Chicago Rideshare Law Requires $1M Commercial Auto, $1M CGL Cover

Illinois Gov. Pat Quinn’s veto of legislation that would have implemented statewide regulation of commercial rideshare organizations, or transportation network companies (TNCs), put the spotlight on the Chicago rideshare ordinance that was passed by the city council in late May.

Chicago’s ordinance, which became effective Aug. 26, requires TNCs to carry $1 million in commercial auto liability insurance, as well as commercial general liability insurance with limits of at least $1 million per occurrence. In addition, the city of Chicago must be named on the policy as an additional insured, according to a summary of the law released by the office of Mayor Rahm Emmanuel.

The commercial insurance coverage is required for the period in which the contracted driver is logged onto the mobile application through which potential riders contact TNC drivers. It matches the state’s requirements for personal auto coverage.

The ordinance established Class A and Class B categories for TNCs according to the amount of time their individual drivers spend behind the wheel on behalf of the TNC.

The license fee is $10,000 for Class A companies, which have company-wide driver averages of 20 hours or less per week logged into the application. Such companies are required to get city approval of their policies for background checks, driver training, vehicle inspection, and zero drug tolerance. Chauffeur licenses are not required for drivers for Class A companies.

The license fee for Class B companies is $25,000. Class B companies have logged in driver averages of more than 20 hours a week. Public chauffer licenses are required for Class B companies. Background checks and drug tests for Class B companies will be performed by the city of Chicago. Such companies will be required to get an annual third party, 21-point inspection of all vehicles. Vehicles in this class have an age limit of six years and must pass annual inspections by the city to operate up to 8 years. The companies will need to obtain city approval for their driver training process.

For both Class A and Class B companies, driver requirements include: possession of a valid driver’s license; a minimum age of 21; no convictions within 12 months of seeking the license of reckless driving, hit and run, more than two moving violations, or license suspension or revocation; no guilty findings within five years for felonies, DUIs, crimes of moral turpitude, and sale or possession of controlled substances.

Chicago also implemented surge pricing protections, according to the mayor’s information sheet.

The ordinance requires companies to publicly announce that surge periods — or times of high demand — “are in effect and to take steps to ensure that customers clearly agree to the price, including providing customers with a true fare quote in dollars and cents unless the customer opts out of such a quote. The ordinance also reserves the right to place a cap on surge pricing if the increased disclosure requirements do not alleviate consumer complaints,” according to the summary.

The law requires TNCs to pay ground transportation tax and limits drivers to a maximum of 10 hours per day of driving time. In addition, it imposes a 10 hour per day time limit on the use of personal vehicles for ridesharing.