How Car Accident Claims Involving Uber or Lyft Are Different From Other Types of Auto Accident Claims
When people are injured in Uber or Lyft accidents as passengers or drivers, the claims process may differ considerably from other types of motor vehicle accidents. The key difference with ride-share accidents is the potential recovery sources. Getting medical care, information from the other driver, accident report, and other relevant information will all still be important. People will also want to take photographs of the damage to the vehicles to help to support their claims. After people take these steps, determining liability and the potential recovery sources can be complex in accidents involving Uber or Lyft vehicles.
How Uber and Lyft accidents differ
The sources of recovery are the primary difference in accidents involving Uber or Lyft. These ride-share app companies require their drivers to have commercial insurance coverage. The available coverage will depend on the phase of driving that the drivers are in at the time of the accidents. Typically, drivers that have their ride-share apps turned on are covered under the ride-share company's insurance policy. However, the amount of the available coverage will depend on whether the drivers were waiting for passengers to call for rides, had accepted rides, or were actively transporting passengers at the time of their accidents. Another important consideration is how Uber and Lyft classify their drivers.
Uber and Lyft driver classification
Uber and Lyft claim to be technology companies instead of transportation companies. Through their platforms, drivers who use their apps can connect with passengers who want rides. The companies do not operate or own the vehicles that their drivers use, and the drivers are not viewed as employees. Instead, Uber and Lyft classify their drivers as independent contractors. The companies classify their drivers in this way to avoid responsibility for damage or accidents that occur while their drivers are working. Normally, independent contractors are liable for the harm caused to others by their negligence. By contrast, employers are vicariously liable for the negligent actions of their employees while they are working. Classifying their drivers as independent contractors is a way for the ride-share companies to evade liability for car accidents.
In California, the ability of Uber and Lyft to classify their drivers as independent contractors will become more difficult since the passage of Assembly Bill 5, which Governor Gavin Newsom signed into law on Sept. 18, 2019. Under this law, Uber and Lyft drivers should be classified as employees instead of independent contractors. However, the companies have publicly stated that they will continue to classify their drivers as independent contractors. The classification of the drivers will likely be challenged in court.
Insurance and ride-share drivers
Personal liability automobile insurance policies exclude coverage when people use their vehicles for commercial reasons. This is because insurance companies set their premiums based on the risk of claims and accidents. The risk is lower when people use their vehicles for personal reasons and higher when they use them for commercial purposes. Uber and Lyft drivers would have to buy commercial policies to be covered in accidents, but the premiums for commercial insurance are higher.
Uber and Lyft have insurance for their drivers. However, the coverage that is offered depends on the phase or period the drivers are in at the time of their accidents. During period zero, the apps are not open. During period one, the drivers have opened the ride-share apps and are waiting for passengers to request rides. During period two, drivers have been connected with passengers and are traveling to pick them up. Finally, period three occurs when the drivers are actively transporting the passengers to their destinations.
During period zero, accidents that are caused by a ride-share driver will be covered by the driver's automobile insurance policy in fault states like California. In no-fault states, each driver will make claims to their personal policies. Uber or Lyft's insurance will not provide coverage.
When drivers have the app turned on and are in period one, Uber and Lyft will cover accidents that are the fault of the ride-share drivers. It is third-party insurance that will only cover the losses that are suffered by people who were injured or who sustained property damage. It will not cover the ride-share driver's property damage or injuries. The liability coverage that is offered in period one for accidents caused by Uber or Lyft drivers is $50,000 per injured person, $100,000 for two or more injured people, and $25,000 for property damage. Drivers must first claim on their policies before the ride-share coverage will pay, however. It is contingent coverage. This makes it important for ride-share drivers to purchase a ride-share endorsement from their insurance companies. If they do not have the endorsement, their insurance companies will deny coverage, meaning that the contingent insurance from Uber or Lyft will not pay. In California, however, contingent liability insurance cannot be offered. This means that ride-share drivers must either have a ride-share endorsement or a commercial policy.
During period two or three, Uber and Lyft offer liability coverage of up to $1 million. This insurance will cover injuries that are suffered by passengers whose Uber or Lyft drivers cause accidents and to others who are hit by ride-share drivers when the drivers are at fault. However, the coverage will not cover injuries that are suffered by the drivers. The liability coverage will pay for damage to the drivers' vehicles, but it is contingent coverage.
Finally, Uber and Lyft provide uninsured motorists coverage for drivers who are in period three of $1 million. For drivers who are in other periods, there is no uninsured motorist coverage.
It is important to note that the liability limits vary from state to state. Some states have higher limits for the liability coverage provided by ride-share companies. For example, New York mandates that drivers in period one are provided with insurance with liability coverage of $75,000 per person, $150,000 per accident, and $25,000 for property damage. For drivers in periods two and three, the required coverage is $1,250,000. The uninsured motorist coverage for drivers in period three in New York is also $1,250,000.
Claims when a ride-share driver is at fault
When an Uber or Lyft driver is at fault in an accident that injures a passenger or a third party while the driver is in period two or three, the injured victims will file claims against the ride-share driver's insurance policy. As long as the driver has a commercial policy or a ride-share endorsement, the insurance company will be responsible for covering the claim up to the policy limits. If the limits are exhausted, Uber or Lyft's contingent liability coverage should kick in and cover the remainder up to $1 million. If the driver does not have commercial insurance or a ride-share endorsement, his or her insurance company will likely deny the claim when it discovers that the vehicle was being used for commercial purposes. This means that Uber or Lyft's contingent insurance will also not pay.
Assuming that the driver does have commercial insurance or a ride-share endorsement, people who are injured by the drivers during phase one will file their claims with the driver's insurance first. After the policy limits are exhausted, the ride-share company's policy should kick in up to the policy limits of $50,000/$100,000/$25,000.
Drivers who are not at fault
When Uber or Lyft drivers are not at fault for their accidents, the ride-share drivers and the passengers may file claims against the at-fault drivers' insurance policies for their injuries and property losses. If the ride-share drivers share some responsibility for the accidents, the passengers may file claims against the ride-share drivers and the third-party motorists who share fault. The ride-share drivers may also file claims against the third-party motorists, and their damages awards will be reduced by the percentages of fault that are attributed to them.
With the passage of Assembly Bill 5, ride-share drivers who are injured in accidents while they have their apps engaged may be able to file workers' compensation claims. Since the law is new, this will likely be something that is litigated in court. An experienced personal injury lawyer might help his or her clients to identify all of the potential sources of recovery to help them to recover fair compensation for their losses.