Your Uber is here: Which auto insurance goes along for the ride?
July 23, 2021 – In today’s gig-economy, many people work for (and use) ridesharing programs like Uber, Lyft, and DoorDash. Convenience abounds, but with sometimes little thought given to the applicable insurance coverage if an accident happens.
Generally, personal auto policies exclude injuries arising out of the use of an insured’s vehicle to carry persons or property for a fee. For example, if someone uses his personal car to deliver pizzas and hits a pedestrian, the driver’s personal auto policy would not cover his liability for the accident.
However, to stay current with evolving rideshare technology, personal auto policies have evolved beyond these “carry for a fee” exclusions.
Increasingly, personal auto policies have “commercial ridesharing” exclusions that apply while an insured uses his vehicle for commercial ridesharing programs.
For example, in Maxwell v. James River Ins Co, 401 F.Supp.3d 1183 (D. Col. 2011), the policy excluded coverage for injuries sustained during the “period of time your covered auto is being used by any insured who is logged into a transportation network platform as a driver, whether or not a passenger is occupying the vehicle.” The federal judge enforced this commercial ridesharing exclusion, holding that the insured’s personal auto policy did not cover accidents occurring while she was driving her own car for Uber.
Exclusions like the one Maxwell addressed are specifically written for commercial ridesharing. Instead of coverage depending on the driver’s stated intent, coverage objectively depends on whether the insured is logged into a transportation network platform — like the Uber or Lyft applications.
Commercial ridesharing exclusion enforceability may vary by state. For example, in Texas, personal auto policies cannot exclude uninsured motorist coverage while an insured is a passenger in a commercial ridesharing vehicle.
However, even if an insured’s personal auto policy excludes coverage, Uber and Lyft drivers may still have coverage while driving for these companies. Uber and Lyft provide liability coverage (and occasionally uninsured motorist benefits) for their drivers. The coverage types and limits can vary, so drivers and passengers should check on the available coverage, ideally, beforehand.
Because rideshare drivers typically use their personal vehicles, it can be difficult to determine exactly when the insured’s personal auto policy should apply and when the commercial ridesharing insurer’s policy should apply.
To address this issue, the National Association of Insurance Commissioners (NAIC) created time periods insurers can use as a guide to help determine liability based on when the accident happened. The NAIC designated the following periods:
Period 0: The driver is using his or her own personal vehicle and the app is not turned on or enabled.
Period 1: The driver has enabled the app but has not yet accepted a ride request.
Period 2: The driver has accepted a ride request via the app and is in transit to the passenger.
Period 3: The passenger is in the driver’s vehicle, en route to the destination.
The driver’s status within the periods can change frequently. For example, after the driver drops the passenger off, the driver is back to Period 1 or, if the driver has turned off the app, Period 0. The driver’s personal policy is most likely to apply during Period 0 and least likely to apply during Period 3.
Similarly, companies, like Uber and Lyft, have implemented their own “periods” explaining the different levels of coverage based on the timing and status of the driver when the accident happened. For example, Uber’s website lists the following periods:
Offline/driver’s app is off: The driver’s personal auto policy applies.
The driver’s app is on, and he is waiting for a ride: Uber’s policy will typically provide somewhat limited coverage (e.g., $50,000 per person, $100,000 per accident bodily injury liability limits, and $25,000 per accident property damage liability limits).
En route to riders/during trips: “Full” coverage is typically provided by Uber (e.g., $1 million liability policy limits).
Some cities and states also impose higher minimum coverage limits on insurance than the general amounts listed on Uber’s and Lyft’s websites.
For example, in New York state, when there is no passenger in the car, but the app is on, drivers are required to have liability limits of $75,000 per person for bodily injury, $25,000 for property damage, and $150,000 per occurrence to more than one person. After the driver has accepted a ride request and is en route to his destination, the driver must have a minimum of $1.25 million in liability coverage and $1.25 million in uninsured motorist coverage. These coverage requirements can be satisfied by the driver’s insurance, Uber/Lyft’s insurance, or some combination of both policies.
New York City goes even further — requiring the same liability insurance for Uber and Lyft drivers as a taxicab, so any rideshare vehicle must have commercial liability coverage of $100,000 per person, up to $300,000 per accident.
Using these NAIC, Uber, or Lyft periods minimizes debate regarding the driver’s trip purpose when an accident occurs. Instead, periods objectively determine the potential coverage based on verifiable data — the driver’s ridesharing app status when the accident happened.
For example, a driver could open his app and, while he is waiting to receive a ride request, he decides to pick up food for himself. While on the way to get food, the driver is in an accident.
Because the periods create a bright-line rule, although the driver says the travel at the moment of impact was personally motivated, the app was on — indicating the driver was ready to accept a ride request. Therefore, coverage under his personal auto policy is excluded.
Despite the intention to create a bright line, life’s complexities can blur that line.
For example, some delivery drivers work in teams — splitting compensation as one person sits in the passenger seat, picking up and dropping off the food — while another person drives. If the passenger is logged into the app, is the driver using the commercial ridesharing application? Depending on the insurance policy’s wording, this team approach can add uncertainty to the coverage determination.
Complexities can also arise at the dividing lines between periods. For example, assume a driver has accepted a food delivery request and the drop off location is near a busy intersection in a large city. The driver is handing food to the customer with one hand and turning off the app with the other, when the driver’s foot slips off the brake and the car rolls forward over the customer’s foot.
Is the driver in period 0 (app off), period 1(done with the delivery but app not quite turned off), or period 3 (still completing the delivery)?
Despite noble attempts to eliminate confusion by creating “periods,” there can sometimes be room for debate, with outcomes likely to be heavily dependent on specific policy language and the nuances of each accident.
The important thing to keep in mind, assuming the driver’s personal auto policy actually provides coverage, is that the available coverage will likely hinge on whether the driver has the Uber or Lyft application open and whether the driver has accepted a ride request.
Always refer to the driver’s auto policy, the ridesharing companies’ policies, and state and local rules and regulations when considering how commercial ridesharing could affect available auto coverage.
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