South Dakota Governor Dennis Daugaard has signed HB 1091 into law, creating new requirements regarding insurance for vehicles used to provide rides for a transportation network company (“TNC”) and exempting vehicles used to provide these rides from certain commercial licensing requirements.
The new law provides, among other things, that, before a TNC may allow a person to act as a TNC driver on the TNC's digital network, the TNC “shall require” the person to submit to the TNC an application that includes:
(1) The person's name, address, and age;
(2) A copy of the person's driver license;
(3) The registration for the personal vehicle that the person will use to provide prearranged rides;
(4) Proof of financial responsibility for the personal vehicle of a type and in the amounts required by the TNC; and
(5) Any other information required by the TNC.
In addition, the law requires that, before a TNC may allow a person to act as a driver on its digital network, the TNC “shall conduct, or contract with a third party” to conduct:
(1) A local and national criminal background check;
(2) A search of the national sex offender registry; and
(3) Obtain a copy of the person's driving record maintained under South Dakota law, Section 32-12-61.
The new law also provides that a TNC “may not knowingly allow” to act as a TNC driver on the TNC's digital network a person:
(1) Who has received judgments for more than three moving traffic violations in the preceding three years, or at least one violation involving reckless driving or driving on a suspended or revoked license in the preceding three years;
(2) Who has been convicted in the preceding seven years of a felony;
(3) Who has been convicted in the preceding seven years of a misdemeanor involving:
(a) Resisting a law enforcement officer;
(b) Dishonesty;
(c) Injury to a person;
(d) Operating a motor vehicle while intoxicated;
(e) Operating a motor vehicle in a manner that endangers a person;
(f) Operating a motor vehicle with a suspended or revoked driver license; or
(g) Damage to the property of another person;
(4) Who is a match in the state or national sex offender registry; or
(5) Who is unable to provide information required under the law.
Another section of the new law requires that TNCs “establish and enforce a zero tolerance policy for drug and alcohol use” by drivers “during any period” when a driver “is engaged in, or is logged into” the TNC's digital network “but is not engaged in, a prearranged ride.”
With respect to insurance, the new law provides that a TNC driver or TNC on a driver's behalf “shall maintain primary motor vehicle insurance that recognizes that the driver is a [TNC] driver or otherwise uses a vehicle to transport riders for compensation” and covers the driver while:
(1) The driver is logged on to the transportation network company's digital network; or
(2) The driver is engaged in a prearranged ride.
The required insurance for (1) above is:
(1) Primary motor vehicle liability insurance in the amount of at least $50,000 for death and bodily injury per person, $100,00 for death and bodily injury per incident, and $25,000 for property damage; and
(2) Uninsured and underinsured coverage as required by South Dakota law, Sections 58-11-9 and 58-11-9.4.
The required insurance for (2) above (i.e., while a TNC driver is engaged in a prearranged ride) is:
(1) Primary motor vehicle liability insurance that provides at least $1 million for death, bodily injury, and property damage; and
(2) Uninsured and underinsured coverage as required by South Dakota law, Sections 58-11-9 and 58-11-9.4.
The law specifically provides that coverage under a motor vehicle insurance policy maintained by a TNC “may not be dependent on a personal motor vehicle insurer first denying a claim nor shall a personal motor vehicle insurance policy be required to first deny a claim.”
Among the other insurance-related provisions in the new law is one that provides that any insurer that writes motor vehicle insurance in South Dakota “may exclude any coverage afforded under the policy issued to an owner or operator of a personal vehicle for any loss or injury that occurs while a driver is logged on to a [TNC's] digital network or while a driver provides a prearranged ride.”
Finally, the new law also provides that, in a claims coverage investigation, TNCs “shall immediately provide upon request by directly involved parties or any insurer of the [TNC] driver if applicable, the precise times that a [TNC] driver logged on and off of the [TNC's] digital network in the twelve-hour period immediately preceding and in the twelve-hour period immediately following the accident.”
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].