September 5, 2016
Posted: September 5, 2016 |
Ride-sharing services like Uber and Lyft are examples of a “disruptive innovation” that have created a new market in transportation services and displaced an established pattern of how people move from one place to another.
Passengers hail an Uber or Lyft from their Smart Phone Apps and arrange for a car to pick them up, often at a significantly discounted price compared to taxis and limousines. Since its inception in 2012 Uber has grown tremendously and the company is currently valued at $69B and is dominating the ride-share industry.
With more and more Uber and Lyft vehicles on the road, since 2012 Allen Flatt Ballidis & Leslie has observed a significant increase in accidents involving e ride-sharing vehicles. When first on the scene, the only requirements to become an Uber or Lyft driver were to have a valid driver’s license, to be at least 21 years of age, to own a vehicle with liability insurance coverage and to pass a background check. In the State of California a driver needed only to carry the minimum financial coverage or $15,000/$30,000, an amount often times insufficient to cover one’s damages or injuries.
Uber does not consider itself a transportation service, instead, they classify the business model as a technology company. Recently, the State of California has agreed with their position, classifying drivers as independent contractors as opposed to employees. This ruling poses interesting questions about Uber’s liability for their drivers and the type of insurance coverage required for both the company and their drivers. In July 2015, California enacted new statutory laws requiring an Uber driver to increase their insurance coverage to $50,000/100,000.
Drivers must be very careful when obtaining auto insurance coverage and carefully review their policies to ensure they have sufficient coverage while driving for Uber or Lyft. Most personal auto insurance policies do not cover a driver while they are “performing business activity” or while they are “transporting passengers for hire,” allowing insurance carriers to deny coverage. Many auto insurance companies are now requiring drivers to carry a commercial policy rather than a basic auto policy.
The question then becomes “When is a driver actually working?” In a recent court decision it was determined, after a driver logs onto their Uber or Lyft they are still covered by their own automobile insurance policy. However, after they “accept” a passenger, they are then considered to be “working” and at that point, the insurance coverage switches from the driver’s personal policy to that of the ride-sharing company’s policy. The insurance policies covering Uber and Lyft must be at least $1M dollars and this coverage stays in effect until the passenger is dropped off at their destination.
For several years, Allen Flatt Ballidis & Leslie have been closely monitoring the impact this “disruptive innovation” is having in the transportation industry and on our clients. Our goal is to ensure all insurance coverage is thoroughly researched and understood, so we can advocate for our clients should they be involved in an accident, as a passenger or as a driver of a ride-sharing vehicle.
Contact our experienced legal team immediately to learn more on about these emerging legal considerations, or if you or someone you know, has been involved some type of ride-sharing accident. Our personal injury attorneys have won hundreds of millions in verdicts and settlements over the past 40 years for our clients.