Florida Taxi Industry Vs. Transportation Network Companies (Uber and Lyft)

ride sharing

The Insurance Controversy

Taxi companies in Florida and across the United States are not the only transportation company anymore. With today’s technology have brought new competitors to the industry and a different take on transportation service. I’m sure you’ve heard of Uber or Lyft, and have maybe even used their services a time or two. These companies are known as Transportation Network Companies or TNC’s for short.

TNC’s consider themselves to be “ride-sharing” organizations rather than taxi companies. Their driver’s use their own personal vehicles and insurance. This has been there main competitive advantage against taxi companies since forming. This business advantage continues to be a topic of debate and now has officially turned into a lawsuit in Florida Judicial Circuit Courts.

As of September the 17th, Judge George S. Reynolds made the decision to require the Florida Department of Highway Safety and Motor Vehicles (FDHSMV) to determine whether the TNC’s are upholding to the states minimum standards for insurance. This order was delivered after two different taxi companies in Florida filed a lawsuit on September the 9th. The state has just 40 days from the 17th to make the determination and deliver their decision. Let’s take a look at why Florida taxi companies have been so upset.

Florida Taxi Companies Complaints

Taxi companies across the state have been at a financial disadvantage with TNC’s like Uber and Lyft entering Florida. Taxi companies are upset because their largest expense as a business is their commercial insurance policies. Florida requires taxi companies to have a commercial policy on their vehicles at all times.

TNC’s operate by having their drivers use their own personal vehicles. Uber and Lyft drivers are insured through the James River Insurance Company (JRIC). The lawsuit states that TNC drivers are only paying commercial rates when they are connected to the company’s application. When they are not working their insurance limits are like a normal personal policy.

This has left the taxi companies in Florida at a huge disadvantage as they are spending far more ensuring they’re properly insured at all times. Florida taxi companies are hopeful this lawsuit will even up the playing field and provide resolution to the issue.

Transportation Network Companies Position

Uber, Lyft and others were formed as a “ride-sharing organization” not a transportation, taxi or limousine companies. Regardless of what you call them, most people look at these companies as transportation organizations, just like a normal taxi service.

The TNC’s are commercially insured by JRIC, who is authorized to do business in Florida. The commercial insurance provided is a business auto policy with coverage limits of $1 million each for liability, underinsured and uninsured motorist. This policy is in first position, with the driver’s personal auto policy in second position.

Florida state law requires traditional transportation companies to have a commercial policy with $125,000 coverage limits per person for bodily liability, $250,000 coverage per incident and $50,000 coverage for property damage. So if you look at this alone, it is clear that Uber provides more far more than the necessary coverage minimums as set by the state. TNC’s, like Uber, feel their providing a higher level of safety for their employees and customers. So what’s the problem? Let’s look at the lawsuit closer.

The Lawsuit

This recent lawsuit claims that Florida state law is not clear and concise enough regarding the minimum insurance required by the state for for-hire transportation companies. The law states that all for-hire transportation vehicles must be insured with a commercial insurance policy at all times.

As the law is currently written, TNC’s are able to use this specific type of commercial insurance through James River Insurance to cover their driver’s, passengers and cars only when their in use. Being that JRIC provides this unique policy that is only in effect when the Uber driver is connected to the Uber application and are able to price the policy accordingly. Since Uber drivers use their personal vehicles they spend significantly less on their commercial insurance premiums than a traditional taxi company who’s insuring their company vehicles 100% of the time.

The taxi companies who filed the lawsuit also explain that James River Insurance Company although able to do business in Florida are not a member of the Florida Insurance Guaranty Association. This membership is part of the requirements of a for-hire transportation company under Florida Statute 324.031.

The Next Steps

Knowing the FDHSMV only has a limited number of days to respond to this lawsuit it is very likely this will clarify this controversial issue. Taxi companies across the state of Florida have been waiting over a year to see movement and resolution on this topic.

Ever since Uber entered Florida, traditional taxi companies have been at a huge disadvantage regarding insurance expenses compared to these new age Transportation Network Companies. The FDHSMV will hopefully level out the playing field for all transportation companies in the state by making the necessary changes to current statutes. As this lawsuit is resolved, I will be publishing a follow up article discussing the outcome of the case.

In the meantime, if you own a transportation company in South Florida then I strongly encourage reaching out to me. I years of experience in the commercial insurance industry and would be happy to assist you find a more affordable commercial policy. At my Brightway Insurance offices, I have access to twice as many insurance carriers than a typical independent agent and a passion for helping people. Please give me a call today and find out how fun and easy finding affordable commercial insurance can be!

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