Uber/Lyft: Are You Covered?

By: Melissa Jordan
By now you’ve probably heard of the new ride-sharing programs called Uber and Lyft. If by chance you haven’t heard, they are easy to use apps you download to your phone, using the GPS the app will locate you. Instead of calling a taxi the traditional way, you push a few buttons and an Uber or Lift driver comes to pick you up. You use the app to pay the driver. The catch is, the driver is someone just like you or me, probably driving their personal vehicle. Uber has another vehicles in their fleet, but for the purpose of this blog, we will discuss the personal vehicles in the Uber X class. Getting into someone’s vehicle and going somewhere may be cheap and convenient, but you may need to be concerned if they are insured. Uber has said they go through a screening process to make sure all of their drivers are “insured and legally able to drive”, but does this mean they really are properly insured?
The easy answer here could be yes. Uber does offer insurance while you are riding in the vehicle you requested. According to Uber’s website, you are covered while you are in their vehicle: “…there’s a commercial insurance policy for ridesharing with $1 million of coverage per incident. This policy covers drivers’ liability from the time a driver accepts your trip request through the app until the completion of your trip.” This translates to, if you are in the vehicle, your driver causes an accident, you are covered up to $1 million. They also mention: “There is also uninsured/underinsured motorist coverage (UI/UIM) of $1 million per incident for bodily injury, in case another motorist causes an accident and doesn’t carry adequate insurance. So, for example, injuries caused by a hit-and-run accident would be covered by the UI/UIM.” This means if another driver causes the accident and you try to make a claim on their insurance and their coverage is not sufficient, (or they have none at all) you are also covered by $1 million. While searching Uber’s rival Lyft’s website, it looks like they have similar coverage. They offer $1 million for riders and also $1 million for UI/UIM.
On the flip side, you may be considering becoming a driver for Uber or Lyft. It sounds like a great way to earn extra cash and choose your own schedule. You simply log into the app when you and your vehicle are available, and the program will notify you when you have a ride request. You show up, pick someone up, take them where they want to go, and you get paid! But is it that simple? What if you are in an accident? Are you covered?There is no easy answer to this question. While both Uber and Lyft’s websites mention coverage for drivers, there are many news articles across the internet stating the coverage has not worked the way it should or that the coverage is too low. Both companies require you to carry your own personal auto insurance. This will protect you when you are driving your car on a normal basis, for example, to the store or to a movie, but will not cover you for business uses. Most policies have an exclusion for driving the car for delivery purposes, like pizza delivery, and every day more companies add exclusions for companies like Uber and Lyft. Some companies may not even cover you at all if you use the car for hire, even if you aren’t working when the accident happens.Previously, Uber only offered coverage while you had a rider in your car. This meant that if you were logged into the Uber app waiting to get a rider, driving to pick up a rider, or sitting waiting on the rider, you did not have coverage. Your personal auto insurance would need to kick in and cover you. In most cases, personal auto insurance refused to cover the claims. Due to recent legislation, both Uber and Lyft have offered more coverage to their drivers, but is it enough? According to their websites:Uber offers $50,000/$100,000/$25,000 of contingent coverage between trips. During the time that a ridesharing partner is available but between trips, most personal auto insurance will provide coverage. However the driver is also backed by an additional policy that covers driver liability for bodily injury up to $50,000/individual/accident with a total of $100,000/accident and up to $25,000 for property damage. This policy is contingent to a driver’s personal insurance policy, meaning it will only pay if the personal auto insurance completely declines or pays zero. This policy meets or exceeds the requirements for 3rd party liability insurance in every state in the U.S.
Lyft offers Contingent Liability: up to $50,000 per person /$100,000 per accident /$25,000 physical damage, covering driver liability for bodily injury and/or property damage of passengers and/or third parties (applies from the time when a driver flips into driver mode until the driver accepts a ride request)
This means they offer very little coverage. If you were involved in a serious accident, you could be sued for much more than what they offer. A typical personal auto policy offers coverage of $100,000 per person/$300,000 per accident/$100,000 property damage. One seriously injured passenger could max out the coverage provided to you by Uber or Lyft.
What about the coverage for your vehicle? If you are involved in an accident and it broke your headlight, dented your fender, and bent your wheel, you probably couldn’t drive the car. Your personal auto policy would not cover it. You would be stuck without a vehicle to get to your full time job. Now what?
Uber and Lyft both offer coverage for this, but like the liability coverage, it may not be right for you.
Uber offers $50,000 of contingent comprehensive and collision insurance. If a ridesharing driver holds personal comprehensive and collision insurance this policy covers physical damage to that vehicle that occurs during a trip, for any reason, up to $50,000 and with a $1,000 deductible.
Lyft offers Contingent Comprehensive & Collision: $2,500 deductible and $50,000 maximum applicable to drivers who purchase collision & comprehensive coverage on their personal policy (applies from the time a driver accepts a ride request until the time the ride is ended in the app)
This means with Uber and Lyft, you would need to be on a trip (not sitting and waiting, or on your way to pick up a rider) for the comprehensive and collision coverage to kick in. If there were damages to your car because you hit a deer on the way to pick up a rider, you would not be covered. Your personal policy may not cover it, and you would be responsible for the repairs. If you were involved in an accident with a rider in the car, you would be subject to paying a deductible of $1000 with Uber and $2500 with Lyft. If your damage is less, you would have to pay for the repairs entirely. Most personal auto policies carry deductibles of $500.
In order to make absolutely certain you are covered while driving for a ridesharing company, it is a good idea to get a commercial insurance policy on your own. Many companies like Progressive have policies tailored to those who drive for ride sharing apps. By getting a commercial insurance policy, it may cost you in the beginning, but save you in the end. You could tailor your coverage and your deductibles and not need to worry about coming up with an extra $100,000 for liability or even $1000 for an accident.
If you are currently an Uber, Lyft, or other service driver or thinking of becoming one, call our office today to discuss your options!
Remember, every insurance company is different. This blog entry is intended to be general in nature. This blog is not intended to represent, endorse, support, or speak negatively of any of the products or companies mentioned in this article. This blog entry is for informational purposes only. Please contact our office for any questions you may have!
February 12th, 2015 by BIG Agency