USAA offers ride-booking insurance in Texas

Starting May 16, USAA will offer auto insurance to members who drive for transportation-network companies, such as Uber and Lyft, in San Antonio and the rest of the state.

San Antonio-based USAA announced Thursday it will allow members to extend their auto insurance policy to provide coverage from the moment they log in to a ride-booking mobile application until they are matched with a passenger, often referred to as the “gap” period.

Texas Department of Insurance spokesman Jerry Hagins confirmed USAA will be the first to offer the insurance in the state. The agency reviewed USAA’s application and approved it on Feb. 5. An application from another insurer is under review, but the company’s name wasn’t immediately available, he said.

The announcement came two days after Mayor Ivy Taylor disclosed the city would delay the implementation of a vehicle-for-hire ordinance on transportation-network companies while the City Council reviews the regulations. The ordinance had been set to take effect Sunday and would have required drivers to have, among other things, excess coverage of not less than $200,000 per accident for the period when a driver is logged in to the app but has not accepted a ride from a passenger.

The excess-coverage requirement was one of the most contentious aspects of the new law, prompting Uber earlier this month to threaten to pull out of San Antonio if the rules weren’t overhauled. Excess insurance provides additional coverage beyond that of the underlying policy.

Whether the “Ride Share Gap Protection” being offered by USAA will meet that requirement depends on the individual driver. The insurance includes whatever liability limits, coverages and deductibles that are on the USAA member’s auto policy. Depending on a driver’s liability limits, that underlying coverage may or may not meet the $200,000 excess coverage requirement, said Jesse Mata, USAA product management director.

City officials were pleased with USAA’s move, nonetheless.

“At least they’re providing some coverage so that, depending upon on how the San Antonio ordinance finally is determined, maybe they’ll meet the requirements,” said Jim Kopp, assistant city attorney. “But if not, then it’s something that they can consider — further revising their policies.”

City staff and the transportation-network companies have been in discussions “to come up with something” that will allow the companies to remain in the city, Kopp said. The City Council is slated to revisit the ordinance at its next meeting on Thursday.

“This is something that the insurance market is going to find a solution for and not the City Council,” Councilman Rey Saldaña said, adding that USAA’s coverage was “a very positive revelation.”

“USAA will be the first out of the gate, but I will predict many other insurance companies will follow their lead because this is a market that has yet to be tapped,” he said. Saldaña voted against the ordinance, which was passed by the City Council in December.

State Farm, the state’s largest automobile insurer, said it is exploring different insurance coverage options for drivers who work for TNCs, spokeswoman Patti Kelly wrote in an email. Allstate Insurance Co. offered a similar comment.

Both Uber and Lyft hailed the decision by USAA to offer insurance to its members who drive for them in Texas.

“We are encouraged by the creation of modern insurance policies tailored for drivers who participate in peer-to-peer transportation,” Lyft spokeswoman Chelsea Wilson wrote in an email. “We continue to believe that innovation in the insurance marketplace is the most effective way to maintain the highest level of safety while allowing ridesharing to thrive.”

“As technology evolves, so do the industries that rely and support these advancements,” Uber spokeswoman Debbee Hancock said in an email. “This is a timely reminder that regulations should be written broadly enough to make room for growth and innovation.”

Mata said USAA’s coverage is a hybrid that serves as a bridge between a driver’s personal auto insurance and the transportation-network company’s commercial insurance. The latter is insurance for the time a driver accepts a trip request through completion of the trip. Under the city ordinance as written, the transportation-network companies would be required to have liability coverage of not less than $1 million.

USAA first introduced Ride Share Gap Protection in Colorado on Feb. 16 as a pilot program. Mata said the company has gotten good response thus far, though he said the number of members who have signed up for coverage is proprietary information.

“We’re pleased with it and that’s one of the reasons why we decided to expand the pilot in Texas,” he said.

USAA members in Texas can add the Ride Share Gap Protection starting in April. The coverage costs about $6 to $8 a month.

“I just applaud USAA for their innovation in getting a product on the market so quickly,” Taylor said. “They’re usually ahead of the curve.”

Not everyone can apply for the USAA insurance, however. The company’s membership is open only to current and former members of the military and their families. USAA’s various insurance companies collectively had about a 7.5 percent share of the state’s auto insurance market in 2013, according to the Texas Department of Insurance website.