Here is an interesting article concerning insurance coverage for ridesharing providers working for Uber or Lyft. These ridesharing companies are becoming a popular alternative to traditional taxi cabs. For the uninitiated, ridesharing companies work like this; the customer downloads the app to his/her cell phone and then selects a pickup and drop off point. The ridesharing company can also track the user utilizing the GPS located in the user’s cell phone. At that point, the nearest rideshare company driver is alerted and then proceeds to the pickup location. The app tells the user the approximate fee for the trip and how long before pickup will occur. All payment is made via the user’s account and no cash is needed.
However, as this article points out, there are significant questions with this ridesharing arrangement in regards to automobile insurance. If the rideshare driver is involved in an automobile accident and injures a passenger, pedestrian or fellow driver, then which insurance policy covers that accident? The article points out that the major automobile insurance companies; State Farm, Geico and Allstate have declined to cover rideshare drivers because commercial rides are not covered in traditional automobile insurance policies. However, according to the article, Lyft and Uber carry $1,000,000 insurance policies for their drivers. This brings up the excellent question of when this $1M policy applies; during the actual ride, on the way to the pickup, after drop off, some combination of those three, or some other times as well? Also, I was under the impression that rideshare drivers were independent contractors and therefore liable for their own negligence and tasked with obtaining their own insurance. Traditionally, companies are only liable for the actions of actual employees and not independent contractors. I am confused as to why the ridesharing companies are required to carry insurance for non-employee drivers.
Apparently, insurance companies are working with rideshare companies and rideshare drivers to craft a hybrid policy that covers both commercial and personal rides. However, with this being new ground, these policies will no doubt need further interpretation from the Courts. This may lead to some confusion in the short term concerning insurance coverage, at least until the Courts are able to analyze and interpret these new policies. In the meantime, it is important for Uber and Lyft drivers to obtain commercial automobile insurance policies to protect them while providing commercial rides. Further, if you are injured by a rideshare driver in an automobile accident, it is important for your attorney to consider all avenues of insurance coverage that may be available.