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Gimmie a lift

News | January 21st, 2015

As popular rideshare companies like Uber and Lyft consider expansion to Fargo, they may have to decide what impact some regulation currently being discussed at both city and state levels would have on their business. The Fargo City Commission this week exempt the ride hailing companies from new taxi regulations after concerns were raised about them. They did, however, direct the city attorney’s office to come up with separate regulations for the ride share companies.

At the same time, State Representative George Keiser (R-Bismarck) has proposed a bill this legislative session that would require any transportation company that is hauling passengers for commercial purposes to have some sort of insurance or liability coverage for its customers. Currently he said companies like Uber and Lyft operate without such requirements in some major cities. However, concerns are being raised that proposed legislation is too strict and may actually prevent Uber or Lyft from coming to the state. Hearings on the proposed legislation begin next week and usually the rideshare companies have representatives of the company show up at legislatures to give their views on the impact of new regulations.

“What the bill does is it requires coverage for the risk associated with their business model,” Kaiser said. “Most people don’t realize, for example, most personal passenger auto policies have a very clear exclusion for commercial use. So if one decides to use their personal vehicle for commercial use, there’s an exclusion that removes coverage especially on the liability side. So that creates a situation where passengers don’t realize that there is no liability coverage from the transportation provider.

“We’re not trying to eliminate it. We’re just trying to make sure that everyone understands that. In contrast, when you ride in a cab, they don’t have that exclusion and if they are in a wreck you have the right in the courts to sue and do all sorts of things, you’ve got coverage for this risk associated with accidents, etc.”

Uber and Lyft differ from traditional cab companies in that customers use an app when they need a ride to connect directly with drivers in their immediate region, then they negotiate a price for their ride and no cash is involved -- payment is settled electronically, through the app.

These services can be extremely helpful during a high traffic time. Customers can find and contact whomever is available in their region directly, versus waiting for dispatch to send someone to you. Usually rideshare programs like Uber and Lyft are also cheaper than traditional taxi services.

Joe Burgum, Fargo, is an Uber and Lyft fan. He has used the service many times when visiting larger cities and has become an advocate for the companies to expand to his hometown. He said he has no financial interest in that actually happening, he’s just doing so as a consumer who enjoys the service.

“I am just a citizen activist. My only relation to Uber is just a customer,” Burgum said. “I really feel after living in three different major American cities this last year, I used Uber and Lyft a lot and I think that as Fargo looks to be known as a global city in a lot of ways, something like rideshare brings us to the next level. There are stories of huge companies that have chosen to move to Austin versus Dallas because Austin has rideshare and Dallas doesn’t. So I think it’s really a differentiator on a city level.”

Burgum has concerns about the state legislation being proposed and how it would affect Uber’s business model.

“The language of it and the nuances of insuring rideshare is that Uber carries a million dollars in primary insurance for the driver from the point that they’ve confirmed the pick up to the point they drop off a guest. And what this insurance bill is saying is that they have to have that but they have to cover drivers for when they are not on the clock. So as long as the app is open -- regardless of your status whether you have a driver -- there’s another amount of insurance that they are requiring drivers to have from Uber which will essentially double dip on your primary insurance and Uber covering you,” Burgum said.

“It doesn’t prevent Uber from operating, it just makes it really expensive for them to operate. Which either means they won’t come or those expenses will be passed onto the customer, which isn’t what I am interested in.”

Safety concerns have been raised about rideshare groups recently after a couple high profile incidents where a driver of the service allegedly raped a customer. One of the things the city will explore is mandating who will be responsible for the background checks of their drivers. However, Burgum says these rideshare companies are an extremely safe service.

“I believe Uber is really safe. I really equate it to getting in a car with a friend. I drive with a lot of people that haven’t had the number of hours on the road or a background check necessarily,” Bugum explained.

“There’s always a risk getting in a vehicle, it’s much more dangerous driving than it is to fly. So I think we have some perception and numeracy issues surrounding that. But I think there is a risk that people take on. I think from a background check standpoint, Uber is really safe and they are doing the due diligence.”

Rep. Keiser said the goal of his proposed legislation is not to prevent the companies from coming to Fargo but to make sure, should they do, that their passengers are safe. Keiser says he is open to tweaking the language in the bill and addressing any concerns that rideshare companies have about it.

Burgum said it’s an exciting time of growth in downtown Fargo and beyond in the city and he’s hopeful these rideshare companies will soon be a part of it.

“There’s a bunch of data out there on the impact that Uber and Lyft have on DUIs in communities. It’s pretty hard to get a cab on Friday or Saturday night anywhere in Fargo,” Burgum said. “To have a service like Uber where they are uniquely positioned to fluctuate the number of drivers they have with demand, that really is the key differentiator between the cab companies and an organization like Uber.”

Fargo City Commissioner Mike Williams said the city commission wanted to make sure they didn’t enact measures that would prevent Uber from coming to Fargo.

“I moved to separate the business types to make it clear the updated taxi ordinance we approved for traditional taxi service doesn't pertain to the Uber model,” Williams told HPR. “That said, I look at Uber-type rideshare models as opportunities to have more transportation options along with walking, transit, biking, mixed-use neighborhoods where you don't have to drive to get where you want to go and more room on the road to share.”

While Burgum has not been directly told by Uber that it’s considering Fargo, he does sense the company is interested. When the dust settles on all this regulation, Rep. Keiser does need to pass his bill through both chambers of the legislature and the Governor has to sign it, Uber, Lyft and other rideshare companies will find out if their long, cold look at Fargo was worth it.

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