Uber and Lyft are the most popular ridesharing apps in the U.S., with each company boasting hundreds of millions of rides a year. Roughly two million independent drivers provide these rides, taking advantage of the opportunity to earn money on their own time and terms through the gig economy.
Unfortunately, many of these drivers do so without notifying their insurance provider that they’re using their vehicle for ridesharing, which can cause problems if an accident should occur. Here is a look at what can happen if you’re involved in an accident while driving for Uber or Lyft.
Uber and Lyft Provide Insurance Policies for Their Drivers, Don’t They?
While many people are at least casually aware of the $1 million liability insurance policies that Uber and Lyft provide, many do not understand when these policies apply and what they cover.
Uber and Lyft offer a third-party liability policy if a driver causes an accident while waiting for a ride to be assigned, en route to pick up a passenger, or while transporting a passenger. However, this policy is a secondary source of insurance if the driver’s personal insurer refuses to provide coverage or the compensation due to others injured in the accident exceeds the limits of the driver’s policy.
The Insurance Requirements for Being an Uber or Lyft Driver
Lyft and Uber require that individuals who wish to drive for them have and maintain the amount of insurance required in the state where they will drive.
For example, Uber or Lyft drivers in Wisconsin must have a liability insurance policy on their vehicle that includes at least $10,000 for property damage, $25,000 for the death or injury of one person in the accident, and $50,000 for the injury or death of more than one person.
Uber or Lyft drivers in Minnesota must possess an insurance policy that provides at least $40,000 in personal injury protection (PIP), $30,000 in bodily injury liability per person, $60,000 in coverage for bodily injury liability for the injuries or deaths of more than one person, and $10,000 in property damage liability.
How Lyft and Uber’s $1 Million Liability Insurance Policies Work
Both Uber and Lyft provide similar tiered liability coverage for injuries incurred in accidents caused by their drivers.
The general availability of this policy is as follows:
- When the driver’s app is off, and they use their vehicle for personal reasons, their own liability insurance policy applies.
- When the driver’s app is on, and they are waiting for a ride request, an Uber or Lyft third-party liability policy is in place with a typical coverage of $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $25,000 for property damage.
- When the driver is en route to pick up a passenger or is transporting a passenger, the Uber or Lyft policy is in place with coverage of up to $1 million. Additionally, both companies will provide collision and comprehensive coverage for drivers who maintain collision and comprehensive coverage in their own insurance policies, however, exceptions may apply.
The Problem Uber and Lyft Drivers Often Face After an Accident
By simply reading the information provided above, it would appear that Uber and Lyft drivers have two insurance policies that will cover the expenses incurred to others due to an accident caused by the rideshare driver’s negligence. However, it often isn’t that simple.
If an accident involving an Uber or Lyft driver is another driver’s fault, the Uber or Lyft driver can seek compensation by filing a personal injury claim against the at-fault driver’s auto insurance policy. Regardless of whether the Uber or Lyft driver has their app on, is en route to pick up a passenger, is transporting a passenger, or is using the vehicle for personal reasons.
However, if the accident resulted from the Uber or Lyft driver during “business use” (picking up and transporting paying passengers), their insurance company will likely deny coverage. This denial may even to personal injury protection policies carried by Minnesota drivers under the state’s no-fault insurance requirements.
Additionally, unless the driver has personal comprehensive and collision coverage, neither a Lyft or Uber third-party policy covers injuries and vehicle damage sustained during an accident when the driver’s app was on and was waiting for a ride request.
American Family Insurance explains that rideshare drivers also miss out on some benefits afforded to drivers through a personal auto policy. While using their vehicle for rideshare purposes, they may not be able to utilize roadside assistance and safe driver discounts.
Why Do Insurance Companies Deny Claims from Rideshare Drivers?
Rideshare drivers present a much greater risk than other drivers simply because they use their vehicles for a greater amount of time each day, increasing the opportunity for an accident. Many drivers do not inform their insurance provider that they are using their vehicle for commercial purposes.
If an accident occurs and it is the fault of the Uber or Lyft driver, when others involved file claims against the driver’s policy, a claims adjuster will be assigned to evaluate the claim. A claims adjuster is an individual hired by an insurance company to protect their bottom line by analyzing the claim and determining how much compensation they owe for the insured’s liability.
