# What Are The Insurance Risks of Rideshare?



## The Rideshare Guy (Jun 3, 2014)

My latest podcast is now live: http://therideshareguy.com/the-ride...ut-uber-lyft-and-sidecars-insurance-policies/

I did all the research for you guys so you don't have to  But in all seriousness, I think a lot of people are under-estimating the risk and you need to be aware of what is/isn't covered.

There are a couple bills in the CA senate right now that will directly affect the outcome of insurance/rideshare. I'll talk more about them in my post on Friday


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## troubleinrivercity (Jul 27, 2014)

An inconvenient truth. Thanks for the research.


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## Scott V. (Jul 28, 2014)

UberX, in Chicago, just made their insurance covering their drivers PRIMARY from ride request to dropoff! This is great news for Chicago drivers! So, if you get in an accident while driving around personally or while waiting for a request, your own insurance will cover you. If you get in an accident while driving to pickup a passenger or while driving them to their destination, you ONLY need to contact UberX's insurance company. No need to contact your own insurance company.

Personally, I am very relieved as this was the only thing that worried me a bit about driving for UberX.


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## troubleinrivercity (Jul 27, 2014)

Sure, but their limits are.. low if you don't have a rider. Don't hit anyone faster than 5mph or so. In any case, I'm not sure collision is covered beyond 50k. You are still very exposed compared to all other drivers for hire. Anyone on the road for eight hours a day needs to assume that some part of their own vehicle will come into contact with some part of another person's sooner or later, probably this year or next. I don't know accident statistics for your city, but they're probably not encouraging.


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## Scott V. (Jul 28, 2014)

Thanks for the reply. I want to comment on your points:

- Their limits are low... - $1M in liability isn't enough?
- low if you don't have a rider - yes, that is what you need your personal insurance for. If you are logged in and not on a trip, Uber will provide secondary insurance. If you aren't on a trip, I don't know why your personal insurance wouldn't cover as you are not getting paid for being online.
- Comprehensive and Collision is up to 50k with 1k deductible. While I would like a lower deductible, I think it is fine. And unless you are driving a car worth more than $50k, the limit on Collision and Comprehensive is fine since those coverages only cover your vehicle. Damage to other people or other people's property is all covered by liability. Why would you need greater than 50k in coverage? I bought my car for about $25k and is now worth less. Any insurance company won't cover it for more than it is currently worth and will total it if the cost to repair is greater than the worth of the vehicle.
- ... assume you will get in an accident eventually... - I agree, which is why I am much more comfortable with this arrangement than before.

Can you provide an example of a situation where you feel the current Uber Insurance would be lacking?

Edit: Also $1m in under and un insured coverage. And in order to have Uber coverage for Collision and Comprehensive, you must have it on your personal policy.


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## kalo (Jun 28, 2014)

Scott V. said:


> - low if you don't have a rider - yes, that is what you need your personal insurance for. If you are logged in and not on a trip, Uber will provide secondary insurance. If you aren't on a trip, I don't know why your personal insurance wouldn't cover as you are not getting paid for being online.


If you have the App on and not on a trip you are still conducting a business. Businesses need commercial insurance. If you hit someone Ubers insurance is $50k. What if you severely injure someone? 50k will not cover it. You will be sued and your assets are completely at risk because you do not have proper insurance for conducting a business.



Scott V. said:


> - Comprehensive and Collision is up to 50k with 1k deductible. While I would like a lower deductible, I think it is fine. And unless you are driving a car worth more than $50k, the limit on Collision and Comprehensive is fine since those coverages only cover your vehicle. Damage to other people or other people's property is all covered by liability. Why would you need greater than 50k in coverage?


This applies Only when you are on a trip. App on and driving around, you are not covered unless you have commercial insurance. App on and you don't tell your insurance..? = insurance fraud. Check the consequences.



Scott V. said:


> I agree, which is why I am much more comfortable with this arrangement than before.


Nothing has changed really, they were always Primary when you had a ride, they just didn't want to admit it (hoping you will pretend like it was a personal accident if possible - lie). No personal insurance company would ever pay out while you were conducting a business..

One possible way to avoid the most liability is to never drive with the app on with no passenger. Park in a safe location then turn the app on.

That's the way I see it anyway.


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## Tim In Cleveland (Jul 28, 2014)

I always have my app on as soon as I start my car. That way, I can catch riders on the way to busy areas. Leaving it off until I can "safely park" just wouldn't work well.


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## troubleinrivercity (Jul 27, 2014)

In Illinois, I was just advised by my CPA that I'd be paying 26% taxes on Uber income. You may pay less in some other state, but only three or four states (CA/IL/NY/CO) are on any reasonable timeline to have our insurance contradictions worked out. Don't risk your car and your legal future unless the money is unequivocally worth it.


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## Sydney Uber (Apr 15, 2014)

Being a licensed commercial operator I carry my own insurance - so can rest easier. 

The 50k for vehicle cover is more than adequate for a UBERX car, if you spent more than 25k for UBERX then IMO, that would be over capitalising. Uber would actually help get the message out about UBERX being their low cost option if they limited cover to 25k encouraging UBERX partners not to overcapitalise.

The real scary bit is the 1 million personal injury /public liability cover. That wouldn't cover the ongoing medical bills of a passenger or pedestrian hit by a UBERX car who is maimed for life. The courts would chase a UBERX driver for the rest of their lives if something bad happened. Wouldn't even need to be the drivers fault.


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## troubleinrivercity (Jul 27, 2014)

100k/50k/25k will not begin to cover any serious accident. If one happens and your personal/primary insurance says "Thanks but no thanks", you're unbelievably ****ed if Uber's coverage is your only recourse. And we really need to be assuming that our insurance company will be doing a cursory investigation if they're on the hook for more than 100k. They're looking for things that could terminate their liability, and we all have a massive one. The costs of driving your own car for hire are mountainous, in this infant stage of the companies' development.


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## grams777 (Jun 13, 2014)

https://uberpeople.net/threads/risky-business-behind-the-wheel-of-the-new-economy.607/#post-5272


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## Oc_DriverX (Apr 29, 2014)

troubleinrivercity said:


> 100k/50k/25k will not begin to cover any serious accident. If one happens and your personal/primary insurance says "Thanks but no thanks", you're unbelievably ****ed if Uber's coverage is your only recourse. And we really need to be assuming that our insurance company will be doing a cursory investigation if they're on the hook for more than 100k. They're looking for things that could terminate their liability, and we all have a massive one. The costs of driving your own car for hire are mountainous, in this infant stage of the companies' development.


You, and others, like to point out that 100k/50k/25k coverage is inadequate. At least in CA the minimum limits for personal policies are 15k/30k/5k. Do you lobby for states to increase their minimum coverage limits? Do you advocate that people get personal policies with $1mm limits or higher? Is there some inference that accidents with commercial vehicles are somehow worse?


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## grams777 (Jun 13, 2014)

Oc_DriverX said:


> You, and others, like to point out that 100k/50k/25k coverage is inadequate. At least in CA the minimum limits for personal policies are 15k/30k/5k. Do you lobby for states to increase their minimum coverage limits? Do you advocate that people get personal policies with $1mm limits or higher? Is there some inference that accidents with commercial vehicles are somehow worse?


Probably because we're associated with deep pocket companies.

For example:

Lawrence vs Uber (Passenger opens door hitting bicyclist - requesting $3.5 million+, $325k of medical expenses incurred)
http://www.scribd.com/mobile/doc/200545863


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## cybertec69 (Jul 23, 2014)

Scott V. said:


> UberX, in Chicago, just made their insurance covering their drivers PRIMARY from ride request to dropoff! This is great news for Chicago drivers! So, if you get in an accident while driving around personally or while waiting for a request, your own insurance will cover you. If you get in an accident while driving to pickup a passenger or while driving them to their destination, you ONLY need to contact UberX's insurance company. No need to contact your own insurance company.
> 
> Personally, I am very relieved as this was the only thing that worried me a bit about driving for UberX.


 In NYC you are required by NYC law to have commercial insurance on your car, and a commercial drivers license "C,B or A", and also apply for a FHV license from the TLC office, or Medallion license for Yellow Taxi "with a drug test and fingerprint test", without it you will not be able to receive TLC plates from the DMV which are required to operate any type passenger transportation vehicle "TCL, Livery, Taxi", if you are caught transporting people for profit without a hack license your car will be impounded and you will receive a hefty summons, NYC TLC Commission has hired close to a thousand undercover TLC agents solely for this purpose to fight against illegal transportation practices", which you can see happening all over the 5 boroughs. Once you receive your plates you go to the TLC inspection station which is pretty stringent, and your vehicle is put through some serious tests before you receive your base diamond sticker, which is placed on the front right corner of your windshield and the two rear passenger doors. No personal insurance free lancing with Uber in NYC.


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## Scott V. (Jul 28, 2014)

So, are you saying that IL has a specific tax rate for Uber income? That sounds pretty ridiculous to me. It is treated like any other self employed income. You can take a 55 cent deduction per mile or deduct actual expenses for your business activity.

