James just got a part-time job with a new company in Cincinnati that offers rides to patrons for a slightly cheaper fare than typical taxi services.  Patrons simply request a ride through an app on their mobile phone and James arrives to take them to their destination.  James uses his own car to transport the patrons.  With this new job his car became a care for hire. 

One evening James had two passengers and was headed from a downtown bar to their home in Mt. Adams, otherwise a quick car ride.  After the red light on the corner of Main St. and 3^rd, James proceeded through the intersection not noticing the car that was about to run the red light on 3^rd.  There was no stopping in time, the oncoming car crashed into the rear driver’s side door gravely injuring James’ two passengers.  The car that ran the red light was at fault however, the deaths of James’ passengers exceeded their liability limits and James’ uninsured and underinsured policy would kick in to cover the loss of his two passengers and money to care for the two children they left behind.  Early into the investigation by James’ insurance carrier they found he was driving a car for hire, his car was part of a livery and therefore this tragic accident was not covered under his auto policy.  Now James is financially exposed for the death of his two passengers and the children they left behind.

The following story is fiction however instances such as the one just described happen daily.  Currently there are two new companies that base their business on this marketing platform; companies use smartphone apps that help users find a ride in a driver's personal car and to pay for the ride using a credit card.  The app calculates the fare, and the companies are paid a portion of the payment.  Many people do not know that if their personal vehicle is used to transport people or goods for payment is not covered under their personal auto policy.  In this case James’ car was a part of a livery even though he owned the vehicle.  There is a finite legal term that is also utilized by insurance carriers is “livery of conveyance.”  It is defined as: The transporting of people or goods for hire.  It includes conveyance by taxi service, motor carrier, or delivery service.  Livery conveyance  means a vehicle is used indiscriminately in transporting the public and not limited to certain persons and particular occasions or governed by special terms [Stanley v. American Motorists Ins. Co., 195 Md. 180, 186 (Md. 1950)].  If you peel away the legal jargon this simply means it is a car for hire and is excluded from personal auto policies (PAPs) with no exception.

If you are unsure if your activities are considered to be used in livery of conveyance contact your insurance agent to verify if you need additional coverage to protect yourself from what James unfortunately experienced.  The following are some underwriting guidelines set by insurance carriers for a livery policy, these are standard guidelines and each carrier may have additional criteria:

• Small fleet taxi, limousine and black car risks (5 or fewer units)

• Vehicles must be less than 15 years old

• Drivers must be a minimum of 25 years of age

• Drivers must have a minimum of 2 years of verifiable driving experience

• Vehicles involved in non-emergency medical transportation are excluded from this type of policy

Smaller independent “taxi” services are starting to appear in Cincinnati due to their popularity in other large cities and many of them are not considering their insurance risks and responsibilities.  In addition, since many local schools have eliminated busing to and from schools, many stay-at-home Moms are transporting several kids to and from schools and are reimbursed for their time by the parents of these children.  This scenario can also be considered a vehicle for hire.  If you are unsure if you are operating a vehicle for hire or if your activities are covered under your personal auto policy, simply call your agent to verify.  EK Agency will be happy to discuss with you what constitutes a livery vehicle and match you with the right and economical policy for you.  It’s better to be safe than ending up like James who will experience psychological and financial problems for many years to come.