California Insurance Commissioner Announces Insurance Product Designed to Cover UberX and Sidecar Drivers for Incidents Occurring During “Period 1”

On May 27, 2015, the California Insurance Commission approved a new Farmer’s Insurance product intended to close the insurance “coverage gap” that exists for transportation network drivers (such as UberX and Lyft drivers), during the so-called Period 1. Period 1 represents the time when the driver has the app opened but has not yet matched with a rider. Up until now, in Period 1, the driver’s individual insurance was the only potential source of insurance coverage. But many private insurance policies specifically exclude coverage when a driver is driving “for hire.” This essentially leaves it up to the insurance company itself as to whether or not to cover damages caused by the driver’s negligence. California’s action in approving this product is intended to remove some of this ambiguity for drivers and those injured during Period 1—at least in California for those drivers who purchase this special insurance. However, while this action represents a step forward in that it clears up some confusion and attempts to solve a known problem, uncertainty remains. New gaps and legal questions are inevitable as transportation network companies continue to grow in popularity and success. A Los Angeles Times article discussing California’s regulatory action is available here.