RULES AND REGULATIONS
Title 52--PUBLIC UTILITIES
PENNSYLVANIA PUBLIC UTILITY COMMISSION
[52 PA. CODE CH. 32]
[L-00970124]
Passenger Carrier Insurance Coverage Requirements
[30 Pa.B. 3439] The Pennsylvania Public Utility Commission (Commission) on May 11, 2000, adopted a final rulemaking to clarify § 32.11 (relating to passenger carrier insurance) that the amount of minimum third party coverage refers to split coverage. The contact person is Rhonda Daviston, Law Bureau, (717) 787-6166.
Executive Summary
In 1994, the Commission issued a policy statement in an attempt to quiet confusion in the passenger carrier industry concerning the minimum requirements under the Commission's regulation regarding insurance coverage for passenger carriers. Since then, it has become apparent that the policy statement did not meet the intended goal. In an effort to formalize the Commission's intent and clarify the language of the regulations, the Commission has amended § 32.11(b).
Section 32.11(b) has been amended to clarify that the amount of minimum third party coverage refers to split coverage.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on April 28, 1998, the Commission submitted a copy of the notice of proposed rulemaking, published at 28 Pa.B. 2146 (May 9, 1998), to IRRC and to the Chairpersons of the House and Senate Committees for review and comment.
Under section 5(c) of the Regulatory Review Act, IRRC and the Committees were provided with copies of the comments received during the public comment period, as well as other documents when requested. In preparing this final-form regulation, the Department has considered all comments from IRRC, the Committees and the public.
Under section 5.1(d) of the Regulatory Review Act (71 P. S. § 745.5a(d)), on June 7, 2000, this final-form regulation was deemed approved by the House and Senate Committees. Under section 5.1(e) of the Regulatory Review Act, IRRC met on June 8, 2000, and approved the final-form regulation.
Commissioners present: John M. Quain, Chairperson; Robert K. Bloom, Vice Chairperson; Nora Mead Brownell; Aaron Wilson, Jr., Statement attached; Terrance J. Fitzpatrick
Public meeting held
May 11, 2000
Final Rulemaking Order By the Commission:
By order adopted October 28, 1994, Docket No. L-940087, we issued a final policy statement interpreting the minimum insurance requirements for passenger carriers transporting fewer than 16 passengers. The final policy statement was published at 25 Pa.B. 681 (February 25, 1995) see § 41.21 (relating to insurance coverage for common or contract carriers of less than 16 passengers--statement of policy).
The issuance of the policy statement was the culmination of a request to issue a declaratory order in Petition of Damone Clayter, Docket No. P-00930722. In Damone Clayter, petitioner was a passenger in a taxi owned by Jenny Cab Company and said cab was involved in a motor vehicle accident. Clayter was injured in the accident and was at risk of losing rights to underinsured motorist coverage because of a controversy as to the amount of liability coverage required by § 32.11 of the Commission's regulations. Clayter petitioned this Commission requesting a declaratory order which detailed the third party insurance limits that a cab company must maintain in Pennsylvania and approved as valid the liability policy of Jenny Cab Company. In response to Clayter's petition, the Commission ordered an investigation into insurance claims, state liability coverage requirements and driver safety records.
At the conclusion of the investigation, the Commission issued a policy statement detailing its interpretation of § 32.11. In issuing the policy statement, it was this Commission's intent to put to rest any confusion or controversy regarding third party insurance coverage as required by § 32.11(b).1
Unfortunately, as evidenced by the recent Federal case Adams v. Clarendon, confusion and controversy remains. Adams v. Clarendon, Civil Action No. 95-6392 (U.S. District Ct. (E.D. Pa.)). Adams, who was injured in a Philadelphia taxicab insured by Clarendon Insurance Co., filed a class action suit against Clarendon charging, inter alia, that Clarendon had issued policies at less than the minimum amounts required by § 32.11(b). The Courts have found that insurance carriers may be liable for more than the policy limits if the carrier issued insurance at less than the minimum amount required by law. Metro Transp. Co. v. North Star Reinsurance Co., 912 F.2d 672 (3rd. Cir. 1990).
Adams argued that § 32.11(b) requires a minimum of $35,000 in third-party liability coverage for each individual passenger/pedestrian injured in a taxicab accident, regardless of the number of individuals injured in aparticular accident or of the aggregate required minimum amount of insurance coverage.2 Such an interpretation is at odds with our interpretation as set forth in the policy statement in § 41.21.
To avoid future controversies regarding the minimum amount of insurance required by this Commission, we proposed to amend the existing regulation covering motor vehicles capable of carrying fewer than 16 passengers in an attempt to remove doubt as to the required minimum amount of insurance coverage and how it is applied. By amending the existing regulation, we will formalize our intent as expressed in the policy statement.
The proposed rulemaking was published at 28 Pa.B. 2146 (May 9, 1998). Following publication, the Commission received one formal comment from IRRC which raised two questions. In its comment, IRRC noted that the required coverage may be inadequate when considering that the minimum $35,000 per accident could conceivably need to provide coverage for up to 15 passengers.
In responding to this comment, the Commission notes that in addition to ensuring that the public is adequately covered in the event of an accident, the Commission must also take into consideration the high cost of insurance for taxicab companies. We are mindful that our goal is not to make getting and maintaining insurance an insurmountable burden on taxicab companies. We must balance the interest of protecting the public with the interests of making it financially feasible for taxicab companies to continue providing adequate, safe and reasonable service to the public. To that end, we do not believe that raising the established minimum requirements is in the best interest of all parties concerned.
