Rideshares have become a central part of how we talk about transit today. Cheaper than a typical cab and more convenient than public transportation, especially in mid-size cities, rideshare companies like Uber and Lyft have come to represent the power of the startup sector. As rideshares revolutionize transit, though, they’re also creating new legal questions, and one of the most important concerns accidents: when a rideshare vehicle gets into an accident, how does insurance work?
If Uber and Lyft were like typical transit businesses, corporate would oversee all of the insurance issues, and would have the deep pockets to take care of even the most disastrous circumstances. In reality, though, these companies define themselves as tech brands – they’re all about the apps – leaving their drivers in a tough situation. This has led to a hugely complicated set of insurance considerations.
Fault Comes First
When a rideshare vehicle gets into an accident, the first question is always one of fault. Who caused the accident, and what are the laws in your state? In Virginia, for example, if another driver is at fault in an Uber-involved car accident, then expenses fall to that driver’s liability coverage. However, if your driver – the contractor for the rideshare – is at fault, then Uber does provide insurance coverage up to $1 million.
Uber and Lyft may offer insurance to protect drivers and passengers involved in accidents, but this coverage isn’t straightforward. When a driver is on the clock – looking for rides – but doesn’t have anyone in their car, they’re actually operating inside an insurance gap. That’s because rideshare company insurance only covers drivers if they have a passenger. Meanwhile, a driver’s personal insurance becomes invalid the moment they turn on the app because their vehicle then becomes part of a business, according to insurance companies.
Technically there is some coverage for drivers who are signed in but haven’t gotten a ride request yet, but it only applies to bodily injury. During that sign-in phase, drivers are covered up to $50,000 for bodily injury per person, with a maximum of $100,000 per accident. However, Uber and Lyft only offer property damage coverage for other people’s property, not the driver’s. That means if your car is damaged, you can’t drive to earn money and you have to cover the repairs out of pocket.
Play It Safe
If you do plan to use a rideshare service, it’s important that you take appropriate precautions. Just as in your own car, you should always wear your seatbelt when traveling in an Uber or Lyft – even if you’re riding in the backseat. Many people take a lax approach to seatbelt use when in rideshares; because they’re not driving, they abdicate responsibility for safety, and most states don’t have laws mandating backseat seatbelt use by adults. Furthermore, rideshare use tends to increase among adults who are out for social events and who may be inebriated, which also increases the likelihood that they’ll make poor safety decisions.
Rideshare-involved accidents are more common than people realize, and drivers and passengers alike need to take responsibility for the risks inherent in these services. For drivers, that may mean investing in additional insurance, while passengers should always wear a seatbelt and stay alert to any signs of erratic or unsafe driving. Just because rideshare changes the dynamics in the car, that doesn’t mean you should take risks you wouldn’t while driving on your own.