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Uber, Lyft, Sidecar's New 'Insurance Gap' Coverage: Is it Enough?

Three ridesharing giants just announced that they will 'close the gap' in insurance coverage that has come to light recently as a result of several accidents caused by the companies' non-professional drivers.

As I've discussed before on this blog, these companies provide their own insurance coverage for drivers when they have a paying passenger in the car. The logic is, rightfully, that the Uber/Lyft/Sidecar policies should not cover drivers when they are using their own cars to go about their own lives. Drivers need their own personal insurance policies to cover that time.

The "insurance gap" everyone's talking about comes to play when a driver is logged into the Uber, Lyft or Sidecar cellphone app, and is available to accept a ride but does not yet have a passenger in the car. Whose insurance policy covers those instances? The accidents that have occurred so far, including the death of Sophia Liu in San Francisco on New Year's Eve, have resulted in major back-and-forth, with Uber denying liability and declining insurance coverage in Liu's case.

Well, Uber, Lyft and Sidecar all announced last week that they will start offering "contingent" insurance coverage precisely for those transitional periods. The move comes at a time when ridesharing companies are under fire especially from taxi companies for cutting corners in protecting their drivers and clients, and of course for taking business away from taxis.

It is worth noting that Uber has a $1 million policy that covers drivers from the time they accept a ride until the time that ride is completed. This coverage is similar to that of taxis in San Francisco. No problem with that.

But what is this "contingent" coverage? As described by Uber, the new insurance provides "$50,000/individual/incident for bodily injury, $100,000 total/incident for bodily injury and $25,000/incident for property damage." This insurance is meant to take effect only in the event that a driver's personal insurance declines to assume liability. This meets what Uber says is "the highest requirement of any state in the US." Details on the Sidecar and Lyft contingent insurance aren't readily available yet, but I think it's safe to assume they'll be similar to Uber's.

I may not know the real details of this arrangement but it sounds like this coverage only takes effect if the driver's personal insurance declines to cover the accident. The minimum personal coverage in this state is $15,000.00. What happens if the driver has a $15k policy and it provides coverage but the injury is a $1 million injury. The injured party is potentially left with virtually no remedy because there would be no Uber coverage. But even if there is Uber coverage, Uber's $50,000.00 is also next to nothing if the injury is serious.

This is merely a band aid on a serious problem. Uber drivers looking for their passengers can do serious damage just like a taxi looking to pick up a fare. The taxi is covered for $1 million -the price they pay to do business on San Francisco streets. But if, let's say, the insurer of the driver who hit and killed Sophia Liu had declined to pay, I dare say that $50,000 in total coverage would not be sufficient to compensate the child's family for her tragic death.

As noted, taxis in San Francisco are required to have $1 million insurance policies, which cover them at all times. The $50,000 Uber contingent policy is a far cry from reasonable coverage for what really is a commercial driver. To me, I have seen so many serious injuries in San Francisco that insurance coverage is a big issue. I cannot tell you how many times I have represented clients who were seriously hurt by underinsured or uninsured drivers.

So what's the moral of the story here? I know that many people will not use taxis for a great number of reasons--many very good ones. The issue here is the cost of doing business and Uber/Lyft etc. accepting responsibility for all the harm that their drivers may cause--even when they are in route to a passenger. That is a threshold issue for me in this ongoing battle amongst commercial transportation. Until they obtain the very same coverage that taxis have, I use taxis. Once they get that coverage, it is a different ball game.

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