Ride-hailing services highlight new risks

An important prospect’s purchasing team is coming to town for a major sales presentation. We arrange for a ride-hailing service (e.g., Uber, Lyft) to pick up our very important visitors at the airport and bring them to our home office. All is well until a truck makes an illegal turn in front of the ride-hailing car carrying our visitors, leading to an accident with all three members of the prospect’s team severely injured.

Some months later, we are served. The prospects have filed suit naming the ride service, the driver, the trucking company — and us. Now what?

Let’s pause to parse this entirely plausible set of events. We know that the major ride-hailing services carry insurance against such eventualities, but we read in their own information that their policies carry million-dollar limits. This sparks a few questions, including:

• Is that limit per person or per incident?
• Were we aware of the limit before we ordered the ride for our guests?
• Do we have a corporate account with the ride-hailing service or did one of our executives put this ride on his own personal account?
• If we have a corporate account, does that include a contract that spells out liability assignments? For example, if our executive vice president (EVP) put this charge on his own card, what does his agreement with the service say about liability in the event that the policy limit is breached? Does it even cover rides ordered for third parties? Does his liability roll up to the company?

Determining who’s liable

As these questions demonstrate, a simple business courtesy like providing a ride-hailing service for visitors can lead to a complex web of potential liabilities. Further, the liabilities are equally complex if an organization establishes a corporate agreement with a service to provide rides for employees during normal business travel. Companies have increasingly entered into these agreements to provide a benefit to their employees and control travel and expense. But how does this arrangement impact the company’s obligations for workers’ compensation under the “coming and going” regulations in the states in which they operate?

As of today, courts have not provided definitive guidance on the issue of workers’ compensation for a company arranging the use of a ride-hailing service. To further muddy the waters, each state typically has its own set of regulations and laws, meaning there could be 50 different answers for determining who is at fault or liable for one accident. For example, 12 states and Puerto Rico have no-fault auto insurance laws, meaning that drivers have insurance to cover their own injuries and damage rather than insuring to pay out for third persons involved in an accident. Court cases that could provide clarity on these scenarios will be decided in the months and years ahead but, until then, it is essential that organizations have a complete understanding of the liabilities they inherit when entering into an agreement with a ride-hailing service.

Ride-hailing considerations and other emerging risks

If a company decides to sign a contract to make a ride-hailing service the primary form of transportation for its employees, it is essential that it not agree to the contract without an in-depth discussion with the internal risk manager and the company’s insurance broker and carrier.

The most important thing to consider when reviewing contracts is understanding where the liability falls in the event of an accident. For example, does the ride-hailing service assume liability for the accident? If not, risk management should write the contract in a way that protects the employer from assuming risk if an accident does occur. Furthermore, if there is no clause accounting for who is responsible for an accident, it is essential to determine if a company’s insurance carrier has a duty to defend the organization under the appropriate policy.

It is worth noting that the uncertainties surrounding ride-hailing have attracted entrepreneurs with new ideas about insurance. For example, Sure is offering Ride Safe, a use-based policy for passengers of Uber or Lyft. However, ride-sharing company policies have strict guidelines as to when Ride Safe takes effect and under what situations the coverage applies — another area where organizations should have a clear understanding before signing a contract.

Companies face other emerging risks when they enter a ride-hailing contract. For example, a 2018 CNN investigation found that at least 103 Uber drivers have been accused of sexually assaulting or abusing passengers in the past four years. Business owners have no control over a ride-hailing services’ vetting process and do not have access to a driver’s criminal history or driving record. Thus, it is vital that organizations understand how the ride-hailing service protects passengers from the unfortunate event of abuse from drivers. In addition, the company will want to make sure the contract clearly states that the ride-hailing service takes responsibility for the actions of its drivers.

Furthermore, as in every industry, cyber threats continue to be an area of exposure. Ride-hailing services are most often used through mobile apps. Should a company enter into an agreement; its employees will enter sensitive information into those apps, such as company credit card numbers or employee email addresses. This creates another point of entry for sophisticated cybercriminals to hack into a company’s corporate network and cause damage.

Cyber risks should also be considered when signing a contract. Companies need to understand how the ride-hailing applications are built and how they protect the vast amounts of personal data they collect. In addition, the company should understand who exactly is liable if a ride-hailing service is hacked and the personal information of employees is stolen. Will that liability fall on the ride-hailing service or the company that signed the contract with that service?

Again, there are no definitive legal answers to these questions. It is important to remember just how new this type of service really is. Uber was founded almost exactly 10 years ago, but it did not become a common part of life in the United States until about five years ago. Technology almost always makes its impact on society before the courts can have their say on the rules and regulations that govern it.

Once a company signs a contract with a ride-hailing service, it is clear they inherit a significant chunk of liability. From potential car accidents to unsolicited actions of drivers to increased cyber risks, organizations will be more exposed from a liability standpoint. Moving forward, companies should instruct their legal team and insurance organization to pay close attention to court decisions that will define how ride-hailing services will work with employer insurance. The worst-case scenario for a company is to find its name attached to a precedent-setting court case

As for that helpful EVP who used his own ride-hailing account in my initial example? It is recommended to have a policy that restricts or forbids such actions.

Gary Anderberg (Gary_Anderberg@gbtpa.com) is the senior vice president-claim analytics at Gallagher Bassett. Anderberg is a driving force in taking Gallagher Bassett’s cutting-edge analytics and technology tools to the next level.

To learn more about emerging risks, join us at the America’s Claims Executive Leadership Forum & Expo in Las Vegas, Nevada on June 24-26.

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Ride-hailing vs. car ownership: For many, the car is still king