Is Your Uber Driver Uber-Insured? If You're Injured, Let's Hope So.

Ride-sharing services such as Uber and Lyft have aggressively expanded into new markets across the U.S.—Indianapolis included. This expansion combined with competitive fares and the brilliant convenience of their smartphone apps, has caused an explosion in consumers’ usage of these nifty transportation options. Unfortunately, they have also created a number of lawsuits.

Why lawsuits?

Among the varying reasons for these lawsuits, many are based upon injuries that occur to passengers, pedestrians, or bikers while the driver is on the job. One of the most publicized lawsuits against Uber deals with a six-year-old girl who was tragically hit and killed by an Uber driver on New Year’s Eve in San Francisco.

As cities and states across the country grapple with how and whether to regulate Uber and its ilk, the question arises: if you’re in an accident and you sustain injuries, how will you fare in an Uber or Lyft versus a traditional taxi before that fare is paid? The answer is, as with many legal questions, it depends.

Because of public awareness and a likely realization their insurance policies were insufficient in light of a passenger’s potential injuries in an accident, both Uber and Lyft recently announced an increase in their insurance policy limits to $1,000,000. But these policies only take effect at certain times. So an injured party’s ability (or inability) to recover for his/her injuries hinges upon the driver’s activities at the time of injury. Timing iseverything.

Insurance policies: Taxi vs. Uber/Lyft

In Indiana, local ordinances govern the amount of liability insurance that taxi drivers must possess. In Indianapolis, that amount is only $100,000, but the coverage generally applies anytime the taxi driver is driving the taxi—regardless of whether s/he’s been hired by a passenger.

Each driver for Uber and Lyft must essentially have his/her own personal liability insurance. But in most instances, that coverage does not apply and is specifically excluded when the driver is acting in a commercial capacity. In fact, Uber and Lyft’s newly-increased insurance policies only kick in when the passenger officially hires the driver and lasts until the driver drops off the passenger.

So what happens when the Uber driver is in between jobs and accidentally injures a pedestrian or biker? In this circumstance, as long as the driver has Uber’s app open, there is gap coverage that Uber provides, but only for a maximum of $100,000 worth of injuries.

Will there be enough insurance coverage to make you whole?

You can bet that driver’s personal insurance company will deny that injured person coverage in a heartbeat because it will argue the driver was engaging in commercial activity—even though s/he wasn’t officially hired at that moment. In an ideal situation, the driver purchased additional commercial insurance to apply when his/her personal policy excludes the ferrying around of passengers for compensation—unfortunately, most drivers do not do this. Moreover, the ride-sharing companies’ million dollar policies won’t be in effect either because they don’t apply in this instance. The only insurance coverage available will likely be the $100,000 gap coverage.

Thus, the amount of insurance coverage available to an individual injured by an Uber or Lyft driver constantly fluctuates depending on whether the driver has been hired or is just in between jobs. This has a huge impact on whether a passenger, biker, or pedestrian can be made whole.

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