There are lots of risks in life. Driving a car, whether driving for UberX or for personal trips, is one of those risks and they are equal risks. Do you think someone will come after you any more because you are driving for UberX than if you are driving around your neighborhood? In my mind, they are equal risks. People will do whatever they want regardless. If they want to sue, they will. They won't care what the person's circumstances are.

So, are you saying we should all stop driving our cars in case we might get into a serious car accident where we are at fault and then lose all our money to the lawsuit?

Also, we all have our own perspective that shape our opinions. Troubleinrivercity, can you provide your background? I am an UberX driver that has done quite a bit of research on how this will affect my taxes and insurance, and my information differs from yours. Are you a taxi or limo driver? Are you a P&C insurance broker?


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## Scott V. (Jul 28, 2014)

grams777 said:


> Probably because we're associated with deep pocket companies.
> 
> For example:
> 
> Lawrence vs Uber (Passenger opens door hitting bicyclist - requesting $3.5 million+, $325k of medical expenses incurred)


Should Taxi's and Limo's provide higher insurance than they currently do? The $1M policy that UberX provides is greater than the requirement for Limo's and Taxi's in IL.


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## troubleinrivercity (Jul 27, 2014)

_So, are you saying that IL has a specific tax rate for Uber income? That sounds pretty ridiculous to me. It is treated like any other self employed income. You can take a 55 cent deduction per mile or deduct actual expenses for your business activity._

My CPA told me 26% Maybe he forgot a deduction. What did yours say, or what was your filing for this year?

_There are lots of risks in life. Driving a car, whether driving for UberX or for personal trips, is one of those risks and they are equal risks._

I think you know they aren't. Ten minutes of driving-for-hire is as dangerous as thirty of personal driving. We have to do things very quickly and we have to take risks we otherwise wouldn't, to protect our rating. Obviously being in city traffic for thirty hours a week puts you at maximum risk of an accident.

_So, are you saying we should all stop driving our cars in case we might get into a serious car accident where we are at fault and then lose all our money to the lawsuit?
_
No, I am saying you should look at your Uber gross and then your hourly$, and then decide if you're being adequately compensated for your elevated liability. It's not elevated in comparison to the general public, it's elevated compared to the rest of livery drivers. They have a company, you don't.

_Are you a taxi or limo driver? Are you a P&C insurance broker?_

Oh, you're going _there_. Okay, feel free to flutter carelessly on. All I'm here to say is that your margins might be narrower than you think. I am an UberX driver who has realized he needs to gross $250 a day to make it worth my while. Every day this doesn't happen, I have to ask tough questions.


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## Scott V. (Jul 28, 2014)

troubleinrivercity said:


> _So, are you saying that IL has a specific tax rate for Uber income? That sounds pretty ridiculous to me. It is treated like any other self employed income. You can take a 55 cent deduction per mile or deduct actual expenses for your business activity._
> 
> My CPA told me 26% Maybe he forgot a deduction. What did yours say, or what was your filing for this year?
> 
> ...


Yes, I am going "there". Wherever there is. My point is that we all are biased by our own experiences and knowledge. I disclosed mine to show which side of the debate I am on. I was simply asking you to disclose your biases by disclosing a bit about yourself. That way, readers can use this information to decide who to believe. I appreciate that you answered.

"We have to do things very quickly and we have to take risks we otherwise wouldn't, to protect our rating." - I don't know about you, but I don't. I have a very good rating but never risk my safety or the safety of my passengers in order to "protect my rating." I am not sure what risk taking you do, but I do not. I receive comments from many passengers that they appreciate my safe driving and comfortable ride.

The only reason why I feel like I am more in danger of getting in an accident is just from time. The more time you spend on the road, regardless of the reason, the more likely you are to get in an accident. Just simple statistics.

I started driving in December and very little to start so last year is not a good gauge since it was less than $200 for December. I did speak with my accountant about this year and he said I could take a mileage deduction while online.

You bring up a GREAT point! This is not a get rich scheme. If you are only driving to make money, there may be more effective ways to do this. This does provide good cash flow, but at the end of the day, you will have a small profit. Since you get paid 85% of $1 a mile and 24 cents a minute and 2.40 per ride and the deduct 55 cents per mile which includes the miles transporting the customer but also the miles getting your customer and any other driving you do to get to a good location to get a ride, YES, you are correct, the profit is low! Unless, of course, you drive during peak hours where and when there are SURGES.

