As of May 1, 2017, MAPFRE will start offering a new endorsement for ridesharing drivers in Massachusetts. Approved by the Division of Insurance earlier this month, MAPFRE becomes on the second insurer in the Commonwealth to offer such an endorsement.
On October 19, 2016, USAA was the first carrier to issue a ridesharing endorsement to cover exposures relating to drivers using their personal auto for ridesharing companies. In April 2017, MAPFRE, the largest private passenger automobile writer in Massachusetts with 25% of the private passenger market announced that it had filed for approval of a ridesharing endorsement.
The MAPFRE endorsement may be the harbinger of other carriers offering similar endorsements for their insureds. Agency Checklists has written extensively on insurance-related ridesharing issues and thought some of its readers would have an interest in the new MAPFRE endorsement and some ridesharing issues to better answer questions from their insureds.
First a little legislative history.
Ride sharing apps brought auto policy exclusion and eventually legislation
The advent of companies such as Uber and Lyft allowing drivers of private passenger automobiles to use their vehicles like private taxicabs presented private passenger automobile insurers with an unanticipated and unrated risk factor.
To avoid this risk, the Automobile Insurers Bureau had approved in 2013 a mandatory endorsement (“Ride Share Exclusion”) excluding coverage on personal auto insurance policies when used for ridesharing. That endorsement states:
We will not pay any claim for injury or property damage under the policy, while your auto is being used in a personal vehicle sharing program. Such programs or the use of your auto by a person other than you or a household member under an agreement and with payment to you. …” (Emphasis in original).
In July 2016, the Massachusetts Legislature passed a comprehensive ridesharing bill that the governor signed. The law designated ridesharing networks such as Uber and Lyft as “Transportation Network Companies” and the drivers using their personal autos for ridesharing as “Transportation Network Drivers.”
Transportation network company legislation results in three different coverages plans
The transportation network company law specified insurance coverages transportation network companies had to provide their transportation network drivers. The law also granted insurers the right to completely exclude coverage for transportation network drivers when using their personal autos for ride sharing.
The legislation resulted in transportation network drivers having three different insurance coverages applicable to their vehicle.
- If the transportation network driver is only using the vehicle for personal purposes, the private passenger insurance policy applies without regard to the Ride Share Exclusion.
- If the transportation network driver logs into the transportation network company’s app waiting for a passenger or package delivery assignment (“Standby period”), the transportation network company’s standby period liability coverage applies and the Ride Share Exclusion bars coverage under the transportation network driver’s private passenger insurance policy.
- If the transportation network company assigns a transportation network driver a passenger or delivery, the transportation network company’s extended liability policy applies until the driver completes the assignment. In that case, the Ride Share Exclusion bars coverage under the transportation network driver’s private passenger insurance policy
The MAPFRE endorsement applies to transportation network drivers only for the standby period.
The MAPFRE endorsement is entitled “Limited Transportation Network Company Driver Coverage” (“Endorsement”).
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What does the Endorsement do?
The Endorsement gives some primary and excess coverage under a transportation network driver’s private passenger auto policy when the driver is waiting in a standby period.
The transportation network company must provide the transportation network driver when logged into the transportation network company’s digital network and available to receive transportation requests during a standby period the following insurance:
- $50,000 of coverage per individual for bodily injury
- $100,000 of total coverage for bodily injury
- $30,000 of coverage for property damage
- uninsured motorist coverage of at least $20,000 per person and $40,000 per accident, and
- personal injury protection of at least $8,000 per insured person.
The Endorsement provides the transportation network driver excess liability limit equal to the difference between the transportation network company’s liability limit (uniformly, $50,000) and the limit on the driver’s MAPFRE policy. For example, if the transportation network driver had a $100,000 liability limit on Part V, Optional Bodily Injury of their policy, the Endorsement would provide an excess liability limit of $50,000. If the transportation network driver has liability limits less than the transportation network company’s $50,000 standby period liability limit, the Endorsement offers a default $5,000 as its added excess limit.
Likewise, the transportation network driver’s property damage limit applies to the extent it exceeds the transportation network company’s property damage limit (uniformly, $30,000). If the property damage limit of the transportation network driver’s personal auto policy is less than $30,000, the Endorsement offers a default $5,000 as its added excess limit.
What the Endorsement primarily does, though, is add back coverage within the standby period for collision and comprehensive. Presently transportation network companies have no obligation or incentive to offer collision and comprehensive coverage to transportation network drivers during the standby period. Without the Endorsement, the Ride Share Exclusion will bar collision and comprehensive coverage for any transportation network drivers during a standby period.
For transportation network drivers with auto loans requiring collision and comprehensive, the Endorsement, if available, seems a legal necessity.
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If the Endorsement only provides collision and comprehensive for the standby period, how does a transportation network driver get collision and comprehensive coverage during an assignment from the transportation network company?
The policies for Uber and Lyft, and some other transportation network companies, provide contingent collision and comprehensive coverage for the vehicles of transportation network drivers while while working an assignment. Since there is a complete exclusion under the Ride Share Exclusion while the insured vehicle is transporting passengers or packages as part of a transportation network company’s system, this type of contingent collision and comprehensive insurance should protect the transportation network driver’s vehicle.
But, agents dealing with transportation network drivers should note the different deductibles for the contingent collision and comprehensive coverages offered by transportation network companies. For example, Uber provides contingent collision and comprehensive with a $1000 deductible and a $50,000 limit. Lyft, however, has a $2,500 deductible on collision and comprehensive, also, with a $50,000 limit.
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Does the Endorsement apply at all when the transportation network driver has a job from a transportation network company?
