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Stuck and can’t find a cab? Using a phone app for a ride-sharing service, you can summon a ride, entering where you are and where you want to go, and a driver picks you up in minutes. You pay with a credit card through the app, eliminating worries about having enough cash on hand.
If your kids live in a big city, they probably know about ride-sharing outfits like Uber, Lyft or Sidecar, if they haven’t already downloaded one of the apps.
The San Francisco-based transportation network companies have taken off across the U.S. — the six-year-old Uber, for example, is in 43 countries.
The appeal, especially to the young, is easy to understand. Drivers age 21 and older with insured cars and clean driving and criminal records can make extra money working for the services, using their own cars and working whatever hours they choose.
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Operates in over 80 cities and areas in the U.S. including Dallas, New York, Los Angeles, San Francisco and the Hamptons. Uber is currently in 45 countries. The lowdown: Uber offers a variety of choices at different price points, including: uberX (everyday cars), uberTAXI, uberBlack (high-end sedan), uberSUV and uberLUX (luxery cars). Rates vary depending upon the service requested and the city. During high-demand periods, higher “surge pricing” is put in place to attract more drivers to meet the requests of riders. The insurance details: UberBlack, UberSUV and UberTAXI ride requests are manned by a livery or taxi transportation provider that carries a commercial insurance policy for at least the minimum amount required by local laws. UberX ridesharing providers carry personal insurance policies; however, Uber carries a commercial insurance policy for ridesharing with $1 million of coverage per incident. This policy covers the driver from the time a trip is accepted until the completion of the trip, and is primary to any personal auto insurance for the vehicle, but secondary to any commercial auto insurance policy on the vehicle. Uber has uninsured/underinsured bodily injury coverage of $1 million per incident to cover all occupants of rideshare vehicles. There is contingent comprehensive and collision coverage of $50,000 with $1,000 deductible if the driver holds personal comprehensive and collision coverage and that primary coverage is denied or exhausted. There is contingent liability insurance of up to 50/100/25 ($50,000 per person and $100,000 per accident of bodily injury and $25,000 of property damage) to cover a driver when in between trips. It only pays if the driver’s personal auto insurance denies a claim. No fault coverage (PIP) is provided at similar levels as limos or taxis if the state requires it. |
| Based in San Francisco based. Founded in 2012 Operates in over 60 cities and areas, including Atlanta, Boston, New York, Los Angeles and the Silicon Valley. The lowdown: Lyft grew out of Zimride, which offered ridesharing for longer trips by linking people up through a Facebook application. Lyft drivers are distinguished by a pink, fuzzy mustache attached to the front of their vehicles. Lyft collects “donations” in some cities and charges a set amount in others. During busy periods, higher “Prime Time” rates are turned on. The insurance details: Lyft has a commercial auto liability policy of $1 million for bodily injury and/or property damages of passengers and/or third parties. The insurance is in effect from the time a driver accepts a ride request in app until the ride ends in the app. There’s also contingent comprehensive and collision coverage of $50,000 with $2,500 deductible. This is applicable as secondary coverage to drivers who purchase comprehensive and collision on their personal auto insurance policy if their primary coverage is denied or exhausted. Uninsured/underinsured motorist coverage of $1 million covering bodily injury of drivers, passengers and/or third parties. Coverage is primary to driver’s personal auto policy from time driver has accepted a ride request until driver ends the ride in the app. Contingent liability of up to 50/100/25 ($50,000 per person and $100,000 per accident of bodily injury and $25,000 of property damage) that covers passengers and third parties from the time a driver turns on driver mode on app until driver accepts a ride request. If driver has commercial policy, then Lyft’s policy will be in excess. Lyft’s policy is not available in New York currently. |
| Based out of San Francisco. Founded in 2012. Operates in: Boston, Chicago, Los Angeles, San Francisco, Seattle and Washington, D.C. The lowdown: Drivers have ability to set their own price — based on demand, quality of the car and perks — to compete for your business. Sidecar claims to be the only ridesharing app to show the exact price before a rider gets in the car. The insurance details: Sidecar has a commercial auto liability policy of up to $1 million per occurrence that covers both property damage and/or bodily injury up to the limit. Coverage begins when a driver accepts a ride until the passenger exits the vehicle at the end of the ride. There’s also contingent collision of $50,000 with $500 deductible. This is secondary to any other applicable insurance policies carried by the Sidecar driver and only applies when a driver’s personal policy declines coverage or his limits are exhausted. |
Based out of San Francisco. Founded in 2009. “It’s a very popular and innovative approach to an age-old business of transporting people for money,” says James Whittle, the American Insurance Association’s chief claims counsel.
