United States: IREG Update - May 29, 2015


With the rise of the so-called "sharing economy" comes a rise in risks to participants of all kinds, and to the companies that provide platforms for such "sharing." Over the last few years, the insurance risks evident in the activities of those participating in sharing economies have started to come to light. While regulators in many states are still struggling to catch up with the realities of these platforms and services, more companies are popping up and are being adopted by users around the world. It is important to understand the pitfalls, as well as the potential for growth and opportunities, surrounding this growing "sharing economy."


The so-called "sharing economy" began to appear in early 2000's, as social technologies enabled the emergence of new business models that capitalized on collaborative consumption. eBay and Craigslist were early examples, even pre-dating the term, that allowed users to find each other in an attempt to make good on the old proverb, "one man's trash is another man's treasure." Today, the term "sharing economy" covers a wide range of digital platforms and offline activities, from ride-sharing companies (with activities in over 50 countries), to smaller initiatives such as tool libraries that are part of local public libraries. While there is no uniform definition for the "sharing economy," it appears to consist of four broad categories: (1) redistribution of goods; (2) increased usage of durable assets; (3) exchange of services; and (4) sharing of productive assets. eBay and Craigslist are examples of the first category. The second category includes car rental services such as Zipcar, bicycle rental or sharing companies, and ride services (such as Uber, Lyft and Sidecar). The second category also includes lodging sharing companies such as Airbnb and Couchsurfing. The third category includes companies such as Task Rabbit, which allow users to sell services while connecting with other users in need of those services. The fourth category includes services such as communal offices or educational platforms that focus on sharing information in order to promote production rather than consumption. In this IREG Update issue, we will focus primarily on ride services or ride-sharing.

Ride-sharing Risks

Ride services such as Lyft, UberX (the ride-sharing arm of Uber) and Sidecar connect online platform users with drivers available near the user at any given time. Drivers for these platforms do not have to be the traditional "professional driver." Rather, drivers can use their own personal vehicles to provide rides for a fee during times of their choosing. These platforms, specializing in connecting drivers and riders for the transportation of passengers for profit in personal vehicles, have become known in the insurance industry as transportation network companies (TNCs).

The main risks affecting TNC participants are coverage gaps, which were spotlighted by the unfortunate death of a five year old girl in a collision with an UberX driver on December 31, 2013 in San Francisco. The activities of TNC drivers have been split into three periods of time by regulators, including California Insurance Commissioner Dave Jones:

Period 1: "Pre-Match" — The driver is logged on to the application, but has not yet been matched with a rider.

Period 2: "Match Accepted – Passenger Pickup" — The driver has been matched with a rider on the application and is en route to pick up the passenger.

Period 3: "Passenger Occupying Vehicle" — The driver has picked up the passenger and is driving the passenger to the agreed upon destination.

Coverage gaps arise because TNC drivers use personal cars that are generally covered by personal automobile insurance. However, personal automobile insurance policies exclude commercial activities, such as transporting passengers for a fee. Therefore, many TNC drivers operate without realizing that their personal automobile insurance policies will not cover them while they are engaged in this commercial activity. While large TNCs provide some commercial auto coverage, the amount provided is different from coverage provided by traditional taxi and other livery companies because it does not cover the TNC driver during all three periods mentioned above. Usually a TNC company's commercial coverage is not triggered until Period 2 or even Period 3, leaving a significant gap in coverage during Period 1, when the driver's personal automobile carrier would argue that commercial activity has begun and therefore exclude coverage.

The National Association of Insurance Commissioners (NAIC) recently released the TNC Insurance Compromise Model Bill, which reflected a collaboration between multiple insurers and UberX. Under the Model Bill, there is a minimum amount of coverage required in Period 1, which increases at Periods 2 and 3. Unlike other state models, there is no presumption of or presumption against coverage for TNC related activities. The Model Bill also does not have a requirement for maintaining comprehensive or collision coverage. The NAIC also adopted a TNC White Paper on March 31, 2015, which summarizes the issues surrounding TNC insurance regulations and, as Exhibit A, the steps various states and municipalities have taken to address and regulate these activities.

A copy of the TNC Insurance Compromise Model Bill can be found here.

A copy of the NAIC's TNC White Paper can be found here.


Insurance underwriters are notoriously hesitant to underwrite new types of risks without years of data to back up their actuarial estimations. However, TNC driver coverage also presents a growth opportunity for insurers. Coverage endorsement can be developed to help TNC drivers close the insurance gap. Moreover, these issues have created a need for a hybrid insurance product, which would be purchased by TNC drivers, serving as a personal automobile insurance policy when the driver is using the vehicle for personal use, but with more commercial coverage during the ride service periods. Some insurers have already begun developing and offering such hybrid products. Being a part of this solution would give the insurance companies a seat at the table as these regulations are being developed, allowing companies to be proactive, rather than reactive, in this growing market.


Online ride services have been around since the late 2000s and show no signs of slowing down. It is important for companies to understand the legal and regulatory landscape that these companies are operating under to make sure that these programs are compliant, and for insurers to make sure that they are protected from claims they have intended to exclude. However, despite the possible pitfalls, there are many opportunities for companies to be first-movers in this emerging insurance market. As regulators continue to sort out how best to deal with this emerging market, companies can play a role in shaping these regulations as participants, rather than simply reacting.

Look for future IREG Update issues to address insurance challenges and opportunities related to other categories within the "sharing economy."

Contact the author of this article: Bella Shirin


Noteworthy links from the past two weeks


  • NY Superintendent Ben Lawsky announced he is leaving his department in June, and speculation about his successor intensified [The New York Times]
  • Superintendent Lawsky discussed his agency's focus on individual accountability in its investigations [CNBC]

Property & Casualty

  • Florida became the fourth state to ban "price optimization" techniques," and the industry worried about the breadth of the definition [Palm Beach Post]
  • Florida passed a drone privacy law that will affect insurers that use drones to inspect properties [Law360]
  • The New York Times applauded efforts to "reform" the title insurance industry [The New York Times]

Life & Health

  • FSOC said that annuities with guaranteed living benefits pose risks for the financial system [Insurance News Net]
  • Drafters of the ACA admitted that the four words being scrutinized by the Supreme Court were a drafting error [The New York Times]
  • Missouri fined Aetna $4.3 million for failing to provide autism coverage [Missouri Department of Insurance]
  • The Centers for Medicare and Medicaid Services proposed new rules for managed care organizations [Law360]


  • IAIS Executive Committee Chair and FIO Director discussed progress on international capital standards [A.M. Best, A.M. Best]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
22 Jan 2019, Seminar, San Francisco, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

23 Jan 2019, Seminar, Los Angeles, United States

Dentons is pleased to offer a full day of classes, just in time for the California MCLE compliance period deadline of January 31, 2019.*

24 Jan 2019, Other, New York, United States

Join Dentons’ Health Care Partner Lori Mihalich-Levin and White Collar & Government Investigations Counsel Christine Genaitis as they lead conference sessions at AHLA Academic Medical Centers and Teaching Hospitals Institute.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions