Ridesharing with companies like Lyft and Uber is becoming more and more popular every day. These companies offer their drivers a way to make extra cash quickly and conveniently, with nothing more than their personal car and their cell phone.
But when an accident happens, the rideshare driver can be caught in an uncomfortable spot between their personal car insurance and the insurance offered by the rideshare company.
As a driver for a rideshare company, you're considered an independent contractor. This means that you're not technically an employee of the company; you're just providing a specific service that they're paying for. The company is not required to provide you with any benefits other than payment for your services.
However, both Lyft and Uber offer insurance to their drivers and passengers. If they didn't, they'd have difficulty finding drivers, because personal car insurance often doesn't cover accidents that happen while you're working (more on that below).
How much insurance Lyft and Uber offer depends on what you're doing at the time. You can find up-to-date insurance information directly on Uber's and Lyft's websites. As of the writing of this article, they have very similar insurance. The coverage depends on what you're doing at the time of the accident. It can be broken into three categories:
Your personal insurance should cover you at this point. However, it's important that you don't tell your insurance that you were driving for a rideshare service at the time of the accident if you didn't have the app on. If the app is off, then Lyft and Uber will not cover you. If you mention them to your insurance, it might complicate things and give your insurance an opportunity to deny coverage. Remember, if the app is off, you were not driving for a rideshare service.
If you're available to receive a rideshare request, you are driving for Uber/Lyft and their insurance applies. If you're in an accident at this point, the following coverage applies:
Lyft and Uber's highest level of insurance applies when you're either on your way to pick up a passenger or have a passenger in your car.
Contingent means that you must file a claim with your own personal insurance company before Lyft or Uber's insurance kicks in. Then, if your insurance denies your claim or the claim is more than the limits on your insurance, the rideshare company's insurance will kick in.
There's a potential problem with filing a claim with your own insurance: you might not be covered for commercial driving purposes, which includes driving for a rideshare company. This means that not only can your insurance deny your claim, they can also cancel your policy entirely.
This puts you in a Catch-22, though. If you don't file with your own insurance, Uber or Lyft's policy won't kick in. If you're injured, it can be hard to know how your medical bills are going to get paid.
Some car insurance companies allow you to purchase a rideshare endorsement. This will cost extra, but it provides you with the peace of mind that your insurance will cover you if you're in an accident while driving for a rideshare company.
Depending on what state you're in (and, more specifically, whether you're in a no-fault state), if there was another driver involved, their insurance might cover injuries or damage to your vehicle. As you can imagine, though, adding a third insurance policy to the mix can just complicate things further.
It's cold comfort to know about a rideshare endorsement after an accident has already happened. What should you do if you're stuck between your personal insurance and the insurance offered by the rideshare company?
Your best bet is to contact an attorney who has experience dealing with insurance companies. If you were hurt, an injury lawyer might be your best bet. Your injury lawyer should be able to explain the law in your state and exactly how it applies to you.
Since ridesharing is a fairly new concept, the laws that govern it are often new (or non-existent). This is the sort of situation where you want a knowledgeable professional at your side. With so much potentially at risk, you want every advantage you can get.
Don't have a lawyer? We can evaluate your case in just a few minutes at Injury.com. Get in touch and find out if we're a good fit for you, all online.