Ridesharing services like Lyft and Uber seem to grow ever more popular. It's easy to arrange a ride, the cars and drivers are nice, and you feel like you're part of a cooperative economy. Plus, Uber and Lyft are cheaper and faster than taxicabs. Why take a taxi?
It seems like taxicab companies have a monopoly on the business of driving small groups of people around for money, doesn't it? Well, in a sense, that's true -- and, historically, there are good reasons for that. Most important among those reasons is safety: Taxi drivers have to pass a detailed driving history check, resolve all outstanding tickets, and demonstrate their knowledge of traffic laws and the quickest routes from A to B all through the area. They're licensed and tracked, so if something happens to you, you can easily find out who the taxi driver was.
Just as important, taxicab companies are required by law to have a substantial amount of liability insurance to cover any injuries the driver or passengers might sustain in an accident. Furthermore, that insurance must cover each aspect of the taxi-rider contract, which is a confusing rule most people don't even know about. Those aspects include:
- Period 1: The driver is actively seeking passengers
- Period 2: The driver is on their way to pick up a passenger
- Period 3: A passenger is in the vehicle
Is it really important for professional drivers to comply with all those regulations? An LA Times editorial claims that over-regulation is making the taxicab industry uncompetitive. The taxicab industry argues the problem is just the opposite: Uber and Lyft drivers aren't professionals, and that puts riders in danger of everything from accidents to sexual harassment and crime.
New law requires Lyft, Uber and their drivers to carry commercial insurance
Last September, California passed a new law that designates Uber, Lyft and other ridesharing apps as transportation network companies, or TNCs. That means both the organizations and the drivers must have commercial-grade insurance like taxicab companies. It went into effect this week.
That's an important change for riders because accidents do happen. It's up to you whether Lyft and Uber are a better choice than a traditional taxi -- but that choice shouldn't mean you're left with the bills after a major accident.