For the past several years, ride-sharing has become a phenomenon that has pleased people who have long complained about the scarcity of taxis or the lack of public transportation. On the other hand, it has irritated the taxi industry and certain municipalities. The main two players in the ride-sharing industry are Uber and Lyft.
Ride-sharing consists of these companies using amateur drivers who pass background checks, though the sufficiency of these have been under attack, and have a suitable vehicle. Once an app is turned on their smart phones, persons seeking a ride make a request on their own phone app for the nearest available driver. Payment for the ride is through the passenger’s credit card that is already loaded on the app so that no cash physically changes hands during the ride or when it is completed. Uber and Lyft contend that they only provide a platform for pairing drivers with passengers. Accordingly, they contend the usual regulatory fees and other requirements are inapplicable to their drivers or to them.
Who Covers an Accident?
Besides disputes over regulatory issues among others, there have been concerns over the responsibility of Uber or Lyft in an accident. Initially, the companies took the position that since its drivers are independent contractors, the driver’s own personal auto liability insurance should cover the incident. But following a fatal accident in San Francisco involving an Uber driver, the ride-share companies agreed to certain concessions.
If a driver has the app on and is transporting passengers, then the ride-share company will provide umbrella or excess insurance coverage that becomes applicable after the driver’s own insurance is exhausted. Both companies provide coverages of $1 million. Issues arise, however, when the driver has the app on but is not transporting anyone and an accident occurs.
California, which classifies Uber and Lyft as TNCs or transportation network companies, a distinction from cabs, requires that the driver’s own policy be primary in this case unless that insurer nullifies coverage. In such cases, it is provided by the TNC of $50,000 per person and $100,000 per accident.
When the driver accepts a passenger or has persons for transport in the car, then the TNC will provide $1 million in coverage and for uninsured (UM) and underinsured coverage (UIM) should the responsible motorist be uninsured or not carry adequate coverage for the accident.
Otherwise, if the Uber or Lyft driver either does not have the app on or has not yet accepted a driver request when the accident occurs, then the driver’s own policy applies. In some states, minimum coverage may be as low as $25,000/$50,000.
Importance of UM and UIM Insurance
It is always important that you have UM and UIM coverage since about 20% of motorists on the roadways lack any insurance. If the liable driver has minimal coverage, you risk receiving little compensation for a serious injury.
In major cities across the US and in many towns and smaller municipalities, these ride-share companies have a significant presence so that the chances of getting into an accident with such vehicles are high. If you are a passenger or another motorist and the Uber or Lyft driver caused your accident injuries, you have to first determine if the driver’s app was on and if so, whether a passenger was aboard or a ride had been accepted. Under these circumstances, you may be able to seek compensation from Uber or Lyft.
Otherwise, if you are only able to make a claim against the driver’s personal policy, you risk having insufficient coverage available for your accident. If you do possess UIM coverage, you can collect under your own policy provided it exceeds the liable driver’s coverage and after that has been exhausted.
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