Council draft would pass costs of taxi driver accident onto victims: experts

A Manhattan City Council member wants to cut taxi drivers’ accident insurance coverage by nearly 90 percent – a move that would shift the costs of traffic violence onto victims rather than on drivers, legal and industry experts say.

The bill introduced last month by Councilmember Carmen De La Rosa (D-Inwood) would increase the minimum personal injury protection insurance that yellow cab, livery and app-based drivers must carry from $200,000 to $50,000 reduce – but this reduction The cost of coverage would be borne by those injured in accidents.

“This is just devastating for a pedestrian to be hit by a car,” said attorney Victoria Wickman, who is also president of the New York State Trial Lawyers Association, which has advocated for it higher Insurance requirements.

“‘I’m sorry we ran you over, but we’re not paying for your medical bills now.’ I mean, it’s really outrageous,” Wickman added.

PIP insurance, also called “no-fault insurance,” is designed to quickly cover medical expenses and economic losses—regardless of who is at fault. In 1998, the city reportedly raised the minimum coverage amount for Taxi and Limousine Commission-licensed drivers to $200,000 after a series of high-profile accidents raised questions about taxi drivers’ safety. Adjusted for inflation, that would be almost $400,000 in today’s money – meaning the reduction to $50,000 represents a cut of more than 87 percent in real terms.

De La Rosa’s minimum insurance coverage would meet the national standard, but vulnerable road users need higher levels of coverage, according to Bruce Schaller, a former deputy commissioner at the Transportation Department during the Bloomberg administration who now works as a taxi industry consultant.

“It is a bad idea precisely because pedestrians need more coverage, especially because many pedestrians do not have their own car insurance that would otherwise cover them,” Schaller told Streetsblog in an email.

The costs of accidents are unusually high in New York, said Sam Schwartz, a former taxi driver who became the city’s transportation commissioner and chief engineer at the Department of Transportation in the 1980s.

“Two hundred thousand is next to nothing if you get into an accident in New York that results in an injury, so $50,000 is way too little.” [coverage] for people who drive for a living,” Schwartz told Streetsblog.

De La Rosa’s legislation comes at a time when the industry’s largest insurer, American Transit, is facing collapse and a new company could come in and raise monthly premiums, said the lawmaker, whose Uptown neighborhood is home to many taxi drivers .

“The interest for me in covering this bill comes from the plight of these drivers who have told me that insurance premiums are so high,” she told Streetsblog. “You pay exorbitant fees every month, and then the coverage is tenuous at best.”

Motorists pay about $4,000 to $5,000 per year in premiums, according to TLC, but these fees vary in part depending on the motorist’s record.

On the other hand

De La Rosa argued that most claims don’t meet the higher state benchmark anyway. The higher requirement also encourages more fraudulent claims, she added.

“It’s an exorbitant amount that’s kind of arbitrary. The $50,000 more than covers that is what I hear from the industry, as someone who is not an insurance and liability expert,” De La Rosa said.

Moving in the opposite direction is the disparity in liability insurance, where drivers in the city must carry at least $100,000 in insurance to cover long-term care and damages, as opposed to $1.25 million elsewhere in the Empire State, like Streetsblog previously reported.

Matt Daus, a former TLC commissioner who served as the regulator’s general counsel at the time of the reforms 24 years ago, agreed that not many claims are up to $200,000 and said the decades-old law warrants an overhaul .

“I think it’s worth a look,” said Daus, who now works at the law firm of Waschers Marx, specializing in transportation. “We have to make sure it doesn’t have a catastrophic impact on seriously injured people.”

It’s unclear whether the bill would actually result in lower premiums because companies can still set higher monthly fees even if the required coverage is lower, Wickman said.

“There is absolutely no equation for premiums to go down because you lower PIP coverage through no fault of your own,” she said. “There is absolutely no connection between the two.”

Schwartz says premiums typically don’t go down as much as coverage.

“Normally the decline is not that dramatic,” he said. “I tried to reduce my insurance, but it doesn’t correspond to the percentage reduction of the maximum amount.”

De La Rosa claimed that this would reduce costs for drivers, but added that there would be an explanation of the tax implications as part of the bill’s hearing.

“Every driver has a different type of insurance, but they believe that on a monthly basis this will reduce the amount of money coming out of the driver’s pockets,” the Pol said.

Crash test funds

In the 12 months between September 1, 2023 and August 31, 2024, there were 5,650 crashes involving taxis that caused injuries – or 15 injuries per day, according to TLC data. According to a 2004 study by Schaller on the safety of taxi and taxi drivers, that number was 10,000 per year for most of the 1990s, including 12,922 in 1998, the year of the reforms.

The number of TLC drivers has increased to over 117,000 licensed vehicles over the last decade with the introduction of apps like Uber and Lyft.

However, healthcare costs have also skyrocketed, with $50,000 barely covering a hospital stay, and accidental injuries can require intensive procedures and months of rehabilitation.

“Most people who are hit by a car end up paying more than $50,000 in medical bills,” Wickman said.

She said her client, who was hit by a motorist and sustained a leg injury, had to pay far more than the current insurance claim.

“She gets shattered and has her whole leg, probably 40 pins, three plates, young runner, she’s 26 years old,” Wickman said. “She had to wear external fixators…then she had to have surgery, then she had to go to rehab. So her hospital bill was well over $200,000.”

Instead of lowering the city’s requirements, the statewide minimum should be raised to meet the city’s requirements, she said.

Since the driver’s insurance will no longer provide $150,000 in coverage, these costs would shift to the victim’s health insurance, whether it is private or government health insurance such as Medicare and Medicaid.

Any payouts the victim later receives from driver’s liability insurance would likely go back to health insurers, since they often place a lien on those payments to offset their insurance coverage, Wickman said.

That means if an injured party later receives, say, an additional $100,000 in liability insurance payments, their health insurer could seek that money back to cover their expenses, the Legal Eagle explained.

“It will exhaust the whole thing, the patient will get absolutely no compensation for any pain and suffering,” the lawyer said. “This hand pays the other and the one who gets hurt doesn’t see a dime.”

She also questioned that reducing coverage would necessarily reduce fraud, adding that bogus medical claims could still persist because they typically target several lower-cost treatments rather than just a few expensive medical procedures.

For example, the city could also require taxi or for-hire vehicle drivers to pay a surcharge to offset any higher insurance costs, rather than burdening accident victims with more payments, Wickman said.

If officials did more to improve road safety, insurance costs would also fall because accidents would be less likely, Transportation Alternatives advocates said.

“TLC drivers spend more time on the road than other drivers and should be insured in a way that takes this into account,” Elizabeth Adams, the organization’s interim co-executive director, said in a statement. “Road violence causes a very real physical, emotional and financial toll – and the only way forward is to fundamentally change our streetscape and not saddle victims with the bill.”

De La Rosa said she was open to discussions about other measures and that her bill would require a hearing and financial analysis with more details on the potential impact, but she also worried that more expensive rides could hurt people who need them around.

“When I think about my community and the type of people that would call an Uber … it would be someone trying to get to a doctor’s appointment or the A train isn’t working,” she said. “Passing on these costs will likely reduce the incentive for people to get into these cars, which some might say is a good thing, and they will argue that it is their livelihood.”

“Introducing this bill is like starting this conversation,” the politician added. “It is a good opportunity for us to take stock of where we are in the industry, which has changed significantly over the last decade, and then see where other solutions can be derived.”

According to a spokesperson, the TLC is reviewing the bill. There are currently four sponsors in total.