By Cory Bilton
Far-sighted lawyers, law-makers, and citizens have been voicing concern about what happens in the event of an accident with a ridesharing service like Uber and Lyft. In January this year, an UberX driver struck and killed a child in San Francisco. Following the collision, Uber denied liability, claiming that its driver was in-between fares, a time in which Uber doesn’t provide insurance coverage. Without Uber’s insurance covering the collision, the family that lost their child would only be able to pursue the driver as an individual, and maybe his personal insurance (that is a long shot; most personal automobile insurance excludes coverage when the personal car is being operated as a vehicle-for-hire).
To avoid this type of uncertainty and in an attempt to clarify liability following an accident, the DC City Council has passed bill 20-0753, the Vehicle-for-hire Innovation Amendment Act of 2014. If signed into law by Mayor Gray, the bill will create numerous new laws to label, categorize, and insure ride-sharing vehicles operating with companies like Uber and Lyft. Here is a summary of the new insurance requirements:
Rideshare Companies Must Provide Coverage When Car Has a Fare
The new law will require ridesharing companies to cover all their drivers for any damage caused while the driver has a prearranged rider, up to $1 million in damage per occurrence. This appears to match the amount of insurance coverage that both Uber and Lyft say that they already provide to their drivers. The key is that the $1 million in coverage only applies when there is a paying rideshare customer in the vehicle.
Rideshare Vehicles Must Have Commercial Insurance While Logged Into the System
For any time when the driver is logged into the rideshare system, basically any time the driver is saying he’s ready for a passenger, the law requires new minimum levels of insurance. Either the driver or the rideshare company must provide liability insurance coverage of at least $50,000 per person or $100,000 for each accident, as well as $25,000 in property damage coverage. This must be insurance coverage that recognizes that the car is a vehicle-for-hire. Since most personal automobile insurance does not cover a vehicle-for-hire, this means the insurance must be some form of commercial auto insurance. This insurance can be provided by the rideshare company or by the driver himself.
Rideshare Companies Must Guarantee Insurance Coverage
Uber drivers will not just be able to say, “Yeah, I’ve got insurance” without that actually being true. If it turns out that the driver doesn’t have insurance, or had it but let it lapse, then Uber will be on the hook for the coverages listed above. The rideshare companies are required to guarantee the insurance coverages are available.
If There are Multiple Insurance Policies that Provide Coverage, They Share Equally
If the rideshare driver maintains an insurance policy and the rideshare company also provides coverage, then both policies may provide coverage for damage or personal injury. It is not clear yet whether insurers will create new products or policies to offer to rideshare drivers. Insurers often loathe having more than one policy trigger at the same time. So duplicate coverage may not come into existence in practice, but the law provides for it to happen.
Bottom Line: The New Law Fills in the Gaps
The new laws will help to force rideshare companies to provide insurance any time one of their drivers is on the job in Washington, DC. There will now be some valid liability insurance when the rideshare driver is looking for a passenger in the system, driving to pick up a passenger, and during all parts of the passenger’s ride. Given the vast difference in available coverage depending on the status of the rideshare vehicle, my guess is that there will be more growing pains and future litigation to hammer out some of the finer details. But with the growing popularity of ridesharing services, this is definitely a good start.
Please review my disclaimer.