Insurance Concerns for Lyft, Uber, and Ridesharing Users
The ride-sharing debate continues in Pennsylvania, with the Public Utilities Commission squarely in the middle. The PUC regulates taxi and other livery services in the Commonwealth of Pennsylvania. A a bill (the Ridesharing Arrangement Acts) is currently pending in the legislature to permit ride-sharing groups to operate in Pennsylvania without being subject to the regulation of the PUC. One of the largest consumer concerns involving peer-to-peer ride-sharing networks, such as Uber and Lyft, should not be government regulation, but insurance requirements.
Does traditional car insurance extend to ride-sharing situations?
The answer to this question is unclear. Private car insurance ordinarily does not cover the vehicle when it is being used for commercial purposes, unless there is a specific provision in the policy that extends coverage to commercial endeavors. Specifically, typical car insurance does not cover your vehicle if you are using it to carry persons or property for a fee. Certain exceptions to this rule have been carved out based on public policy considerations, such as carpooling arrangements. If you drive your vehicle and transport others, and your passengers share the cost of gas or other expenses, Pennsylvania law considers this to be a carpooling situation where you are not actually carrying the passengers for a “fee.” The amount paid by the passengers has to be related to the cost of the trip without any payment to you as the driver. In true carpooling situations, car insurance will apply in the event of an accident.
Ridesharing, as envisioned by Uber and Lyft, is not carpooling as defined by Pennsylvania law. You and the driver do not necessarily share a destination, and the fee you pay (or charge as the driver) does not reflect solely the costs associated with the trip. The driver is earning a fee to transport passengers from Point A to Point B. If the driver does not have a commercial insurance policy for the vehicle, or an endorsement to permit him or her to use the vehicle to carry persons for a fee, the driver’s insurance policy may not apply to any accident in which the vehicle is involved.
Do Lyft, Uber, and other ride-sharing networks regulate or require certain insurance for their drivers?
Currently, the only insurance regulations in effect for drivers working through Lyft and Uber are the regulations set forth in the Pennsylvania Motor Vehicle Financial Responsibility Law and those set forth by the networks themselves. The minimum insurance required by Pennsylvania law is only $15,000 per person/$30,000 per occurrence. Lyft and Uber have insurance requirements for their drivers, but the requirements do not include purchasing commercial insurance that is guaranteed to provide coverage in for-profit ridesharing situations. Furthermore, drivers are not always obligated to name Lyft or Uber as an additional insured on their personal policy, meaning even if the policy applies, it would not extend coverage to the carrier for any type of negligence committed by the carrier.
Ridesharing organizations seek to remedy the insurance situation by purchasing umbrella coverage that covers all of their drivers and vehicles. There is still some debate, however, as to whether this coverage will truly apply if a driver is involved in an accident while carrying passengers. Most umbrella policies apply over and above an underlying policy. For the umbrella policy to apply, the underlying policy has to provide coverage for the loss. Jim Black, the Executive VP of Lyft, Inc., testified before the Public Utilities Commission that Lyft’s umbrella coverage provides “first dollar” coverage, meaning that even if the underlying insurance on the private vehicle does not apply, the Lyft coverage will still apply. However, the $1mil Lyft policy is only in effect when the Lyft driver is actually transporting someone through the app. If the Lyft driver is waiting for a fare with the app open, Lyft only provides coverage in the amount of $50,000 per person/$100,000 per occurrence. Lyft provides no excess coverage to the Lyft driver is the driver is driving and waiting for a fare, but for whatever reason does not have the app open.
Where does that leave the injured victim?
The insurance picture is far from clear if you are the victim in a car accident involving a Lyft, Uber, or other ridesharing vehicle. Whether you are occupying the ridesharing vehicle, or struck by the ridesharing vehicle, you may be left in the center of an insurance nightmare. Whose insurance do you even contact? What happens if the carrier for the ridesharing vehicle denies coverage? What if the driver of the ridesharing vehicle was driving under the influence, or was otherwise unfit to be a professional driver? What if you were the victim of a crime committed by the ridesharing driver?
None of these questions have clear answers, which is why Pennsylvania, and many other states, are struggling with how to regulate and what to require of ridesharing service providers. Technology moves much faster than the law, and Pennsylvania legislators are working to catch up to allow ridesharing services to safely operate within the Commonwealth in a manner that will not jeopardize the interests of the public in general.
If you are involved in a car accident with a driver who is operating through a ridesharing service, call KM&A today to see how we may help you to protect your legal rights. Contact Erin Rudert at 412-626-5590 or by email at firstname.lastname@example.org.