The rules seek to accommodate and properly regulate an emerging industry while not giving start-up companies a competitive advantage over traditional taxi services, Dayton Deputy City Manager Stanley Earley said.
Some groups contend that ride-sharing services continue to operate in a gray area of the law, because drivers may lack auto insurance that provides full or adequate coverage in the event of a crash.
“There are people signing up to drive for Uber and Lyft who assume their personal auto policies will cover them, but in most situations, that is not the case once they turn the app on,” said Dan Kelso, president of the Ohio Insurance Institute, a group representing the state’s property and casualty insurance industry.
Dayton City Commissioners on Wednesday passed new rules on transportation networking companies, sometimes known as ride-sharing or ride-booking companies.
Uber, an app-based ride-sharing service out of San Francisco, Calif., started operating in Dayton in August. Lyft, an app-based competitor, recently began operating in other parts of Ohio.
Uber customers enter their credit card information and download an app for their mobile devices. They use the app to arrange rides from private-car owners, taxis and limo operators. Rides from private-car owners, a service called uberX, is the cheapest form of transportation offered by the company and is the most popular platform.
App users’ credit cards are charged for the transactions, and no cash is exchanged. Uber drivers cannot be flagged down on the street.
Under Dayton’s new rules, ride-sharing companies will be required to only employ drivers who 19 or older and who possess a valid driver’s license.
Drivers must have at least the minimum amount of auto insurance required by the state. Drivers will have to obtain registration tags from the city and will be subject to criminal background checks. Ride-sharing drivers are independent contractors.
The city’s police director can refuse registration tags to any driver who engages in illegal activity, lies on their application and has a record of arrests or unsafe driving behaviors. The same rules of conduct apply to taxi cab drivers.
Transportation networking companies will have to pay an $8,500 annual fee to the city and make trip reports and a list of drivers available to the city upon request.
Taxi cab companies pay fees for individual rides, but the city is charging transportation networking companies an aggregate fee in a comparable amount, said Earley.
“Instead of making those costs tied directly to the individual vehicle, they are tied to the network as a whole,” Earley said.
In addition, new regulations passed by commissioners will require taxi cab drivers to maintain a clean and sanitary vehicle and keep good hygiene and appearance.
Taxi drivers will be required to wear a collared shirt that is tucked in, closed-toe shoes, a belt and a skirt or slacks.
Taxi operators will be required to carry at least $1 million in liability insurance coverage for personal injury and property damage. Taxis will be required to issue credit card receipts containing the name of the cab company.
Taxi operators can apply for a variance to give them 12 months to update their vehicles if they are too old.
Walt Brown, owner of Walt’s Taxi Cab Service, applauded the dress code requirements, saying, “There are way too many taxi drivers who are basically wearing rags.”
Brown said he supports regulating ride-sharing companies because that could help level the playing field.
He said the companies have avoided costly requirements imposed on traditional, licensed cab businesses.
Taxi companies in many major cities have protested ride-sharing services, claiming they undercut their prices by skirting strict regulations.
Critics also have raised questions about the extent of the companies’ auto insurance coverage.
George Vann, office manager and a driver for Clean Cab in Dayton, said many Uber drivers do not realize that personal automobile insurance is not intended for and will not cover people who are using their vehicles for commercial purposes.
He said comprehensive commercial insurance is crucial when serious accidents occur.
“I want to know how they can let a 19-year-old drive somebody around the city, while I have to wait until they are 25 to get them on commercial insurance,” he said.
Most personal auto insurance policies contain exclusions when a person uses their personal vehicle for commercial purposes, such as carrying a person for a fee, said Ohio Insurance Director Mary Taylor earlier this year.
Transportation networking companies may have liability insurance, but that may not cover medical expenses, collision costs and uninsured and underinsured motorist crashes, Taylor said. She urged ride-sharing drivers to consider buying a commercial automobile insurance policy.
Uber says ride-share providers through uberX carry personal insurance policies, but the company also has a $1 million commercial insurance policy per incident.
Still, local taxi drivers said Uber and other start-up companies have flaws, such as they cannot take reservations ahead of time.
Vann said his company and Uber serve different clientele, but he has given rides to people who were supposed to be picked up by uberX drivers but they never showed.
“They (arrange rides) over the Internet, so there is nobody to get in contact with when they don’t show,” he said. “They can call me back and holler at me.”
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