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Uber and Lyft Protection, No Matter Who’s Behind the Wheel

Insurance- JLFranklin Wealth Planning

If you use rideshare companies like Uber and Lyft, or if you live in an urban area where rideshare companies operate, this article contains crucial information for how to protect your assets.

Both Uber and Lyft have similar insurance programs. The coverage varies depending upon if a driver is looking for a rider, driving for non-ridesharing reasons, or on-the-clock for the rideshare service. First, some definitions.

  • Non-Rideshare Driving: When a driver’s rideshare app is off and they are neither looking for passengers nor working, their own auto insurance policy is responsible.
  • Driver Is Looking for a Fare (Period 1): When a driver’s app is on and they are looking for a fare/rider, their own auto insurance coverage is primary. Most personal auto insurance companies exclude business use (also known as livery, or driving passengers or delivering goods for hire). Uber and Lyft both offer secondary coverage during Period 1, but it’s limited to bodily injury at $50K per person/$100k per accident and property damage liability at $25K.
  • Driver Is en Route or with a Passenger (Period 2): When a driver accepts a fare and is now en route or the passenger(s) has entered the vehicle, the rideshare company insurance coverage kicks in. The driver is now covered for $1 million for both bodily injury and property damage liability, plus $1 million uninsured/underinsured motorist coverage. The driver’s own auto insurance is likely nullified during this time period, since most personal auto policies exclude driving passengers for a fee. For the driver’s vehicle, contingent coverage for comprehensive and collision coverage is based on their own auto insurance coverage. This coverage is subject to a deductible.

Coverage as a Passenger

If you are a passenger in a rideshare vehicle involved in an accident in which the driver of the vehicle is determined to be at fault, then your injuries would be covered during Period 2 under the insurance provided by Uber/Lyft for $1 million. If your Uber/Lyft vehicle is hit by another party, then the other driver’s insurance would be responsible. If your Uber/Lyft vehicle is hit by an uninsured or underinsured vehicle, then the rideshare vehicle’s coverage would kick in for the $1 million coverage. If the $1 million limit is exhausted or inadequate, you may be able to seek damages directly from the rideshare company. This can be difficult, but it is a possibility. Because rideshare drivers are contractors and not employees, it can be very difficult to sue the driver for liability.

Statistically speaking, data shows an uptick in accidents since rideshare vehicles have become more prevalent, although this is likely because more vehicles are on the road and more people are behind the wheel who lack experience on city streets. Data does not show that these drivers are less safe – in fact, they are probably less likely to be distracted while driving. However, the risk of fatigue can be high depending on how long they have been driving and the timeframes in which they are driving.

Unfortunately, good information is lacking as to how these transportation network companies, or TNCs, work. And, it’s an area in which a lot of the rideshare drivers themselves are misinformed. It’s crucial for rideshare drivers to have their own rideshare insurance, for when they are not covered by a company (see Period 1, above). Sadly, the majority do not have coverage.

If You’re a Driver or Pedestrian Hit by an Uber/Lyft Driver

If an on-duty driver hits you, either in your own vehicle or as a pedestrian, Uber/Lyft are responsible. In the insurance industry, it’s common knowledge that a large number of TNC drivers don’t have auto insurance coverage, or they have not informed their auto insurance carrier that they drive for a rideshare company. If the driver were to cause an accident, their coverage would be limited to whatever their personal insurance provides or the amount of liability coverage provided secondarily by the rideshare company, if they are with an active fare.

If the rideshare driver doesn’t have an active fare at the time of the accident with you, then coverage is limited to the $50K provided by the Uber/Lyft commercial insurance for bodily injury. Any additional coverage would have to come from the rideshare driver’s personal insurance (if such coverage exists).

If You’re a Passenger in an Uber/Lyft Accident

If the rideshare vehicle you’re in as a passenger is involved in an accident, it’s important to stick around and take the following action:

  • Collect contact and insurance information from all drivers, and contact information from other passengers.
  • Take detailed pictures of the accident, including damage to vehicles and your body.
  • Report the accident first to law enforcement, then to the rideshare company’s customer service department.
  • Determine who is at fault, so you can maximize your ability to have damages paid by the rideshare company or the other (non-TNC) driver.

If another vehicle hits the car you’re riding in as a passenger, the rideshare company covers you to the limits stated above. Uber/Lyft will step in to cover the other driver’s liability limits if they are inadequate; this is helpful in the case the accident involves an uninsured motorist.

What You Can Do to Protect Your Assets

Carrying your own uninsured motorist coverage on your personal auto insurance and umbrella policies is very important. If you do not own a car and live in an urban area, consider buying a non-owner auto policy in order to have uninsured motorist coverage in the event that you are hit as a cyclist or pedestrian.

If you’re involved in an auto accident with a rideshare company driver, it’s recommended that you get legal representation; do not try to settle the claim on your own.

With thanks to Diana Robinson of Asero Insurance Services.

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