Issue 13 by San Francisco Public Press

Popular Services Raise Insurance Questions Continued from previous page.

ride-service companies insist drivers’ insurance companies will cover claims arising from their paid work and, in fact, have already done so. Margaret Ryan, vice president of communications at Sidecar, said in an email that the company has yet to see an incident in which a driver’s personal insurer has denied a claim. Erin Simpson, director of communications at Lyft, said she is aware of “multiple instances” in which an insurer has known that drivers were working for Lyft and still approved a claim under the driver’s insurance policy. And indeed, one Lyft driver I talked to said that when he got into an accident in 2012 while carrying a paying passenger, his insurance company was aware of the circumstances and still approved the claim. Things may be different now that the utilities commission has issued regulations for the ride-sharing industry. One of the commission’s major findings: the transportation network companies are commercial enterprises. Pete Moraga, a spokesperson for the Insurance Information Network of California, an industry group, said personal auto policies typically exclude coverage for vehicles when they are in commercial use. If you are driving for a transportation network company and you have your own personal policy, Moraga said, “the minute you pick up your rider, that policy will cease to cover you.” Lyft, Sidecar and UberX instituted excess liability insurance policies of $1 million per incident for their drivers, a level of coverage that the state utilities commission now requires. The commission found that coverage to be more than adequate for the transportation network companies and noted that the San Francisco Municipal Transportation Agency also requires the $1 million amount for cab companies. The excess liability policies are supposed to supplement a driver’s individual coverage, providing coverage at the point where personal policies leave off — which is interesting, considering that the insurance industry said that a driver’s personal policy would exclude ride-service claims. Kara Cross, general counsel for the Personal Insurance Federation of California, said that is a potential problem. “Their coverage kicks in after any other coverage is paid first,” Cross said. It is possible, she said, that insurance carriers for transportation network companies might “find more and more situations that the personal carriers are not covering, and then you can have a problem.” Lyft’s Erin Simpson said even though the company’s policy is called excess insurance, it has been custom-designed to “drop down” and cover any amount that a driver’s personal policy does not. And the utilities commission’s regulations specifically state “the insurance coverage shall be available to cover claims regardless of whether a TNC driver maintains insurance to cover any portion of the claim.” Moraga, from the Insurance Information Network of California, said he was skeptical that the drop-down feature would resolve questions about coverage. “There was little involvement if any from the insurance industry in these regulations,” he said. “In real-life situations, you may find there are a lot of gray areas where there’s going to be disputes, claims aren’t honored, and probably litigation at some point.” As the utilities commission hammered out its rules for transportation network companies, the California Department of Insurance said its preferred option would be to require the companies to carry $1 million in primary insurance for each driver — meaning policies that pay first if there is a claim. The insurance department said excess insurance would be

Continued from page B1.

One taxi driver says more company money is spent on insurance than on payroll. Photo: Sara Bloomberg // KQED

acceptable as a lower-cost option. But it added such a dual system of insurance, depending on both a driver’s insurance and a company’s excess liability coverage, could result in confusion to consumers who need to file claims. In a written statement, the utilities commission said its Safety and Enforcement Division is reviewing the transportation network companies’ policies to “make its independent assessment as to whether the existing coverages conform to the CPUC’s insurance requirements.” John Zimmer said that Lyft’s policy has already been tested a few times and that there have been no problems getting claims through. Questions about insurance coverage also extend to the terms of service that the ride-service companies require drivers and passengers to accept. Among those raising that issue is Christiane Hayashi, director of taxi services for Muni. “If there happens to be an accident involving the Lyft or Sidecar service, there’s the uncertainty of how the terms and conditions that people have to sign in order to participate in these services will affect the insurance coverage, because it disclaims all liability for anything whatsoever,” she said. The state Department of Insurance is not fond of the terms either. The department wrote to the utilities commission that “a disclaimer of liability in the TNCs Terms of Service could mislead a consumer into thinking that they do not have a recourse against a TNC, when, in fact, the TNC will be required to maintain $1 million in coverage. The CPUC should prohibit waivers that will prevent consumers from having recourse to the insurance.” The commission did insert language in its final ruling to address this issue: “Nor

In the Key Of ACROSS 1. Jericho features 6. Newspaper section 10. (The) majors, in baseball slang 14. For the birds 15. Plumbing problem 16. Exude 17. “The Sopranos” hit actor 19. Seizes 20. Bionic woman, for example 21. License plates 22. “...___ for Superman!” 24. X, Me or Pepsi group 28. “Pawn Stars” estimate 30. “The Bathers” painter Paul

Acteva CEO: Bad Publicity Worsened Cash Woes

31. Apple cider cookie 35. Doctor’s order 36. “The Earth,” to a Frenchman 38. Critters in litters 42. Gilbert and Sullivan boatsmen 47. “Peekaboo!” follower 49. “Slumdog Millionaire” setting 50. NRA bugaboo 54. “My Heart Will Go On” singer 55. Prefix before business or forestry 56. Stuck and not going anywhere 58. Down in the dumps 59. Literally, “The science of women” 63. Disembarked 64. “¿Qué ___?”