I agree with you about the "$250 a day". There are occasions where this is a bit different but a good general rule. I find driving on the weekend that I can expect to gross at least $25 per hour and, most of the time, over $30. I set aside 10 hours to drive. Last night, I went out and drove from about 5pm to 12 with one 30 minute break. I grossed over $180. Not making me rich but it worked since my first fare took me from Bloomingdale to Evanston (over a $50 fare), I was very efficient with my mileage. I drove a total of about 130 miles for the $180. So what is my take from this. Take out Uber's 15% (actually a bit less than 15%, but I digress), and you get 153. Take out the 55 cents per mile, and you get 81.5. This comes out to 12.50 an hour. This is on a Monday night when there were very few Surges.

Your point is well taken. You have to be smart about how you drive and when you drive, and not just judge your results by the gross amount.


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## kalo (Jun 28, 2014)

Oc_DriverX said:


> You, and others, like to point out that 100k/50k/25k coverage is inadequate. At least in CA the minimum limits for personal policies are 15k/30k/5k. Do you lobby for states to increase their minimum coverage limits? Do you advocate that people get personal policies with $1mm limits or higher? Is there some inference that accidents with commercial vehicles are somehow worse?


Yes these levels are indeed low for a serious accident, but they probably handle the majority of accidents. It's the serious accident that you or any other driver needs to worry about, Uber or not. If you have NO assets don't worry if you don't want. If you have assets, that is when you worry. Most people with assets have a one million dollar personal liability policy. To get that policy your auto policy is brought up to $300k first, then you pay a extra to be brought up to one million for personal liability.

I saw many people (drivers) *****ing on the thread about not getting the pay on time and they had bills to pay. That means they (the drivers) likely have no assets, living pay check to pay check. The regulators want to ensure people (drivers) conducting a business driving others around are well insured. Seems reasonable to me.


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## troubleinrivercity (Jul 27, 2014)

kalo said:


> If you have NO assets don't worry if you don't want. If you have assets, that is when you worry.


This isn't really accurate. People with "deep pockets" get carefully and seriously sued. Those without assets simply get hounded forever. As punishment, I guess, and to recover money for the cost of hounding you.

None of you can really disagree with the insurance company's claim that an Uber driver's private insurance policy is mispriced, very significantly so. This puts a big target on our backs. The industry has a grievance and it's going to resolve it, with us or with Uber.


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## Scott V. (Jul 28, 2014)

kalo said:


> Yes these levels are indeed low for a serious accident, but they probably handle the majority of accidents. It's the serious accident that you or any other driver needs to worry about, Uber or not. If you have NO assets don't worry if you don't want. If you have assets, that is when you worry. Most people with assets have a one million dollar personal liability policy. To get that policy your auto policy is brought up to $300k first, then you pay a extra to be brought up to one million for personal liability.
> 
> I saw many people *****ing on the thread about not getting the pay on time and they had bills to pay. That means they likely have no assets, living pay check to pay check. The regulators want to ensure people conducting a business driving others around are well insured. Seems reasonable to me.


Seriously?? UberX paid 1 day late due to a problem with the company that processes their direct deposits. This could have happened to any company. I have had this happen to me before with other companies on occasion with the same 1 or 2 day delay. UberX was very apologetic and embarassed by this and made no excuses. When they discovered the mistake, they promised everyone would be paid no later than the next day and they were.

Let's stick to the facts. Yes, UberX was late on ONE weekly payment. It was due to a mixup at their processor. That is it. Not because they didn't have assets. Sheesh!


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## kalo (Jun 28, 2014)

Scott V. said:


> Seriously?? UberX paid 1 day late due to a problem with the company that processes their direct deposits. This could have happened to any company. I have had this happen to me before with other companies on occasion with the same 1 or 2 day delay. UberX was very apologetic and embarassed by this and made no excuses. When they discovered the mistake, they promised everyone would be paid no later than the next day and they were.
> 
> Let's stick to the facts. Yes, UberX was late on ONE weekly payment. It was due to a mixup at their processor. That is it. Not because they didn't have assets. Sheesh!


Sheesh! You don't comprehend what my post is saying.  (I edited it for you with the word "drivers"..)


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## kalo (Jun 28, 2014)

troubleinrivercity said:


> This isn't really accurate. People with "deep pockets" get carefully and seriously sued. Those without assets simply get hounded forever. As punishment, I guess, and to recover money for the cost of hounding you.
> 
> None of you can really disagree with the insurance company's claim that an Uber driver's private insurance policy is mispriced, very significantly so. This puts a big target on our backs. The industry has a grievance and it's going to resolve it, with us or with Uber.


Mispriced??? It DOESN'T EVEN APPLY when you are operating a business. It's NO good, unless you lie and commit fraud.


