“Where did you go to high school?” is a peculiar St. Louis question that perplexes newcomers to the area. For the insurance savvy traveler here, a new question may replace it: “Where do you garage this vehicle that you propose to carry me and others for compensation or a fee?”
That sort of question may gain relevance due to the introduction of two new transportation networking companies in cities across the country, Uber and Lyft. These two companies offer mobile applications for iPhone, Android and Blackberry devices that connect consumers to drivers in select cities. Consumers arrange for pick up and make payments with these mobile apps. The companies state that the drivers are independent contractors. They typically drive their own personal vehicles.
Lyft recently started operations in the St. Louis area. A circuit court in St. Louis City, however, issued a temporary restraining order last month that forbade Lyft from doing business in St. Louis City and County. It also ordered the company to disable its mobile apps here as well. The Metropolitan Taxicab Commission stated that it had sought the injunction out of safety concerns.
St. Louis City Mayor Francis Slay has indicated that Uber, Lyft’s competitor, has entered into discussions with his office in an effort to “abide” by the Commission’s regulations.
A few states away, the Ohio Department of Insurance recently issued a Consumer Alert regarding these types of companies. The Department emphasized the “insurance gaps” that could exist for users and drivers of these services:
The Ohio Department of Insurance wants Ohioans to be aware of the insurance gaps that may exist for [transportation networking company] drivers and passengers. Most personal auto insurance policies contain exclusions when a person uses their personal vehicle for commercial purposes; such as carrying a person for a fee. Personal automobile insurance is not intended to cover people who are using their vehicles for commercial purposes.
Exclusions that remove liability coverage when drivers use their vehicles to carry persons for compensation or a fee are commonplace in personal auto policies issued in Missouri and Illinois.
Illinois courts generally have upheld and enforced these exclusions. See Progressive Universal Ins. Co. of Illinois v. Liberty Mut. Fire Ins. Co., 2005 215 Ill.2d 121, 828 N.E.2d 1175 (2005).
Missouri courts, however, have not directly addressed their enforceability. Some exclusions in Missouri auto liability policies are completely enforceable. Others are enforceable only beyond the minimum limits of auto liability insurance required by the Missouri Motor Vehicle Financial Responsibility Law (MVFRL). For bodily injury claims, those minimums are $25,000 per person and $50,000 per accident.
Whether Illinois or Missouri law applies to a given auto insurance policy is subject to a series of factors, the most important of which is where the vehicle is garaged.
Both Uber and Lyft apparently have reported that they carry their own insurance. The scope of such coverage remains to be seen.
In the meantime, whether the individual driver’s personal auto policy provides liability coverage for any accident that may occur may turn on whether Illinois or Missouri law applies to that driver’s policy. As a result, consumers in the St. Louis area hopping into a Uber (and maybe Lyft) car in the future may want to skip the high school question and ask one a little more pertinent: “Where do you garage this vehicle that you propose to carry me and others for compensation or a fee?”
