San Antonio goes too far with ridesharing insurance requirements
San Antonio, Texas appears to be on the verge of implementing one of America’s worst laws to regulate transportation network companies like Uber and Lyft.
The current San Antonio bill—which has dozens of problems my colleague Josiah Nealey describes in The American Conservative—is particularly notable for its onerous insurance requirements. Texas itself has slightly-above-average minimum insurance requirements, with $30,000 per person and $60,000 per accident for bodily injury, and $25,000 for property damage. But in San Antonio, the bill would impose on ride-sharing drivers a $200,000 minimum, more than any state save Michigan; mandated uninsured motorist coverage, which required in only 14 states but not for other Texas drivers; and a requirement for comprehensive/collision insurance that is not required by law anywhere else.
The first two requirements are within the bounds of reason; indeed, there’s a decent public safety rational for requiring TNCs to carry uninsured motorist coverage even if other drivers in the state don’t have to. But the mandate for comprehensive/collision coverage seems particularly problematic and anti-market. There’s no public benefit whatsoever in forcing people to protect their own cars. Indeed, for people driving older cars –as many starting out as ridesharing drivers will do—it’s almost certainly a net loss to economic welfare to require it.
In the context of a generally reasonable framework for regulating ridesharing, it might be possible to overlook the problems with the mandate in favor of political expediency, particularly since so many new cars are going to have lienholders who require such coverage already. In the context of a San-Antonio-like law that, as Neeley says, imposes “a background check, fingerprinting, a driving test, a defensive driving course, a physical exam, an eyesight test and a drug test” the requirement needs to be considered in the same category: as an unwarranted and unjustified barrier to people earning a living.
In short, rather than making it easier for economic activity to take place by transferring risk, the insurance requirements are serving as part of a constellation of bad ideas that seem likely to harm a vibrant emerging industry. San Antonio’s ridesharing insurance mandates are threatening to make an already bad policy much worse.