Ride-share insurance
But insurance and regulatory concerns abound. Unlike taxi companies, which are highly regulated, the rules of the road are not yet spelled out for ride-sharing businesses. Regulators and insurance industry officials warn consumers to understand the risks involved when riding with or driving for transportation network companies.
And if your child has a car and is making money driving people around, you might have cause for alarm.
Under the so-called livery exclusion, a personal auto insurance policy does not provide coverage when you use the car to transport people for money. If you (or your child) get in an accident while driving for a transportation network company, your personal auto insurance likely won’t cover the claim.
“They need to understand the risks and the obligations they may be assuming,” Whittle says. “There may be insurance gaps, and those gaps could affect you as a passenger and as a driver.”
Ride-sharing companies provide insurance to protect drivers and passengers, but the questions of whether the coverage is enough and when that coverage applies are murky.
The issue came into sharp focus after an UberX driver struck and killed 6-year-old pedestrian Sofia Liu and seriously injured her family members on New Year’s Eve in San Francisco. UberX is the least expensive service offered by Uber. The company denied responsibility because the driver was not transporting a passenger at the time.
The family filed a lawsuit against Uber and the driver in San Francisco Superior Court, claiming the company is responsible for Sofia’s death because the driver had the Uber app on when the collision occurred.
“As transportation delivery systems evolve so will the law,” said Liu family attorney Christopher Dolan in a press statement. “The technology may change but the basic rights of the public to safety and accountability will be upheld through the civil justice system.”
Is there enough auto insurance coverage?
Since then both Uber and Lyft beefed up the insurance they provide drivers.
Both companies had provided $1 million of liability coverage and $1 million of uninsured/underinsured motorist coverage per incident for drivers from the time they accept a trip to passenger dropoff. The liability insurance covers others’ injuries, including passenger injuries, and property damage if the driver causes an accident. The UM/UIM insurance covers the driver’s and passengers’ injuries if an uninsured or underinsured driver causes an accident.
Both companies then added coverage this year for times when drivers are logged on to their networks but are not yet transporting passengers for hire. The coverage kicks in if the driver’s personal auto policy doesn’t pay out. The contingent coverage is $50,000 per person for bodily injury, $100,000 per accident for bodily injury and $25,000 for property damage with both Uber and Lyft.
“Most personal auto policies cover the period of time when a driver is between commercial trips and not carrying a passenger,” Uber spokesperson Natalia Montalvo says in an email. “However, if a driver’s personal insurance policy is found not to cover an accident during this period, Uber’s policy will provide contingent coverage for a driver’s liability at the highest requirement of any state in the U.S.”
Lyft spokesperson Paige Thelan says, “While we do expect personal carriers to cover the time period prior to carrying a passenger, in order to erase any uncertainty, Lyft now provides additional protection. This protection provides backstop coverage to drivers when they are in match mode and are not providing rides.”
Sidecar offers $1 million of liability coverage from the time a driver accepts a passenger trip through the app to dropoff. It has not yet announced additional insurance to cover the time when a driver has the app on but hasn’t accepted a passenger. In May the company announced it had added $50,000 of collision insurance, with a $500 deductible, to cover the driver’s car while on “an active ride.” The company states that the insurance it provides is secondary coverage, meaning that it kicks in if the driver’s personal auto insurance policy denies the claim or is inadequate.
