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Navigating the Insurance Maze of App-Based Delivery Services: Unraveling Proposition 22 and Vicarious Liability

Updated: Jun 21

In the fast-paced world of app-based delivery services, the landscape of insurance requirements and liability can be confusing and challenging to navigate. With the recent passage of Proposition 22 in November 2020, classifying drivers as "Independent Contractors," it's crucial to examine the implications of this proposition on insurance coverage and the accountability of mega-corporations like Uber Eats, DoorDash, and Grubhub.

The Tragic Incident that Sparked Change

Our journey into the realm of app-based delivery services began with a tragic incident on New Year's Eve in 2013. The death of 7-year-old Sophia Liu, injured mother, and brother by an Uber driver led to the first wrongful death action against the industry. The case was handled by Chris Dolan of the Dolan Law Firm in San Francisco, California. Uber's initial claim of being merely an "application" and not a transportation provider raised concerns about insurance coverage. This incident became a catalyst for change.

Advocacy for Change: AB 2293

In response to the need for accountability, Mr. Dolan collaborated with the Liu family to file a wrongful death action and advocated for legislative change. In 2014, AB 2293 was passed, requiring companies like Uber and Lyft to provide up to one million dollars in insurance and underinsured motorist coverage depending on the driver's phase in the delivery process.

CPUC's Role in Regulation

Many California attorneys actively participated in the California Public Utilities Commission's (CPUC) rulemaking process, emphasizing the importance of clearly defining Transportation Network Carriers (TNCs) as common carriers. This distinction, established in Decision 13-09-045, laid the foundation for TNCs' strict liability and accountability for the acts of their drivers.

Proposition 22: A Closer Look

With the passage of Proposition 22, which aimed to classify drivers as independent contractors, a closer examination of its implications is necessary. Contrary to claims by companies like Uber and Lyft, Prop 22 does not limit their liability to statutory minimums. Instead, it focuses on the classification of drivers and aims to exempt app-based transportation and delivery companies from providing specific employee benefits.

Prop 22 and TNC Liability

Proposition 22 does not alter the fact that TNCs are strictly liable for harms caused by their drivers. The increased insurance obligations outlined in Prop 22, such as occupational accident insurance and disability payments, aim to provide additional protections for drivers, especially in the event of injuries sustained while working.

The True Intent of Proposition 22

Proposition 22 was a response to the potential impact of AB 5, which sought to classify app-based drivers as employees. The goal was to limit benefits TNCs would be required to provide their drivers, ensuring their business model remained profitable. While Prop 22 addresses compensation and benefits, it does not affect TNCs' liability for driver conduct.

Conclusion: Embrace Proposition 22

In conclusion, Proposition 22 does not change the fact that TNCs, including Uber and Lyft, are held to strict liability standards. The CPUC's regulatory decisions and findings establish TNCs as common carriers, emphasizing their duty of utmost care and diligence. Instead of viewing Prop 22 as a threat, it provides additional protections for drivers, making it crucial to understand its nuances for the benefit of all stakeholders in the app-based delivery ecosystem.

If you or a loved one has been injured in a rideshare case, contact L WOOD LAW to see if you have a case.

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