IRRC also raised a clarification concern. IRRC noted that the first sentence in § 32.11(b) makes reference to ''liability insurance maintained by a common carrier of passengers.'' However, the existing text in § 32.11(b) references ''liability insurance maintained by a common or contract carrier of persons.'' The omission of the word ''contract'' is a typographical error. The subsection has been corrected to include the word ''contract'' in the first sentence of § 32.11(b).
The purpose of this rulemaking is to clarify the Commission's intent that third-party benefits refer to ''split'' coverage. That is, the $35,000 minimum amount of coverage required for bodily injury, death or property damage must be split in the amounts of $15,000 bodily injury per person, $30,000 bodily injury per accident and $5,000 property damage per accident.
We believe that the changes will promote ease of application as well as fairness while greatly reducing the confusion evidenced in the recent Adams lawsuit.
Accordingly, under sections 501 and 512 of the Public Utility Code, 66 Pa.C.S. §§ 501 and 512, and the act of July 31, 1968 (P. L. 769, No. 240) (45 P. S. § 1201 et seq.) and the regulations promulgated thereunder, we hereby amend § 32.11; Therefore,
It Is Ordered That:
1. The regulations of the Commission, 52 Pa. Code Chapter 32, are amended consistent with this order by amending the reporting requirements in § 32.11 as set forth in Annex A.
2. The Secretary shall certify this order and Annex A and deposit them with the Legislative Reference Bureau for publication in the Pennsylvania Bulletin.
3. The Secretary shall submit this order and Annex A to the Office of Attorney General for review as to form and legality.
4. The Secretary shall submit this order and Annex A to the Governor's Budget Office for review of fiscal impact.
5. The Secretary shall submit this order and Annex A for review by designated standing committees of both Houses of the General Assembly, and for review and approval by IRRC.
6. A copy of this order and Annex A shall be served upon the Pennsylvania Insurance Department, the Pennsylvania Taxicab & Paratransit Association, the Delaware Valley Limo Association, the Northeastern Limo Association, the Western Pennsylvania Limousine Association, and the Radio Associations in the Commonwealth.
JAMES J. MCNULTY,
Secretary(Editor's Note: For the text of the order of the Independent Regulatory Review Commission, relating to this document, see 30 Pa.B. 3239 (June 24, 2000).)
Fiscal Note: Fiscal Note 57-189 remains valid for the final adoption of the subject regulation.
Annex A
TITLE 52. PUBLIC UTILITIES
PART I. PENNSYLVANIA PUBLIC UTILITY COMMISSION
Subpart B. CARRIERS OF PASSENGERS OR PROPERTY
CHAPTER 32. MOTOR CARRIER INSURANCE
Subchapter B. INSURANCE REQUIREMENTS § 32.11. Passenger carrier insurance.
(a) A common carrier or contract carrier of passengers may not engage in intrastate commerce and a certificate or permit will not be issued, or remain in force, except as provided in § 32.15 (relating to applications to self-insure) until there has been filed with and approved by the Commission a certificate of insurance by an insurer authorized to do business in this Commonwealth, to provide for the payment of valid accident claims against the insured for bodily injury to or the death of a person, or the loss of or damage to property of others resulting from the operation, maintenance or use of a motor vehicle in the insured authorized service.
(b) The liability insurance maintained by a common or contract carrier of passengers on each motor vehicle capable of transporting fewer than 16 passengers shall be in an amount not less than $35,000 to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. The $35,000 minimum coverage is split coverage in the amounts of $15,000 bodily injury per person, $30,000 bodily injury per accident and $5,000 property damage per accident. This coverage shall include first party medical benefits in the amount of $25,000 and first party wage loss benefits in the amount of $10,000 for passengers and pedestrians. Except as to the required amount of coverage, these benefits shall conform to 75 Pa.C.S. §§ 1701--1799.7 (relating to Motor Vehicle Financial Responsibility Law). First party coverage of the driver of certificated vehicles shall meet the requirements of 75 Pa.C.S. § 1711 (relating to required benefits).
(c) The liability insurance maintained by a common or contract carrier of passengers on each motor vehicle capable of transporting 16 to 28 passengers shall be in an amount not less than $1 million to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. Except as to the required amount of liability coverage, this coverage shall meet the requirements of 75 Pa.C.S. §§ 1701--1799.7.
(d) The liability insurance maintained by a common or contract carrier of passengers on each motor vehicle capable of transporting more than 28 passengers shall be in an amount not less than $5 million to cover liability for bodily injury, death or property damage incurred in an accident arising from authorized service. Except as to the required amount of liability coverage, this coverage shall meet the requirements of 75 Pa.C.S. §§ 1701--1799.7.
(e) The limits in subsections (b)--(d) do not include the insurance of cargo.
______1 Specifically not addressed in the policy statement was any interpretation of first party benefits.
2 Although the Federal suit settled, Clarendon Insurance Co. has petitioned the Commonwealth Court of Pennsylvania for a declaratory judgment as to the proper interpretation of our regulation at 52 Pa. Code § 32.11(b). Clarendon v. Pa.P.U.C., 359 M. D. 1997 (Pa.Cmwlth. Ct.).
[Pa.B. Doc. No. 00-1159. Filed for public inspection July 7, 2000, 9:00 a.m.]
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