Uber Threatens to Leave Minnesota If It Has to Get Better Insurance Coverage

The bill would require Uber to carry a $1.5 million insurance policy whenever a driver is logged into the app

The bill would require Uber to carry a $1.5 million insurance policy whenever a driver is logged into the app

Minnesota is considering a bill that would require so-called Transportation Network Companies like Uber and Lyft to carry a $1.5 million insurance policy for drivers any time they're logged onto the app.

If that happens, Uber says it's taking its ball and heading home.

See also: Twin Cities Cab Drivers Try to Beat Uber, Lyft at Own Game

"Let me put it this way," says Mike White, general manager of Uber's Midwest region. "There's never been a bill that passed with as onerous requirements as this bill proposes, and we've left other jurisdictions that had less onerous requirements.

"We'd have to think very carefully about whether we could operate in Minneapolis/St. Paul if this passes."

Two weeks ago Uber announced it is pulling out of San Antonio April 1 after the city passed an ordinance mandating extensive background checks and drug testing for TNC drivers. San Antonio later tried to revise the ordinance to win Uber back, but the revisions weren't good enough.

Minnesota's bills (HF 1783, SF 1679) are intended to close a gap in coverage that Insurance Commissioner Michael Rothman warned about when Uber and Lyft first set up shop.

"I definitely believe these companies are innovative new businesses that provide new transportation options and job opportunities for people in Minnesota," says Rothman. "Our goal was to avoid a situation where there would be an insurance gap and a problem for the riders, driver, or public to not have that covered."

The debate centers on when Uber needs to cover drivers. Minnesota wants Uber on the hook any time a driver turns the app on, whereas Uber thinks it's only fair to offer coverage when the driver is transporting or picking up a passenger.

The family of Sofia Liu found out this is a very important distinction. An Uber driver named Syed Muzzafar hit and killed the six-year-old Liu in San Francisco on New Year's Eve 2013.

When the family sued Uber, it claimed it was not liable for damages because Muzzafar wasn't driving anyone at the time, although he was logged onto the app.

"The [state insurance] department is concerned with a big gap in insurance, and the context for that was about the girl who was run over in California," says Rothman. "From a general perspective it's important for the commercial entity conducting business to be the one to take on the risk and cover it, and insure in the event of a loss or an accident."

Rothman says the best option for Minnesotans is to extend coverage to any time a driver is logged on.

"This bill does not recognize the difference between when the driver is actually providing commercial activity and when they just turned on the app. That's a pretty big difference," says Uber's White.

White says that's not the only problem Uber has with the bill.

He says insuring up to $1.5 million is "leaps and bounds higher" than any other requirement Uber deals with and it would have to carry comprehensive and collision coverage, which is not mandatory for any other set of drivers in Minnesota.

Send news tips to Ben Johnson.