Charles A. Yuen
January 2, 2015
New Jersey may soon join the growing list of states that have crafted legislation to specifically address the business model adopted by companies like Uber and Lyft. The Assembly Transportation and Independent Authorities Committee recently advanced a bill that would impose a number of new legal requirements on ride-sharing providers, including minimum insurance requirements.
As we have previously discussed on the Scarinci Hollenbeck Business Lew News Blog, so-called transportation network companies (TNCs) use a cell phone application to connect drivers using their personal vehicles with passengers who need a ride. While the service has proven to be wildly popular with the public, it has drawn the ire of the both the taxi cab industry and regulators.
In New York City, Uber, Lyft and other e-hail apps are authorized under a one-year pilot program, which was approved by the New York City Taxi and Limousine Commission (TLC) in 2013. However, other municipalities have taken a more hard line approach by prohibiting ride-sharing services through cease-and-desist letters and threatening to suspend the licenses of participating drivers.
The comprehensive bill currently under consideration by New Jersey lawmakers (Assembly Bill No. 3765
) combines seven separate bills. Below are some of the key provisions:
- TNCs must provide coverage in the amount of at least $250,000 per incident for liability, property damage and uninsured and underinsured motorist coverage, and medical payments coverage in an amount of at least $10,000 per person per incident involving a TNC vehicle.
- Insurance coverage must be available from the time the third party transportation provider logs on or is otherwise available for hire, until the provider logs out and is no longer available for hire or drops off the last passenger, whichever occurs last.
- TNCs must register with the New Jersey Motor Vehicle Commission. To secure a permit, TNCs would be required to conduct criminal history record background checks, verify operators’ driving records, and periodically inspect vehicles.
- TNCs that violate the law would be subject to a civil penalty of $2,000 for the first offense, per driver, and up to $5,000 for each subsequent offense, per driver.
Debate over the proposed legislation is expected to continue. We encourage our readers to check back for updates.