Big Daddy Taxi Inc. owner Paul Desrosiers has until Sept. 1 to increase his insurance coverage to $300,000, from $75,000, on each of his eight taxi cabs.
Desrosiers received a letter from the R.I. Division of Public Utilities and Carriers on Aug. 3, he said. It stated that “failure to have such proof of financial responsibility in place by [Sept. 1] may result in immediate suspension of your operating authority.”
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“That’s less than 30 days,” he said. “That’s what’s not fair.”
Desrosiers said he agrees with the legislation passed in June requiring taxis and jitneys to raise insurance coverage to $300,000 as the combined single limit, or to $250,000 per person, $500,000 per accident, and a $100,000 property damage split. What he doesn’t agree with is the way it was handled.
Desrosiers only started operating seven of the cabs in July. Now, to comply with the law, he’ll have to pay about $1,900 more per car this year, for a total of about $7,700 each – and of his $15,200 increase, he’ll need to pay about $4,000 up front. He had read about the new law in June, he said, but he had thought there would be a hearing or more notification before it was implemented.
“They should have called in the people, like they do with other public utilities, to come in and testify,” Desrosiers said. “We would have told them that August is the slowest month in the taxi industry.” They might also have been able to negotiate a delay, or talk with the Rhode Island Auto Plan, the high-risk pool that is taxis’ only insurance option right now, to see if they could get some help.
But Terrence Mercer, associate administrator for the motor carriers’ section of the PUC, said taxi companies should technically have complied as soon as the law went into effect, on July 14.
The letter was sent in hopes of getting “everybody on the same page,” Mercer said. “I didn’t think 30 days was an unreasonable time to do that.”
Mercer said he’s spoken with insurance agents, who have said it won’t be difficult getting the premiums in place by Sept. 1, but it could be difficult getting the paperwork processed and a “proof of insurance” submitted to the division by that deadline.
That’s “not a problem” for the division, Mercer said. If the insurer can provide other documentation – such as a letter saying the taxi company has requested increased coverage, to take effect Sept. 1, and a copy of a check signed by the taxi owner – the operator will be considered in compliance.
Tony Leiter, manager of Checker Cab Co. in Providence, said his taxi premiums are already high, about $10,000 per car, and the new law will raise them by another $2,300 to $3,000.
The company will take two taxis off the road to help offset the cost increase, he said. The savings could be used to pay for increased coverage for about half of the 17 taxis remaining.
“We have to go for a rate increase,” Leiter said. A $1.75 increase to the base taxi fare would work, he said, but that doesn’t mean it will be approved.
Getting a fare rate increase involves submitting a formal request to the PUC. It might be easier for, say, a gas or electric company to get a rate increase, because they could “go in with five or six lawyers and get what they want,” Leiter said.
“It’s tough with the cab companies because we’re small business,” he said.
There are 211 taxis registered with the PUC, Mercer said. But the number fluctuates, reaching a peak of about 240.
Desrosiers said that’s part of the reason insurance companies don’t want to write policies for the state’s taxi cabs. There’s no money in it for them, he said.
But Mercer said that, when the General Assembly passed the bill, “there was talk” that raising coverage might give insurance providers an incentive to want to write policies, thus spurring competition.
Higher costs for taxi companies hurt the consumer in the end, said Leiter, because they cause companies to take taxis off the road, which means customers end up waiting longer.
“Some [taxi companies] will charge drivers an insurance fee,” Desrosiers said. “Now there’s pressure on them not to do the right thing when customers get in the cab.”
