New York, N.Y. (November 29, 2021) – New York Partners Patricia Alarcon Demetri and Gina Suarez Misiaszek recently secured a precedent-setting ruling on behalf of a ridesharing company insurer client when Justice Ulysses B. Leverett of the Supreme Court of New York, Queens County issued a decision determining that supplemental uninsured motorist (SUM) benefits were not available to a rideshare passenger who was involved in an accident. See In the Matter of the Application of Greenwich Insurance Co. v. Nunez, No. 716621 (Nov. 10, 2021).
Transportation Network Companies and Applicable Law
In recent years, we have seen rideshare vehicles, operated through transportation networking companies (TNC), rise in popularity as a more convenient way to travel in the United States. In turn, each state has enacted laws that govern and regulate the operation of these companies.
In 2017, Article 44-B, entitled "Transportation Network Company Services," was added to New York's Vehicle and Traffic Law (VTL) and made amendments to the Insurance Law and other laws to permit ridesharing in New York State. One of the law's requirements is that ridesharing companies must maintain mandatory insurance coverage, including SUM coverage for bodily injury in the amount of $1.25 million per accident, where a passenger has been connected with a driver through the TNC's digital network. See VTL §1693, Financial responsibility of transportation network companies.
SUM coverage for ridesharing vehicles is significantly higher than the New York statutory minimum uninsured motorist coverage limit of $25,000 per person and $50,000 per accident. As such, ridesharing companies and their insurers face greater exposure to high value claims in light of the compulsory higher insurance coverage compared to personal automobile insurance, which tends to carry the minimum statutory New York limits.
A TNC insurer, however, is not obligated to provide SUM coverage to "for hire" vehicles where such vehicles operating within New York City are governed by the Taxi & Limousine Commission (TLC), and thus excluded from coverage under the applicable law and TNC policy. Specifically, VTL §1693(12) provides that "[n]othing in this section shall impose financial responsibility requirements upon any entities operating as vehicles for hire in a city with a population of one million or more." In other words, a TNC insurer is not required to provide coverage to "for-hire vehicles" that are "operating" within New York City (i.e., TLC vehicles).
Facts of the Case
In Nunez, the claimant filed a demand for arbitration seeking SUM benefits under the Greenwich policy for injuries allegedly sustained in an underlying motor vehicle accident with a hit and run vehicle. In response, Greenwich Insurance filed a petition seeking the dismissal of Nunez's SUM claim, asserting that no SUM coverage existed under its policy for TLC vehicles, which are defined under New York law as "for hire" vehicles operating in New York City.
Nunez opposed Lewis Brisbois' petition, contending that VTL section 1693(3)(a) required Greenwich Insurance to insure the vehicle occupied by him because it was a TNC vehicle engaged in a "TNC prearranged trip" through a rideshare app. In addition, Nunez argued that if SUM coverage was denied, then he would be left without recourse for the injuries he sustained in the accident.
In its reply, Greenwich Insurance maintained that the vehicle was not a "TNC" vehicle and was not engaged in a "TNC prearranged trip" because under the applicable law and TNC policy, the vehicle was defined as a "for hire vehicle" and thus excluded from coverage. It was further argued that these exclusions were referenced within VTL §1691, which defines a TNC vehicle as follows:
(a) used by a transportation network company driver to provide a TNC prearranged trip originating within the state of New York; and
(b) owned, leased or otherwise authorized for use by the transportation network company driver;
(c) such term shall not include:
(ii) a livery vehicle, as defined in section one hundred twenty-one of this chapter, or as otherwise defined in local law;
(iii) a black car, limousine, or luxury limousine, as defined in section 19-502 of the administrative code of the city of New York, or as otherwise defined in local law;
(iv) a for-hire vehicle, as defined in section 19-502 of the administrative code of the city of New York, or as otherwise defined in local law. . . .(Emphasis added.)
The Court's Decision
The Honorable Justice Ulysses B. Leverett of Queens County, Supreme Court granted Greenwich Insurance's petition and dismissed the SUM claim, holding that the applicable law and subject policy of insurance did not afford the claimant supplementary uninsured/underinsured motorist coverage.
Key Takeaway
This decision is significant because it provides solid precedent regarding the exclusion of SUM coverage for TLC vehicles under the TNC policy, when they are indeed for-hire vehicles operating within New York City limits.
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