No. If the transportation network driver has accepted an assignment from the transportation network company to pick up a passenger or package or is transporting a passenger or a package, the Ride Share Exclusion and the Endorsement both operate to exclude coverage.
However, the transportation network driver will have at least the mandatory liability limits from the transportation network company’s insurance of:
- $1,000,000 in per occurrence, per vehicle coverage for death, bodily injury, and property damage,
- uninsured motorist coverage of at least $20,000 per person and $40,000 per accident, and
- personal injury protection of at least $8,000 per insured person.
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How do you know if an insured should have the Endorsement?
Under the law, transportation network drivers must obtain a “Transportation Network Driver Certificate.” The regulations require that a transportation network company only issue a certificate to a driver who among other conditions “provides notice to all insurers of the vehicle that the applicant intends to use the vehicle to provide transportation network services; …”
Presumably, MAPFRE receives these notices and will advise its agents accordingly.
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When does a driver with a personal auto policy lose coverage under the Ride Share Exclusion, on their personal auto policy.
As soon as the driver activates the app to login to a transportation network company. The driver’s personal auto policy’s Ride Share Exclusion applies. At that point, there is no coverage under the transportation network driver’s personal auto policy for anything that occurs with that auto.
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Will transportation network drivers know they have coverage exclusions?
By law, transportation network companies must disclose in writing to transportation network drivers that the transportation network driver’s own automobile insurance policy may not provide coverage while the driver is providing transportation network services.
- How does the Ride Share Exclusion apply if the policy has the Endorsement?
The Ride Share Exclusion Endorsement has an amendment that carves out the Endorsement stating:
If the “Limited Transportation Network Company Driver Coverage” Endorsement applies to this policy, then the provisions of the “Limited Transportation Network Company Driver Coverage” Endorsement prevails and the coverage exclusions in this endorsement applying to Transportation Network Company usage do not apply.
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Does the addition of the Endorsement affect the policy in any other way such as by loss of discounts or changed rating factors?
Presently, MAPFRE has not made any changes to the allowance of discounts or other rating factors for personal auto policies that have the Endorsements added
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Can assigned risks assigned to MAPFRE who are ridesharing drivers purchase the Endorsement?
No. MAPFRE does not offer the Endorsement to assigned risks.
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What is the cost of the endorsement?
MAPFRE has set the endorsement’s cost as an additional premium equal to seven (7%) percent of the vehicle’s premium excluding any premiums for substitute transportation and towing.
Other transportation network companies may have different provisions for collision and comprehensive, if offered.
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Does the Endorsement just apply to Uber and Lyft?
No. While most consumers and agents have experienced only with Uber and Lyftt, the Massachusetts Department of Public Utilities has presently entered memoranda of understanding regarding certification oversight of transportation network drivers with seven transportation network companies. The following chart has the present operating transportation network companies in Massachusetts.
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Ridesharing companies presently operating in Massachusetts
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| Embarque | a low-cost chauffeured service of Carey International’s livery service. |
| Fasten | Fasten is a ridesharing app that takes less than one dollar per ride for putting the driver in touch with the passenger instead of the 20 to 26 8% that other ridesharing companies take. Per the company, its service “puts more of your fare in the pockets of the people who deserve it the most: drivers and you still pay the industry’s lowest rates!”
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| Lyft | The only major competitor to Uber USA.
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| SAFR | Ridesharing service exclusively for women, built and powered by women that has as its goal to provide “provide safe transportation and job opportunities for women everywhere.”
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| Raiser | Raiser is a wholly owned operating subsidiary of Uber USA that has contracts with all the drivers in order to protect the parent company from liability arising out of the contacts with the drivers.
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| Uber USA | The largest transportation network company in the world.
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| WULEEB, | A Quincy-based ridesharing company that quote does not an answer to third party investors but answers to its writers.”. WULEEB services Boston and Martha’s Vineyard. |
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How big market will the new endorsement provide MAPFRE and its agents?
While the Endorsement fills a real need for transportation network drivers, its financial impact for MAPFRE and its agents appears quite small.
Under the transportation network company legislation, transportation network drivers had to have background checks. Of the 71,000 transportation network drivers seeking certification, The Department of Public Utilities rejected 11,000 for various reasons including license suspensions and criminal records.
Assuming the market for the Endorsement resides with the remaining 60,000 transportation network drivers, MAPFRE market share of 25% would give initially 15,000 potential purchasers of the Endorsement. Of course, this number could increase, if transportation network drivers insured by insurance companies that do not offer a similar endorsement migrate to MAPFRE to obtain coverage.
Assuming an average premium for full coverage of $2200 for the transportation network drivers buying the Endorsement, the Endorsement’s cost would average $154.00 ($2200*.07).
Using that estimate (or guestimate) the possible annual total premium for the Endorsement appears on the chart below based on the number of transportation network drivers buying the Endorsement.
| Drivers | Average premium | Endorsement cost Total premium | |
| 5000 | $2,200 | $154 | $770,000 |
| 10000 | $2,200 | $154 | $1,540,000 |
| 15000 | $2,200 | $154 | $2,310,000 |
| 20000 | $2,200 | $154 | $3,080,000 |
| 25000 | $2,200 | $154 | $3,850,000 |
| 30000 | $2,200 | $154 | $4,620,000 |
| 35000 | $2,200 | $154 | $5,390,000 |
| 40000 | $2,200 | $154 | $6,160,000 |
| 45000 | $2,200 | $154 | $6,930,000 |
| 50000 | $2,200 | $154 | $7,700,000 |
| 55000 | $2,200 | $154 | $8,470,000 |
| 60000 | $2,200 | $154 | $9,240,000 |
Copy of MAPFRE’s new Endorsment
For a copy of the Endorsement, send your request to: Scotter@agencychecklists.com.
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