Last week, Boston's Mayor Menino announced a review of the city's taxi system. Faced with criticism for a number of problems regarding the management, regulation, and insurance issues that currently plague the industry, the city is attempting to make changes that will improve the experience of both cab drivers and their passengers. We do not yet know exactly what these improvements may be.
For other drivers, the pedestrians on Boston's streets, and the passengers of these cabs, the mere possibility of a change to the insurance requirement for taxi cabs is good news. It may come as a surprise that many of the city's approximately 1,800 cabs are "woefully underinsured," even as they collectively drive thousands of miles on the city's streets every day.
Boston, like many other cities, uses a "medallion" system for the licensing of its taxi cabs. A unique medallion is required to operate a vehicle as a taxi cab based out of the city. As there are a limited number of these medallions to go around and none have been issued for years, supply and demand dictates that these licenses are very expensive to purchase, and prohibitively so for an individual. As a result, the vast majority of Boston taxi medallions are owned by a handful of powerful companies.
Though not always the case, most of Boston's taxi cab companies carry insurance policies for bodily injury liability that only comply with the state's minimum requirements: $20,000 per person and $40,000 per accident. Some companies are actually self-insured, and do not retain an outside insurer for their liability insurance. These moves save money for the companies by reducing insurance premiums, but all too often the minimum coverage is not nearly sufficient to adequately compensate someone injured in an accident involving a taxi cab. Not surprisingly, these limits are far less than the amounts taxi cabs are required to carry in many other states.
Taxi cab companies take other steps to make personal injury claims against them difficult or to dissuade injured people from bringing lawsuits against them. The owners of several large cab companies often subdivide their fleets of vehicles into separate and smaller corporations with limited funding. The goal of this is to create a shield and place some distance between the ownership and accident victims. Similarly, cab companies sometimes structure their employment agreements with their own drivers such that the drivers are not employees of the owners, but independent contractors merely using the company vehicle.
As indicated, it is not yet clear what the city or state may do to try to fix this complex problem. It is possible that lawmakers may change the minimum insurance requirements or add increased supervision and oversight to the industry. What is clear is that the owners of the larger cab companies have been operating on an uneven playing field against those injured in accidents involving taxis.
What can members of the public do to protect themselves against cabs with this minimum amount of insurance coverage? The simple and immediate answer is that drivers should make sure they have underinsured motorist coverage through their own auto policies, with a limit that is high enough to provide adequate compensation in the unfortunate event one suffers serious injury in an accident. The comparatively small cost of the additional coverage is well worth it to safeguard against the danger of an accident with an underinsured vehicle, like many Boston-area taxis.
The fact that many taxi cab companies take advantage of legal loopholes is frequently accepted as an unfortunate inevitability by those injured as a result of a taxi cab driver's negligence. If this seems unfair to you, then you are not alone. Because of the current state of this industry in Boston, it is important to be fully informed and have a team of qualified professionals willing to explore all of your options and advocate on your behalf.
The attorneys at SUGARMAN have years of experience litigating accidents involving taxi cabs, and we are here to answer your questions. To contact us, please fill out a Contact Form, call us at (617) 542-1000 or e-mail [email protected].
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