The ride-share industry has exploded in North Carolina and beyond since bursting onto the scene just five years ago. As of last year, Uber alone reported it offered two million rides daily. Other competitors, such as Lyft, report only slightly lower rates.
However, the question of whether these services are adequately covered with auto insurance remains. It was only recently that both Uber and Lyft promised up to $1 million in liability and uninsured/underinsured auto coverage for passengers. But that policy is only applicable under certain circumstances.
Recently, a new survey indicated that many drivers for these services don’t purchase enough of their own insurance to fully protect them at all times, and they may not fully understand the risks involved. That has implications not just for the drivers if they are involved in a crash, but also for anyone with whom they might collide and potentially also with passengers.
Companies that provide these services insist they are not a vehicle service. Instead, they tout their offerings as those of a technology firm. They connect riders and drivers with vehicles. They don’t actually supply the vehicle.
However, after trying to insulate themselves from liability in a number of ways – including designating drivers as independent contractors – company owners realized they would not be able to completely push it off. This was particularly true when so many cities heavily regulated taxi cabs and other livery services. Securing adequate auto insurance was often part of the deal.
In a survey of more than 1,000 drivers who use SherpaShare, it was revealed 77 percent didn’t have additional rideshare insurance coverage on top of what the company offered. Of those, nearly a third cited cost as the primary concern. Furthermore, many drivers underestimated the risks of not carrying more coverage, not realizing they could still be held personally liable for injuries of passengers if they exceeded that $1 million mark (which certainly isn’t unheard of, particularly if the car accident is serious or fatal).
However, those $1 million policies are only in effect if the rideshare driver is actually responding to a call or transporting passengers. Drivers who have already dropped off a passenger or who are not actively responding to a call are not covered by the rideshare service’s $1 million liability policy.
Although riders can make a claim against the driver’s personal insurance, many times they find the driver’s personal insurance carrier didn’t even know they were driving their vehicle for commercial benefit. They may deny and even drop coverage as a result.
Of those drivers who do have extra insurance coverage, 36 percent only have a bare-bones rideshare insurance policy, which some carriers are offering now at rates of between $100 and $200 monthly. A third only have coverage when they are waiting for a rider (to cover the gap between when the rideshare company’s insurance kicks in), and 24 percent have complete coverage that covers all of these scenarios.
Although extra insurance coverage is always preferable, this often leads to squabbles among insurers when a crash actually does happen. Insurers frequently will try to claim it wasn’t their policy that was in effect at the time of the crash.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Many Uber, Lyft Drivers Are Underinsured, Survey Finds, Feb. 29, 2017, By Elizabeth Renter, NerdWallet
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