Source: https://www.mwl-law.com/uber-lyft-and-new-york-loss-transfer-2/
Timestamp: 2019-08-22 11:14:26
Document Index: 547133316

Matched Legal Cases: ['§ 5102', '§ 5105', '§ 5105', '§ 1691', '§ 5105', '§ 5105', '§ 5105', '§ 1691', '§ 5105', '§ 182', '§ 5105', '§ 5105', '§ 182', '§ 5105']

Uber, Lyft, And New York Loss Transfer - Matthiesen, Wickert & Lehrer S.C.
Ridesharing has officially arrived in New York, and confusion over New York no-fault insurance and PIP Loss Transfer arrived with it. On June 29, 2017, the New York State Assembly approved, and Governor Andrew Cuomo signed, the state’s $153 billion budget, which included changes in state law providing for ridesharing and starting a rule-making process that will allow rideshare companies to expand statewide—and expand they did. Prior to the passage of the law, people wanting a ride were limited to calling a livery operator or a service regulated by a local Taxi and Limousine Commission. With the passage of its 2018 fiscal budget, New York has amended its ridesharing (a/k/a, “ride-hailing”, “ride-sourcing”, or “e-dispatch”) laws to provide that Uber and Lyft driver-partners are covered by Uber’s group ridesharing insurance while connected to the Digital Network. Rideshare insurance has evolved to meet the modern world of insurance coverage. Prior to this, Uber, Lyft, and other ride-hailing apps had to operate in New York City under the city’s rules for livery taxis.
While New York Uber drivers—contacted via the Uber app—are driving to pick up a rider, but before the rider gets into their vehicles, they are covered by third-party liability coverage at minimum limits of $1.25 million, UM/UIM motorist coverage of $1.25 million, PIP (no-fault) of $50,000, and contingent collision and comprehensive coverage, provided the driver maintains auto insurance that includes collision coverage for that vehicle while not on an Uber trip. Once a rider is picked up, the Uber driver has the same coverage in those amounts as when driving to pick up the rider, plus the rider is covered once he or she enters the vehicle. When driving the vehicle for personal use, not connected to the Digital Network, no coverage is provided by Uber. Lyft provides similar insurance, with slightly different limits.
Third-party tort claims are limited by New York’s no-fault laws, and a PIP carrier who has paid benefits to a driver or passenger has no traditional subrogation rights. If both vehicles involved in an accident involve “covered persons” they cannot sue each other in tort for losses that should be covered by PIP no-fault benefits. However, if either one of the motor vehicles involved (1) weighs more than 6,500 lbs. unloaded, or (2) is used principally for the transportation of persons (e.g., taxi, bus) or property for hire (e.g., FedEx, delivery truck), a PIP carrier is free to pursue a loss transfer against the negligent motorist’s vehicle insurer for the recovery of the $50,000 first-party benefits it became obligated to pay under § 5102(b)(2). N.Y. Ins. Law § 5105(a). Loss transfer must be pursued through arbitration, and the vehicle meeting the livery condition need not be the negligent vehicle to trigger the loss transfer exception.
Loss transfer is an opportunity for a PIP carrier to recover from the negligent motorist’s insurer the first-party benefits it paid because of an accident. Unfortunately, when PIP benefits are paid to an Uber driver or rider, there has been significant confusion regarding whether loss transfer would be allowed. The biggest issue was whether one of the motor vehicles involved was “used principally for the transportation of persons or property for hire”? There can be no question that a TNC vehicle is a vehicle used for the transportation of persons for hire. Whether such a private vehicle is used “principally” for this purpose is another issue.
On the other hand, it could be argued that the defining characteristic of a TNC vehicle changes once the Uber app is activated and the vehicle is actively operating as a vehicle for hire. Therefore, when a vehicle is operating with the app on, or is transporting a rider, it transforms into a vehicle which primarily is one of livery. Section 5105 was drafted at a time when taxi cabs and livery vehicles for hire were highly-regulated and easily-identified. According to Lawrence Fuchsery, Principal Attorney at the New York Department of Insurance, the perplexing issue of Loss Transfer Arbitration and ride-sharing apps had been under review and we were all waiting on some direction. That direction came on April 12, 2019.
New York Department of Financial Services Circular Letter No. 4
On April 12, 2019, the New York Department of Financial Services issued “Insurance Circular Letter No. 4.” The letter addressed TNC vehicles and the application of Insurance Law § 5105 (the “intercompany loss transfer provisions”) to Uber, Lyft, and other TNC companies. Part AAA of Chapter 59 of the Law of 2017 added a new VTL Article 44-B to govern the operations of TNC vehicles. VTL Article 44-B applies to a TNC vehicle while the TNC driver is: (1) logged onto the TNC’s digital network; or (2) engaged in a TNC prearranged trip as those terms are defined in VTL § 1691.
Circular Letter No. 4 finally addressed the question of whether a TNC vehicle is a vehicle used principally for the transportation of persons for hire under Insurance Law § 5105. It opined that an insurer should not invoke the intercompany loss transfer provisions under Insurance Law § 5105 solely based on one of the vehicles being a TNC vehicle.
For these reasons, the letter says that a no-fault insurer or compensation carrier may not invoke the intercompany loss transfer provisions under Insurance Law § 5105 solely based on one of the vehicles being a TNC vehicle, because a TNC vehicle is not a “for-hire” vehicle under VTL §§ 1691 and 1692 and, therefore, is not “a vehicle used principally for the transportation of persons for hire” within the meaning of Insurance Law § 5105. However, it should be noted that trips originating in New York City or any county or city that enacts a local law pursuant to General Municipal Law § 182 remain subject to all the laws that generally apply to for-hire vehicles and remain subject to the intercompany loss transfer provisions of Insurance Law § 5105. Therefore, the only issue that the Circular Letter addresses is whether the simple fact that one of the vehicles is under dispatch to a TNC is a factor to be used in evaluating whether Loss Transfer is available under § 5105. The Circular Letter concludes that it is not. When evaluating whether or not Loss Transfer is available, you address whatever facts there are other than the vehicle is under dispatch to a TNC. In other words, simply being under dispatch to a TNC alone does not trigger Loss Transfer. As the Circular Letter says, “trips originating in New York City or any county or city that enacts a local law pursuant to General Municipal Law § 182 remain subject to all the laws that generally apply to for-hire vehicles and remain subject to the intercompany loss transfer provisions of Insurance Law § 5105.”
A copy of Circular Letter No. 4, authored by General Counsel Nathanial Dorfman, can be viewed HERE. For a complete chart on Med Pay and PIP insurance subrogation laws in all 50 states, see HERE. For any questions on automobile insurance subrogation, contact Gary Wickert at gwickert@mwl-law.com.