The huge growth of ride sharing means new financial and professional opportunities for many people. It also means an increase in issues not previously considered when it comes to transportation. Before the rise of the sharing economy, if you needed a ride, you hired a taxi or other paid transportation service, or you had a friend or family member drive you. Now, companies such as Uber® and Lyft® have blurred the lines somewhat.
So if you get hurt as a passenger in an Uber® or Lyft®-affiliated vehicle that's involved in a car accident, how will you get compensation for your injuries and other damages? Generally speaking, financial responsibility could come from the insurance company of the at-fault driver—whether it's the ride sharing company's driver or another driver involved in the accident who caused the crash—or from Uber® or Lyft®'s own car insurance coverage. Read on for the details.
The ride sharing driver's car insurance coverage will apply to your passenger injuries, if the driver has a commercial insurance policy or a personal car insurance policy with a special provision providing insurance coverage while engaged as a ride sharing driver. But note that most ride sharing drivers probably won't have a commercial or personal car insurance policy that will cover your injuries. And their personal car insurance policy will probably have a "business use exception" that won't cover damages and injuries that occur while the insured is acting as a for-profit driver.
So, what about the ride sharing company's insurance? The good news is that Uber® and Lyft® carry third party liability insurance coverage which pays up to $1 million for personal injuries and property damage per accident. These policies will only kick in after the ride sharing driver's own insurance has been exhausted, assuming the driver possesses an applicable policy (Uber® and Lyft® require them to have coverage). As a passenger, you're covered under this kind of liability policy, when the ride sharing driver is at fault for the accident.
So what happens if the ride sharing driver isn't at fault for the accident, but someone else is? In this situation, you would seek to recover from the at-fault driver, via a third party car insurance claim against the at-fault driver's car insurance carrier, or a personal injury lawsuit. But how do things work if the at-fault driver doesn't have car insurance or the insurance they have isn't enough to fully compensate you for your losses?
This brings up another avenue of recovery, the ride sharing company’s uninsured/underinsured (UM/UIM) insurance coverage. This coverage also typically provides $1 million in coverage per accident, but keep in mind that it will only apply if the responsible driver is unknown, doesn't have car insurance, or doesn't have enough car insurance to pay for your injuries. And, it applies only during the period of time between when the driver picks up the passenger and drops him off.
If these insurance policies are inadequate to fully compensate you, or the insurance companies refuse to pay out, you can try going after the ride sharing company itself.
According to Uber® and Lyft®, their drivers are not employees, but rather, independent contractors. This is an important distinction because employees have more rights than independent contractors—such as the right to unemployment benefits—and a company is likely to be held legally responsible for the negligence of its employees, but not that of its independent contractors. (Learn when a person/business can be liable for someone else's driving.)
If the ride-share driver was responsible for the accident, you can try to argue that the ride sharing company shares some level of blame for the crash, but this is a murky strategy. Uber® and Lyft® have worked extremely hard to have their drivers seen as independent contractors, not employees, but it's unclear whether or not these companies can continue to shield themselves behind this argument, especially in the face of legislative efforts to have drivers classified as employees. In California, for example, a law known as "AB5" is meant to protect Uber® and Lyft® drivers (and other so-called "gig workers") and make it more difficult for companies to argue that rideshare drivers and deliverypersons are not employees. (More: Are Uber® drivers employees or independent contractors in California?)
In any case, keep in mind that because recovery against Uber® or Lyft® insurance coverage is probably an option for you—whether through the company's $1 million liability coverage, or through its $1 million UIM coverage—if you're injured in a ride sharing vehicle, going after the company directly is probably a last (and hopefully unnecessary) resort.