A Lowcountry man says insurance policies for taxis are out of date and can leave you vulnerable.
Jesse Williams was in a wreck June 1, 2016 in North Charleston.
“I just bought it. I just bought it a month ago, and I got into a wreck,” Williams told the News 2 I-Team.
The police noted it was the taxi driver who contributed to the wreck after going through the intersection at I526 and North Rhett. The taxi driver for North Area Taxi clipped Williams' SUV causing more than $5,000 in damage.
“They are self-insured,” Williams told investigator Rebecca Collett. “That means everything is going to come out of their pocket.”
Williams knew it wasn’t going to be an easy process to navigate, so he hired a lawyer.
What is self-insurance?
Being self-insured means the company has at least 25 cars in their fleet and enough money in the bank to cover wrecks. Self-insurance allows companies to bypass paying a monthly premium to another insurance company.
Ken Harrell at Joye Law Firm says getting self-insured companies to settle often requires court intervention.
“Invariably that's the case. We're going to have to file a lawsuit because it's much more difficult to get it resolved than dealing with a typical insurance company,” Harrell said.
Self-insured companies create their own policies to deal with claims, and they often hire a lawyer to settle for them instead of an adjuster. Plus the claim is coming out of the company's account.
“It's a little more to swallow if you're not just paying premiums,” Harrell explained. “You're paying the claim. So that can result in the situation where you have a harder time getting the situation fairly resolved.”
The minimum requirements
Through our investigation, the I-Team found another issue with the taxi industry.
The minimum requirements for insurance are low and the low limits can leave both taxi riders and other drivers vulnerable should a wreck happen.
Attorneys with Nexsen Pruet reviewed the laws around taxi cabs for News 2. They say the insurance required to operate a cab is the same as for any private driver, but they were concerned because taxis are commercial operators licensed by the state. The law was last updated in 2008.
“You're looking at someone on the road more, carrying more people, and has a statistically higher chance of a wreck,” Molly Cherry with Nexsen Pruet explained.
The insurance works like this.
The minimum required to operate is $25,000 per person injured in a wreck. There is a $50,000 cap in payouts per wreck no matter how many people are injured, though. North Carolina has double the South Carolina limits. Uber carries a million dollar policy for wrecks.
Williams’ lawyers have another concern. State law requires taxi companies to have $3,000 per car saved in a bank account to cover wrecks. Michael Zinn with the Lokey Law Firm says that’s not enough readily available cash in case of a crash.
“The message to drivers is there are rules out there protecting these companies instead of the individual drivers,” Zinn said.
Legislators say they took a look at the laws last year and realized there was a problem.
“It is a risk,” Representative F. Michael "Mike" Sottile told the I-Team. “The chairman of my committee wanted to look at it last year. Unfortunately nothings been done at this time. But I think some movement is going to happen on it this year.”
The balancing act
Business attorneys with Nexsen Pruet say the limits are most likely kept low to allow small businesses to operate. The small operators may not be able to afford the high premiums for more coverage.
Dallas Ball, an attorney for several taxi companies says the law is working exactly how it should, adding the Legislature found the balance between protecting the public and allowing the companies to operate. He doesn’t believe the operators should be required to have any more coverage than the average driver.
“There should be little, if any, downside for consumers if a company chooses to self-insure, provided they have met all of the state requirements and can financially handle potential claims. It’s also important to note, we do not have the expertise to evaluate the current South Carolina DMV self-insurance program.” Oyango Snell, The Property Casualty Insurers Association of America, wrote the I-Team in a statement about self-insurance policies.