can any Terms and Conditions in a TNC’s Terms of Service be used or relied on by the TNC to deny insurance coverage, or to otherwise evade the insurance requirements established in this decision.” Zimmer, Lyft’s CEO, said the issue is a red herring concocted by ride-service opponents. The disclaimer language used by his company and others, he said, is “legal protection that any website will have, completely standard practice.” Even for a ride-service driver covered through the company’s liability policy, that covers only damage to the other vehicle and passengers. If the accident is judged to be the ride-service driver’s fault, the liability coverage will not help pay for damage to the ride-service driver’s car. That would require collision coverage, and the transportation network companies do not offer that. Erin Simpson of Lyft said drivers “would need to check with their personal carrier and check on their specific policy” to make sure their collision coverage applies while working as a Lyft driver. Kara Cross of the Personal Insurance Federation said there is a gap in coverage for transportation network drivers, but added that that could change. She said it is possible that an insurance carrier would consider offering a policy tailored for these scenarios, “so you still have your personal coverage but there would be some language to cover these situations. As far as I know, this product has not come out yet.” One cabdriver I spoke to who’s considering driving for UberX said when he tried to get collision coverage through his insurance company, he was told he had to go through a commercial carrier and get livery insurance. He called one up and was able to get a quote. That, coupled

with the $1 million liability insurance requirement, has made him more comfortable about making the switch. Moraga, of the Insurance Information Network of California, said drivers need commercial insurance, which is more expensive than a personal auto policy, if they want to be covered for anything more than basic liability on their ride-service vehicle. For most of the ride-service drivers I talked to, though, these issues are somewhat abstract. But Brad Newsham, a 28-year veteran cabdriver, said he once worked a yearand-half in an underground mine, and he puts cab driving “right up there with it” in terms of stress, much of it due to being wary of “not killing somebody, not killing yourself.” “Sometimes when I’d have a close call, I would lose my nerve for a while. You come to realize how dangerous it is,” Newsham said. Just how dangerous, you can see in the case of the flying San Francisco fire hydrant. In that accident last March, a black town car on an Uber call collided with another vehicle while turning left on Divisadero. One of the cars hit a fire hydrant, sending it flying through the air. It struck a pedestrian, who sustained severe injuries. Uber is fighting a lawsuit over the incident, essentially arguing it bears no responsibility for the driver’s actions. The ride-service drivers I talked to aren’t focusing on that risk. Right now, they seem to be enamored of the good pay, flexible schedule and social aspects of their jobs. Any insurance concerns they may have are not serious enough to spur them to quit, with many citing the transportation network companies’ $1 million liability policies as a mitigating factor.

Crossword Puzzle: Andrea Carla Michaels & Michael Blake // Public Press

65. Jibe 66. A little force? 67. “A Boy Named Sue” songwriter Silverstein 68. Zero out DOWN

11. 12. 13. 18. 21. 22. 23.

1. 2.

Quipster Gardner of ‘The Barefoot Contessa’ 3. With 18-Down, Lego predecessor 4. Colorful beetle 5. Highbrow 6. “Crooklyn” actress Woodard 7. Period of power 8. Whup 9. Crosscountry trip? 10. “We Belong” rocker Pat

25. 26. 27. 29. 32. 33. 34. 37. 38. 39.

John Lennon classic Iconic guitars City map abbrs. See 3-Down Looney Tunes nickname Ballpark figure: Abbr. “___ Ho” (2008 Best Original Song) Animated holiday greeting Copy, for short Surfing site? Sushi fish Taunt Stocky Palindromic Giants reliever Robb Connecticut Ivy Leaguer Pen pal? As a rule

40. Antarctic waddler 41. Conceal in a hiding place 43. Mollycoddle 44. Magazine bigwigs 45. Carnaval city 46. ___ Francisco 48. “___-hoo!” 51. Dental or salon activity 52. Shaq or Tatum 53. Booker Prize winner “Hotel du ___” 57. Hubbub 58. Michael Jackson hit 59. Auto gizmo that talks, for short 60. “Boo” follower, in a triumphant shout 61. ‘Wow!’ 62. Nevertheless Stumped? Answers on page B8.

ation but resigned from the company when it became apparent my efforts were unsuccessful.” Another former employee said that in the spring of 2012, Acteva had about 50 employees in San Francisco and 80 in India, but disorganized management and customer complaints resulted in a high employee turnover rate and many layoffs. The employee, who asked not to be identified for contractual reasons, also described the working relationship between Gupta and Ed Lemire, the company’s vice president, as “weird,” saying the two argued constantly. Acteva’s clients may never get their money back, even if an investigation discovers criminal wrongdoing. Karen Gebbia, a law professor specializing in bankruptcy and corporate law at Golden Gate University, said that if a business has few or no assets, little or nothing is left to refund to creditors. “A business with a viable business structure may file Chapter 11 bankruptcy in an effort to restructure its obligations and pay its creditors, at least in part, over time,” Gebbia said. But, she said, the process breaks down when cash reserves have disappeared: “Attempting to compel equitable distribution is not particularly useful if there is nothing to distribute.” Gupta’s plan to avoid bankruptcy by taking on more clients does not sit well with Brown, who said the strategy could cause more customers to get caught up in Acteva’s cash-flow problem. For now, Gupta and his employees are not talking in any detail about their new business plan. Gupta said most creditors are nonprofit organizations, and some clients in the sector speculate that they were targeted by Acteva for nonpayment. Not everyone agrees with that assessment. Some experts in nonprofit management say smaller organizations, in general, are more vulnerable to delays in repayment. “Getting into a situation like this, I don’t think, is related to the nonprofit structure,” said Jan Masaoka, CEO of CalNonprofits, a California membership organization that advocates on behalf of charities. “But maybe the consequences are more far-reaching for nonprofits than they are for a private business of the same size.” Web comment: Let’s not

overlook the fact that universities are included in the list of groups not being paid. The Acteva Sucks site was not started to, “criticize the company.” Pankaj either ignores or is blind to the fact that this website was started to apply pressure to get Acteva to contact the people they were ignoring. They killed their brand by not paying people back and coming up with countless excuses. The bad press is a byproduct of Acteva’s actions and lack of payment. — Jason Brown