Background: State law currently provides for the regulation of certain private transportation providers, such as operators of aeroporters, limousines, for-hire vehicles, taxicabs, and charter and excursion buses. These regulations include various insurance requirements. However, current law does not specifically provide for the regulation of what are commonly know as ridesharing companies, i.e. companies that use a digital network or software application to connect passengers to drivers for the purpose of providing a prearranged ride, often by use of the driver's personal vehicle.

For-hire vehicle operators are currently required under state law to obtain a surety bond or liability insurance policy with the following minimum coverage: $100,000 per person, $300,000 per accident, and $25,000 for property damage.

Summary of Engrossed Substitute Bill: Commercial transportation services providers are defined as businesses that use a digital network or software application to connect passengers to drivers for the purpose of providing a prearranged ride. However, a commercial transportation services provider is not a taxicab company, charter or excursion bus, aeroporter, special needs transportation provider, or limousine. A commercial transportation services provider driver is an individual who uses a personal vehicle to provide services for passengers matched through a commercial transportation services provider's digital network or software application. Commercial transportation services are defined as all times the driver is logged into a commercial transportation services provider's digital network or software application, or until the passenger leaves the personal vehicle, whichever is later.

Commercial transportation services providers, drivers if approved by the Office of the Insurance Commissioner, or a combination of a provider and a driver, must obtain a primary automobile insurance policy covering every personal vehicle used to provide commercial transportation services, described as follows:

before a driver accepts a requested ride: $50,000 per person; $100,000 per accident; and $30,000 for property damage; and
after a driver accepts a requested ride: a combined single limit liability coverage of $1,000,000; and underinsured motorist coverage of $1,000,000.

Commercial transportation services insurance policies must offer personal injury protection coverage, and underinsured motorist coverage, in line with existing motor vehicle insurance law that allows for the insured to reject the coverage options.

After July 1, 2016, an insurance company may not deny a claim arising exclusively out of the personal use of the private vehicle solely on the basis that the insured, at other times, used the vehicle to provide commercial transportation services.

The commercial transportation services insurance coverage requirements are alternatively satisfied by having for-hire vehicle or limousine insurance coverage applicable to the vehicle being used for commercial transportation services.

Commercial transportation services provider drivers, for-hire vehicle operators, limousine chauffeurs, and taxicab operators are exempt from workers' compensation requirements.

Staff Summary of Public Testimony on Proposed Substitute as Heard in Committee: PRO: The bill should cover all private transportation providers, not just TNCs. The insurance community supports Senator Habib's efforts at working with stakeholders to improve the bill. The insurance industry needs a clear distinction in the bill between personal and commercial insurance coverage, depending on the activity being covered. The proposed substitute includes such clarity and is supported by the insurance industry. Specific clarity is provided in the proposed substitute as guidance to the courts. The bill attempts to accommodate innovative technology.

CON: Taxi groups participated in a year-long negotiation in King County to reach an agreement regarding the local regulation of TNCs. Agreement was reached on a local regulatory structure. The parties agreed not to ask the state for a new structure. This bill just carves out separate regulatory autonomy for one industry. TNCs have violated laws in other states. The taxi industry cannot support a separate but not equal system. Taxis follow existing rules regarding safety, insurance, Labor & Industries, and other requirements. Under this bill, TNCs would have less regulations than under current law. The bill does not create a level playing field. The insurance requirements in the bill are not available on the current insurance market. The bill provides an unfair advantage to big companies. Existing taxi regulations are more stringent than the TNC regulations under the bill. This bill is a move backward.

OTHER: TNC services have become very popular. The ridesharing industry supports reasonable regulations. Uber has expanded beyond Seattle to Spokane and Vancouver, and is looking at Olympia and Bellingham. Uber wants uniform regulations. Uber currently does background checks and driver record checks. The use of TNC services has shown to decrease incidents of DUI. Uber provides a very convenient service. Uber wants to make sure insurance coverage exists at all times the driver has the software application turned on. Uber doesn't agree with all the provisions in the proposed substitute, but does want to work with the sponsor to address concerns. The bill does require coverage not currently available on the market. Room exists for all companies to offer transportation services, and negotiating a solution is in everyone's interests. Change is not easy, but we need to adapt to new technologies. The Port of Seattle needs authority to regulate all private transportation at its facilities, and is happy to work with stakeholders to address that. The city of Seattle negotiated with interested parties and established a strong safe, accessible, and reliable service, but this bill would prohibit local governments from licensing TNCs and puts safety in the hands of large for-profit companies. The bill would undermine taxis and for-hire vehicles. Seattle supports local governments having on-street enforcement authority. Lyft has been in Seattle since 2013 and is seeing the regulations start to catch up with the industry. Lyft has concerns regarding insurance, fees, and reporting requirements.

Persons Testifying: PRO: Chris Van Dyk, Ride – Quality Ground Transportation Management Services LLC; Mel Sorensen, Property Casualty Insurers Assn. of America; Jean Leonard, WA Insurers, State Farm, National Assn. of Insurance Companies.

CON: Sheila Stickel; Dawn Gearhart, Aamar Khan, Western WA Taxi Cab Operators Assn.; Jim Kelly, United For Hire.

OTHER: Issayas Berhe, Selamawit Alula, Uber, Drivers; Brooke Steger, Uber, General Manager; Curtis Scott, Uber; Samatar Guled, Eastside For Hire; Abdul Yusuf, Q Ride; Clare Gallagher, Port of Seattle; Denise Movius, city of Seattle; Jim Justin, Lyft; Ethan Schaffer, citizen.