Being Uber-Careful: Who’s Responsible?

Few businesses have had the widespread impact of the ride-sharing industry. Marrying the GPS and mapping function on every smartphone with a platform for payment, companies like Uber and Lyft are responsible for declines of up to 30 percent in taxi usage. Most agree that the convenience of ride-sharing has reduced incidences of driving while impaired as well, as a simple result of their convenience: think of them as Amazon’s One-Click Ordering brought to the transportation world.

The business model of these transportation network companies (TNCs), however, also introduces a new set of questions surrounding liability, especially in the way they blur the lines between personal and business use of a vehicle. When a driver uses his or her personal vehicle in the service of Uber, for example, who is responsible when an accident happens?

The answer is, “it depends.”

Most personal auto policies contain specific exclusions for TNCs, on the grounds that a driver transporting people for a fee is now considered a livery service and therefore requires a commercial policy. In certain situations, the TNC’s policy provides coverage, though in others it does not:

• As you may well guess, an off-duty TNC driver using a personal vehicle with their app turned off is covered by their own automotive liability policy. This is pretty cut-and-dried: personal use, personal policy.
• You might also guess that an Uber or Lyft driver in the act of taking a passenger from Point A to Point B is covered by their TNC’s liability insurance. Again, pretty simple: the TNC’s policy is the primary coverage until the end of the ride.

But there are a third and fourth state of affairs, and that’s where the waters of coverage can get a little murkier:

• The driver is in the vehicle with the app on, waiting for a ride request.
• The driver has accepted a ride request but has not yet picked up any passengers.

Several state laws have combined these last two situations and require higher insurance limits while the driver is actively engaged in these ways. And again, personal policies often exclude all TNC use, even if there’s no passenger in the vehicle.

Larger TNCs like Uber and Lyft have full coverage for their drivers, but it may not apply when the driver is waiting for an assignment, leaving at least one gap unfilled by either TNC coverage or a personal policy.

Many personal insurers have responded to this need by offering personal policy endorsements that cover TNC use. This may be the best solution for many individuals. In any event, before you sign up to drive, be sure you fully understand the limits to both your own coverage and that of your TNC.

Questions about automobile insurance? Contact Consolidated Insurance.