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## troubleinrivercity (Jul 27, 2014)

Scott V. said:


> You bring up a GREAT point! This is not a get rich scheme. If you are only driving to make money, there may be more effective ways to do this. This does provide good cash flow, but at the end of the day, you will have a small profit. Since you get paid 85% of $1 a mile and 24 cents a minute and 2.40 per ride and the deduct 55 cents per mile which includes the miles transporting the customer but also the miles getting your customer and any other driving you do to get to a good location to get a ride, YES, you are correct, the profit is low! Unless, of course, you drive during peak hours where and when there are SURGES.


I too have a variety of things I tell myself to stave off the reality that Uber does not pay me very much for the work that I do. They are not invalid (I enjoy the job, I work part time, I meet lots of people, I see the world/city). But they do not change the fact that I give Uber more of myself/my car than they give me back in checks. They could fix this calculus in a heartbeat by bringing their fares back in line to taxi fare. But I guess I'm just not worth that much.



kalo said:


> Mispriced??? It DOESN'T EVEN APPLY when you are operating a business. It's NO good, unless you lie and commit fraud.


Yeah but what most of us care about is "are uber/lyft drivers' claims going through?". It seems like most are, some aren't. Certainly something to worry about, I do not enjoy paying $220 for a sweet policy that could be so easily invalidated.


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## Scott V. (Jul 28, 2014)

kalo said:


> Sheesh! You don't comprehend what my post is saying.  (I edited it with the word "drivers"..)


Thanks. That makes much more sense. It could have been interpreted either way and I interpreted wrong. Agreed... Sheesh on me. ;-)


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## The Rideshare Guy (Jun 3, 2014)

Interesting discussion guys. A couple thoughts..

Uber going to primary is a big deal, now if you get into an accident with pax on or on the way, you won't lose your existing insurance since they'll never find out. You still kind of have to bend the truth with your insurance company since you're still not allowed to be driving for livery and have a personal policy as I outlined in the podcast. Most drivers spend very little time without a pax though and moving, I don't think it will be long before personal insurers are willing to insure drivers as long as Uber is primary during rides. I usually drop off and wait 5-10 mins and then make a move. So in a busy hour, I might be on the road without a pax for 5-10 mins max??

Like you mentioned earlier, you can be sued just walking down the street, someone falls and slips on your driveway, etc. There's always the risk of being sued and when you have no assets, it doesn't make sense to insure against them. As your NW increases, you need to up your insurance to protect against getting sued.. Sucks but that's what living in America is like. Up your homeowner's policy, renter's policy, car insurance and consider umbrella insurance. But that doesn't mean you shouldn't ever set foot outside your house. You still have to take calculated risks and for me driving is still worth the risk. In that bicyclist case, the pax, driver and Uber are all being sued. You know that Uber is going to bring out the big guns and try and settle (likely) or hire some awesome attorneys so they don't have to pay millions. There's always the risk of getting sued but when you do get sued, you want the insurance company to have 100's of thousands at stake so they are willing to settle or hire some good attorneys.

And for the guy who's CPA said he will pay 26% on his Uber earnings I highly advise you do some research into tax basics. If this is your marginal tax bracket, then yes that is true you will pay 26% on all income from Uber but you can't predict that until the end of the year since it will be based off total w2 income if you have a day job, 401k deductions, etc. PLUS there are some amazing deductions that you should take advantage of. I suggest you find a CPA who has experience in small business and/or real estate deductions since rideshare driving taxes are very similar (or listen to my podcast on taxes).


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## troubleinrivercity (Jul 27, 2014)

this is a pretty dodgy post
don't advise people w/o assets not to have insurance. Blood from a stone can apparently be squeezed, according to American debt collectors.
What sort of tax did you pay on UberX earnings?


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## Sydney Uber (Apr 15, 2014)

In the black fleet in Sydney

Comprehensive insurance here means my car and other property and cars I may damage up to 5 million dollars. that's compulsory for Public Vehicle operators and costs between $160-$250 p/month depending on the value of the vehicles. I have 4 ranging in value from $15,000 - $75,000.

Then there's "Green slip" 3rd Party Personal. All road users MUST have this insurance to be able to register and drive their car legally. Private motorists $600-$850 p/a. Limos $850-$1000 p/a. Taxis $5500-$6000 p/a.

Then to insure my drivers is about $1250-$1350 p/a each for workers compensation. 

Then I need to insure myself for accident and illness/loss of income, that's about $50 p/month.

Where UBERx cheats the Mum's & Dad's here is they are a higher risk profile than a private car but not as much as a cab. When they make a claim they haven't adequately contributed to the pool and private motorists subsidise vehicles that have a higher risk profile. IMO that isnt fair.


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