American Property Casualty Insurance Association
  • Staff Contact: Nicole Mahrt-Ganley     
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Nicole Mahrt Ganley


916-440-1116 or cell 916-616-5855




March 21, 2014

TNC Companies Unfairly Shifting Their Insurance Responsibility to All California Drivers

ACIC tells CDI that personal drivers should not subsidize TNC drivers’ riskier driving behaviors

SACRAMENTO - Today the California Insurance Commissioner Dave Jones will hold an informational hearing in the State Capitol on Transportation Network Companies (TNCs) and the insurance concerns related to their business model, says the Association of California Insurance Companies (ACIC). 

TNC services are a new transportation trend in major cities around the country where a company uses a smartphone app to connect drivers with fee paying riders as part of an organized program.  TNCs want to trigger their insurance coverage when a TNC driver is matched with a passenger and until the ride ends, forcing the personal lines policy to cover the risky driving behavior of the TNC driver while trolling for a passenger.

“The TNC model shifts the risk and cost to their drivers and all other California drivers by putting the risk on all personal auto insurance policies,” said Armand Feliciano, ACIC vice president.  “The TNCs are trying to force a square peg into a round hole, and it does not fit because TNC drivers present a higher risk than personal drivers.  The rating factors required under Proposition 103 do not account for the TNC risks, there is no data available on which to base ratings.”

Personal auto insurance policies do not cover commercial activities and contain a specific “livery” exclusion which bars coverage if the car is used for commercial purposes.  Courts have consistently upheld these long established rules.

“Despite the TNCs public declarations that they have solved the insurance concerns, there are many unanswered questions,” said Feliciano.  “Who is going to defend the driver in a lawsuit?  What happens to the TNC driver’s car loan?  Who is going to pay damages to the car while providing TNC activities?  As this service expands in cities and states so do the unanswered questions.”

Legislation on this issue has been introduced in Arizona, Colorado, Georgia and Oklahoma. Local ordinances governing ride-sharing programs have been introduced in Chicago, Dallas and Seattle.

The Association of California Insurance Companies (ACIC) is part of the Property Casualty Insurers Association of America (PCI). ACIC is PCI’s California Voice representing 363 property casualty insurance companies doing business in California. These members write $20.2 billion in premium in California insuring 36 percent of the property casualty insurance sold in the state. California members write 44 percent of personal auto insurance, 29 percent of homeowners insurance, 33 percent of commercial lines business insurance and 40 percent of private workers compensation insurance sold in California.