On March 21, 2017, the State of Michigan will begin governing the operation of transportation network companies, like Uber and Lyft. Until now, there has not been any statewide regulation of these ride-sharing companies, although they have been operating across Michigan.
The laws – Public Acts 345, 346 and 347 of 2016 – establish a framework under which Uber and Lyft, and any other ride-sharing services, must operate. For example, the companies must register with the State of Michigan and pay a per-vehicle fee. Drivers, however, do not register through the state and, instead, must register through the company for which they work. This registration requirement makes it clear that, in Michigan, drivers are considered independent contractors.
Another important aspect of the new law is auto insurance coverage, in cases where there’s an accident involving the ride-sharing vehicle. The law provides that drivers must have a minimum amount of liability insurance, and also clarifies which party is responsible for no-fault insurance coverage when a passenger is injured in an accident.
Basically, the amount of liability insurance that applies is controlled by what part of the trip the ride-sharing vehicle was in at the time of the accident/injury:
• if the crash occurred during a pre-arranged ride – that is, while transporting a passenger – the driver must have $1 million in liability coverage.
• if the collision happened while the driver was between pre-arranged rides – that is, while waiting for the next customer – the driver must have $50,000 in liability coverage.
What about auto no-fault benefits? The law makes it clear that injured passengers must rely on their own no-fault insurance company for any benefits, including allowable expenses, work loss, replacement services and survivor’s loss.
The only way an injured ride-sharing passenger can get benefits from a driver’s insurance company is if there is no other source of benefits – that is, the passenger doesn’t have his or her own no-fault policy, and a spouse or resident relative doesn’t have a no-fault policy.
In addition, the new law imposes passenger safety measures, including:
• all drivers must undergo extensive background checks;
• vehicles must be regularly inspected;
• ride-sharing companies cannot hire drivers with multiple moving violations, major driving violations, a felony conviction or who are on the National Sex Offender Registry;
• before riding, passengers must be provided a photo of their driver and the vehicle’s license plate number; and
• drivers must display “signage” on their vehicle, identifying the ride-sharing company with which they are affiliated.
