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Council lowers liability insurance rate for taxi services after local taxi owners oppose change

Taxis
E-Z Ride taxi driver David Fyler keeps track of the time he picks up a passenger from Shopko last week in Mitchell. (Matt Gade / Republic)

Local taxi companies breathed a sigh of financial relief Monday after the Mitchell City Council approved to reduce the city’s liability insurance rate required for all taxi services.

A month prior to Monday’s meeting, the council backed a handful of changes to the city of Mitchell’s taxi ordinance, and increasing all taxi services general liability insurance limit from $300,000 to $1 million was among the changes.

With the increase of Lyft drivers applying to provide taxi services in the city, most of the taxi ordinance changes revolved around adding regulation policies for the evolving Transportation Network Companies (TNC) such as Lyft. Raising the taxi liability insurance to $1 million for both TNCs and vehicle for hire companies, also known as traditional taxi companies, was one way City Attorney Justin Johnson made efforts to create an equal playing field between the two taxi services.

“It was changed to the $1 million because the state provides several different insurance limits that apply to TNCs, and the largest one of those is when there is a rider actively engaged in a transportation ride which provides that there be a $1 million general liability coverage in place,” Johnson said during Monday’s meeting. “It was an effort to keep that equal among both the TNCs and the vehicle for hire companies.”

Local taxi company owners said the insurance increase would have had a significant impact on their business, adding financial burdens competing against the popular mobile app-based rideshare service Lyft. Art Streetman, owner of E-Z Ride Taxi, said his company’s liability insurance would have increased to $17,000 if the city’s taxi liability insurance limit remained at $1 million.

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“If this doesn’t change here, I’ll have to reduce my staff, and I’ll likely limit the vehicles to three,” Streetman said to the council. “If the council doesn’t reduce this, the local taxi businesses are probably going to be totally annihilated in town.”

Streetman has a total of five taxi vehicles, four of which his business utilizes and are licensed for operation. He said the remaining vehicle was awaiting licensure pending the council’s Monday decision. The $300,000 liability insurance limit for taxi businesses is set to help protect the safety of passengers and drivers in the event that a crash occurs. For example, if a passenger is injured in a crash during a taxi ride, Mitchell taxi companies must have liability insurance that covers a minimum of $300,000 worth of injuries.

Considering the large rideshare company Lyft is a uniquely structured taxi service compared to traditional taxi businesses, its drivers are able to utilize their personally owned vehicles and pay for insurance tailored to Lyft-approved vehicles. According to the insurance regulations for Lyft and TNCs, the driver and vehicle owner has options to insure with various companies, and some companies offer insurance for Lyft-specific services for as little as $15 per month.

However, Streetman said he paid roughly $8,500 annually to insure all of his taxi vehicles.

“We are working against a multi-billion dollar international conglomerate (Lyft) that has a loophole, and they’re responsible for closing taxi businesses all over the country,” Streetman said.

Lyft drivers also may operate their taxi services at any time of the day and night, which means there are no set hours of operation for residents relying on a guaranteed taxi ride at a specific time. In addition, one must have the mobile app on a device to receive a Lyft ride.

“We provide a very necessary service for people, businesses and organizations in the city,” Streetman said, noting Life Qwest, Countryside Living and the Safe House as a few examples. “We are the only taxi service working 362 days a year, and we have designated hours that are posted, which no one else does.”

According to Mitchell Mayor Bob Everson, E-Z Ride Taxi would have to provide a total of 1,000 more rides at its general rate of $7 just to break even to afford the liability insurance hike.

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“We are not trying to put anyone out of business here and make life harder for them, which is why we’re bringing this back to work something out,” Everson said. “I appreciate the work Art (Streetman) has done to help us get a better look at other cities taxi insurance limits.”

Everson cited the taxi liability insurance rates for several similar sized South Dakota cities, noting Aberdeen, Yankton and Watertown have a $500,000 limit.

Johnson provided a brief history of Mitchell’s taxi liability insurance rates, which changed to $1 million in 2011. That $1 million limit stayed in place for roughly four years until it was changed to $300,000 in 2015.

Johnson emphasized how quickly medical bills can add up to a hefty price tag after a crash.

“In my view, $300,000 was insufficient and $500,000 is probably still insufficient but it’s better,” Johnson said, noting it’s ultimately the council’s decision. “It comes down to what is in the public’s best interest as far as what coverage level is appropriate. It doesn’t take a whole lot of injuries to eat through $300,000 when you’re dealing with medical bills.”

Related Topics: TRAFFIC AND CONSTRUCTIONBOB EVERSON
Sam Fosness joined the Mitchell Republic in May 2018. He was raised in Mitchell, S.D., and graduated from Mitchell High School. He continued his education at the University of South Dakota in Vermillion, where he graduated in 2020 with a bachelor’s degree in journalism and a minor in English. During his time in college, Fosness worked as a news and sports reporter for The Volante newspaper.
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