June 21, 2019
Ridesharing: Insurance Coverages and Potential Liability
by Chenee Castruita, Esq., Mazanec, Raskin & Ryder Co., L.P.A.
Rideshare companies have made it clear that they view drivers as independent contractors and not employees. While this issue continues to be litigated in various jurisdictions, current rideshare driving agreements typically require rideshare drivers to carry personal insurance coverage.
Whether the rideshare company's own insurance policy (or policies) provides coverage for an accident in which a driver is involved is usually determined by the rideshare company's own policies and agreements with its drivers, the language of the rideshare company's insuring agreement(s) and the stage of the "trip" during which the accident occurs. The coverages which have been determined to be applicable to the loss are typically third-party liability coverages, and rideshare drivers are generally not covered under these policies for their own injuries or damage to their vehicles.
Typically, rideshare drivers log-in to the rideshare company's app, making themselves available for ride requests. Once a driver accepts a request, the driver will pick up the requestor and take them to their chosen location. Uber® and Lyft® both indicate their insurance acts as primary coverage if the rideshare driver is involved in a "covered" accident while en route to pick-up a rider, or while driving a rider. This coverage ends once the rider is dropped-off at their location and the trip is marked as completed.
When the driver's app is turned off, the driver's personal coverage applies. If an accident occurs while the driver is using the app and is available to receive ride requests, but has not yet accepted a request, both Uber® and Lyft® provide contingent third-party liability coverage in the event the driver's personal insurance does not respond. The ridesharing company's insurance policy will then likely respond, if the driver's policy does not.
Most personal automobile policies exclude coverage for accidents which occur while the insured is working as a rideshare driver, as this is considered a commercial activity. Insurance companies have begun to offer rideshare endorsements for personal automobile policies as the practice of ridesharing has become more common, which may be a worthwhile expense to rideshare drivers.