The claims adjuster works for the insurance company and approaches the claim from the perspective of keeping the payout as low as possible.
What to Do After an Uber or Lyft Driver Injures You
As with any motor vehicle accident, if you’ve been injured in an accident while driving for Uber or Lyft, exchange contact and insurance information with the other drivers involved. Seek medical attention as soon as possible, and report the accident to your insurance company and rideshare company.
Once you’ve taken these actions, you should also speak with an experienced personal injury lawyer. Even if you believe that you had partial or full liability for the accident, an experienced car accident lawyer can meet with you for a free case evaluation and answer your legal questions.
Accidents often involve multiple sources of liability, which means that even if you think you were at fault, others can also be liable for the accident. You can pursue compensation for your injuries through a rideshare accident claim.
If your lawyer identifies other sources of liability, the attorney can explore your legal options for seeking compensation.
Other sources of liability in a Uber or Lyft accident can include:
- Other roadway users, including drivers of cars and trucks whose negligent actions led to the accident.
- The manufacturer of defective vehicle parts used on any of the vehicles involved in the accident that were a factor in the accident’s cause.
- A business establishment or social host knowingly served alcohol to an underage person.
What Is the Personal Injury Claims Process?
The personal injury claims process generally begins when your attorney thoroughly investigates your accident to determine all liability sources and the insurance resources associated with each at-fault party that you can claim against to seek compensation.
Once you reach maximum medical improvement (the point at which you are unlikely to improve with continued treatment), your attorney will establish your claim’s value based on your losses, the insurance available, your injury severity, and other factors.
Your lawyer will then file a claim against the liability insurance policy of the at-fault party(s). When the at-fault party’s insurance provider receives the claim, they assign it to a claims adjuster.
The claims adjuster evaluates the claim, interviews all parties involved, and decides to:
- Accept the insured’s liability and process the claim for payment;
- Deny the claim and provide notification and a reason for the denial to the claimant.
- Offer to settle the claim out of court for less than its established value.
Most personal injury claims resolve through settlement. However, the initial settlement offer from the at-fault party’s insurance provider is generally far lower than the established value for the claim.
Your attorney will work to negotiate an offer that provides fair compensation for the expenses and impacts of your injury. If the insurance provider fails to pay the claim, your attorney can file in civil court as a personal injury lawsuit.
A personal injury lawsuit is a legal claim filed in civil court so that a judge or jury can determine if the at-fault party’s insurance provider owes you compensation and—if so—how much. Insurance providers generally try to avoid a lawsuit, as it involves additional time, expense, and an uncertain outcome.
One of the most important aspects of the court process is the deadline by which you can file the claim, known as the statute of limitations. Each state has a different statute of limitations. Wisconsin claimants, for example, have three years from the accident to file a personal injury lawsuit, while Minnesota claimants have six years to file their claim in court.
Failing to file a claim within this time frame will usually result in losing the ability to use the court process when seeking compensation for your losses.
A claim can still settle after the lawsuit is filed and even during trial, as long as the court has not yet rendered a decision. While working on settlement negotiations, your attorney will also gather the evidence and witness testimony needed to prove liability.
Proving liability needs these three elements:
- The at-fault party had a duty in a given circumstance to use care to prevent causing physical injury and property damage to others.
- The at-fault party breached this duty by taking careless or reckless actions.
- Because of this breach, an accident occurred that injured you.
Is It Possible to Sue Uber or Lyft Due to the Distraction Posed By the Driver App?
While the topic of Uber’s and Lyft’s responsibility for causing accidents by using an app to communicate information while driving remains debatable. Rideshare companies generally argue that they are immune to much liability for their drivers’ actions due to the classification of drivers as independent contractors, not employees.
Generally, companies with employees are required to ensure that those employees are properly trained and responsible for their actions while performing job-related tasks.
With drivers classified as independent contractors, companies must ensure that drivers have clean driving records, the minimum insurance required in their state, and a vehicle in decent running condition. Rideshares are often shielded from responsibility for the driver looking at an app while driving (even though drivers are required to use the app) or other unsafe driver behavior. Additionally, Uber and Lyft are typically not required to provide worker’s compensation for independent drivers, which would provide compensation if the driver was injured on the job, regardless of who was at fault.
If you are in an accident while driving for Uber or Lyft, contact an experienced rideshare accident attorney for a free case evaluation.