In contrast, eight of 10 taxis on the road carry what is known as “20/40” insurance, according to 2011 statistics compiled by the state Division of Insurance.
Some cities insist that cabs carry more insurance than regular cars. New York City and Los Angeles, for instance, each require that taxis carry insurance of at least $100,000 to cover one person’s injuries or death and $300,000 to cover multiple people. Chicago requires that cabs carry at least $350,000 to cover one or more individuals. Dallas requires at least $500,000 to cover all injuries and property damage.
“These are professional drivers, and we believe they should carry insurance that accounts for the fact that they are carrying precious cargo, as opposed to simple conveyance,’’ said Allan J. Fromberg, a spokesman for the New York City Taxi and Limousine Commission.
While there are no national statistics available, the Globe also found a few cities that allow cabs to carry even lower insurance than Boston. Philadelphia requires only $15,000 in coverage for one person injured, the same as for ordinary cars.
For years, the Massachusetts Academy of Trial Attorneys and Massachusetts Bar Association have urged the Legislature to raise the insurance required of taxis. So has Jenkins, the software entrepreneur whose girlfriend was injured when a Revere cab went through a stop sign and struck her car at Logan Airport in 1994.
After she paid her lawyer and medical bills out of the $20,000 insurance payment, she only had $3,000 left, he said. An executive in a seafood export company when the accident occurred, she can no longer work, he said. The couple married after the accident but later divorced.
“We are all paying for this cabdriver’s negligence every time a payment is made” to his ex-wife from Social Security, public food assistance, or Medicare, Jenkins testified in June 2011. “Unless legislation can be enacted that will force them to do what they will not do on their own, it will continue to happen, and the next victim could be any one of you.’’
In that legislative session, two insurance associations opposed a bill to raise the minimum insurance for taxis to what New York City and Los Angeles require. An official with one of the groups, Property Casualty Insurers Association of America, told the Globe it generally opposes mandates for higher insurance and it was concerned that insurers would have to pay bigger claims.
Amazingly, Tutunjian has tried to straddle both sides of this insurance equation. His lawyer argued in one personal injury case that it was “unfair and unreasonable” for a driver who hit a Boston Cab taxi to carry only the minimum required insurance of 20/40.
Yet Tutunjian said it was reasonable for his cab to have the same coverage. “I’m going [with] whatever the law says, the minimum,” he testified in 2008.
For the Rideouts, the paltry insurance on Tutunjian’s cab was hardly the only problem.
Rideout’s mother was struck by a taxi that bore the Boston Cab insignia. But smaller print on the door said the taxi was “O/O’’ — owned and operated — by another entity, Vicky’s Inc.
As medical bills for her mother began to pile up — they totaled more than $700,000 by the end of 2003 — Marion Rideout spent sleepless nights researching Vicky’s. She examined corporate records on the Massachusetts secretary of state’s website and even parked across the street from the Boston Cab garage to watch taxis come and go. She learned that Vicky’s had eight medallions, but no one named Vicky owned it. It belonged to Tutunjian — as did dozens of other taxi companies.
“I’m going, ‘Honest to God, the same person owns them all. What’s going on here?’ ” she recalled. “It then came down to an awareness that it’s a shell game.’’
These mini-cab companies, she would find out, existed almost exclusively on paper. No employees. No bank accounts. No telephone numbers, other than the one for Boston Cab.
Although the medallions held by each company were valuable — each worth as much as $625,000 today — they were highly leveraged because Tutunjian had used them as collateral to borrow tens of millions of dollars to buy more medallions and make other investments. Loading the medallions with debt also makes them less attractive to litigants.
After two years of legal jousting and a judge’s order freezing $5 million of Tutunjian’s assets, the cab tycoon settled Elizabeth Rideout’s lawsuit out of court for $1.5 million.
Rideout also sued the Massachusetts Port Authority, which runs Logan Airport. It settled her claim for $1.3 million, according to the authority.Continued...