Guest post by William R. Henry, Jr.
If your organization engages volunteers to transport people, and the volunteers use their own vehicles, you may be concerned about liability. Now those worries have been amped up by the controversy over “transportation network companies” (TNC’s) such as Uber and Sidecar, which use Web portals to act as brokers between those who need rides and those who are willing to provide them in their private vehicles.
The controversy is that the liability exposure of TNC’s falls between the scope of commercial auto policies and that of personal auto policies, and it will take some time before insurance companies and government regulators can sort it out. Meanwhile, nonprofit-sponsored programs are at risk of an unfair comparison, because TNC’s sometimes are described as “ride-sharing” – a term that volunteer-based programs have used for many years.
There is a major difference in the two models – volunteers driving their own vehicles for nonprofit organizations might be reimbursed for their expenses by the organization or by passengers, but they are not driving to make a profit. In contrast, vehicle owners drive for TNC’s to make money.
Based on all evidence I have been able to find, insurance companies understand this difference. Although individuals who drive for TNC’s might jeopardize their personal auto insurance, there is no reason at this point to believe that an insurer would deny a claim, cancel coverage, or increase premiums of a customer just because that individual is a volunteer driver, and is reimbursed for reasonable expenses.
Most insurance companies writing personal auto coverage have an exclusion for liability “arising out of …a vehicle being used as a public or livery conveyance.” In other words, don’t use your vehicle as a taxi. In response to the rise of TNC’s, the Insurance Services Office (ISO), which provides standard policy forms, recently issued a policy “endorsement” (modification) excluding coverage for TNC-type arrangements.
My organization has approached several underwriters with the question of whether a customer’s coverage might be jeopardized if that person serves as a volunteer, transporting clients for a nonprofit organization, and is reimbursed for expenses.
Although underwriters always remind us that coverage determinations depend on specific facts of a claim, one underwriter from a major insurer did venture to say that a claim would be covered unless the compensation the volunteer had been receiving “exceeded normal reimbursement of expenses, including wear and tear on the auto.”
Jim Levendusky, manager of Insurance Solutions Underwriting for Verisk Analytics, the parent company of ISO, told me he is not aware of any insurance companies that are contemplating adverse action against customers who drive as volunteers.
The California Public Utilities Commission, in a 2013 ruling on regulations and insurance requirements for transportation network companies, also recognized the difference between TNC’s and volunteer-based programs. The rules exempt nonprofit organizations from the requirements.
Even in the absence of evidence, insurance agents and brokers sometimes warn their customers that they are jeopardizing their personal auto coverage by serving as volunteer drivers. A few states have enacted laws to prevent insurance companies from taking the kind of adverse action that no company yet has taken. The “facts on the ground,” as reporters like to say now, do not justify those warnings and legislative actions.
If your organization engages volunteer drivers, make sure your staff and volunteers know these facts!
William R. Henry, Jr. is executive director of Volunteers Insurance Service Association, which provides insurance and risk management services to volunteer-based nonprofit organizations nationwide, under the brand CIMA Volunteers Insurance (www.cimaworld.com).