance does not cover commercial activity such as driving for hire. Uber takes 20 percent from each fare.
UberX breaks its operations into phases. Phase 1 is when a driver is logged onto the Uber app and waiting for a fare. This is the most dangerous phase, while the driver is looking at an Uber-provided smartphone for ride requests. Uber requires that a driver receive and send instant messages, in violation of California’s distracted driving laws, as they must promptly accept fare requests or they will be rated negatively and potentially be disconnected. Phase 2 starts when a fare request has been made and accepted. Phase 3 is when a passenger is in the vehicle. Throughout a driver’s shift, the cycle will repeat until the driver logs off.
Last year, Uber was ordered by the California Public Utilities Commission to provide no less than $1 million in coverage while providing transportation services. Uber decided on its own that only Phases 2 and 3 were covered – not the dangerous Phase 1. In contrast, a taxi’s insurance coverage is in effect from the time the vehicle leaves the yard until it returns.
Who suffers when Uber refuses to provide coverage while their drivers are looking for fares? Potentially, any of us.
Take the tragic death of 6-year-old Sophia Liu, who was run down in a San Francisco crosswalk last New Year’s Eve by an UberX driver who was looking at his smartphone. Sophia’s mother and brother were also struck and seriously injured. Uber admitted the driver was logged onto the app but said he was not engaged in providing transportation services as he had not accepted a fare. The driver had only the minimum insurance on his personal policy to compensate Sophia’s family. Uber did not even offer to help with the little girl’s funeral expenses.
So, without adequate insurance, who pays the hospital bills and funeral expenses, or compensates for lost wages and the loss of a child? You and I, as taxpayers, and the people who were harmed. The Liu family faced more than $200,000 in expenses with no health insurance and no savings, while a company worth $18 billion paid nothing.
It will require coverage whenever the app is on, closing the Phase 1 loophole and requiring UberX and similar providers to maintain at least $750,000 in coverage, as is required of Uber’s town car service.
But with a billion-dollar war chest, Uber wants to protect its profits by fighting AB 2293. Uber’s claim that adding the cost of insurance to its enterprise will stifle innovation is undercut by Uber’s own actions. In April, Uber imposed, on its own, a $1 “safe rides fee” on every trip, claiming it would be used to provide insurance and promote safety. That self-imposed premium did not in any way hamper Uber’s growth or innovation. In fact, Uber received $1.2 billion in additional funding after that self-imposed fee.
Is regulation stifling Uber? No, it is simply requiring Uber to act like any other grown-up, business or individual and purchase adequate insurance – just like the rest of us.