How does insurance work for ridesharing companies like Uber in California?

Issues remain as insurers begin covering drivers under personal liability protection.

Car insurance coverage is something you hope never to have to think about. Comparing policies, paying high premiums, and hoping that in the event of a serious accident you are paid what you deserve is understandably not something most people want to spend a lot of on.

Unfortunately, in the aftermath of an accident, dealing with car insurance companies is a necessity. A policy which you may never have thought much about suddenly may become one of the most important aspects of recovering from an accident. Insurance companies and individual policy terms can be difficult even in commonly occurring accidents between two insured drivers. When dealing with uninsured drivers, common carriers like taxis, and especially ridesharing companies, the issues can increase dramatically in complexity.

Ridesharing company drivers must have liability insurance under California law

Uber, which started in San Francisco and has since taken the nation by storm, has a long history regarding insurance and driver regulation issues. In January, for example, the California DMV issued an advisory to all ridesharing companies that drivers must have a commercial license plate on their vehicles. The advisory is expected to deter some people from signing up to be Uber drivers. This is just the latest attempt by California lawmakers and regulators to make the industry safer for consumers.

Recently, The California Insurance Commissioner allowed Uber and other TNC drivers to purchase additional liability coverage through Metromile Insurance. The provider is adding coverage to the personal auto insurance policy of TNC drivers. Uber and other transportation network companies are required by California law to carry $1 million in liability coverage in the event of a serious accident. Metromile Insurance is the first to offer liability coverage on the personal auto policies of TNC drivers. The insurance kicks in when the driver turns on his or her app, indicating that the driver is willing to carry passengers.

The Taxicab, Limousine & Paratransit Association is not sure that is enough. TLPS spokesman Dave Sutton wrote in a statement that "this arrangement still leaves passengers, drivers and innocent bystanders uncovered by insurance for street hails done outside of the Uber platform."

The California Insurance Department initially began accepting filings for commercial coverage on personal liability policies of rideshare drivers in November, 2014. Tragically, the first fatal accident involving a Lyft passenger also occurred in November near Sacramento, and is expected to test whether insurance coverage is currently adequate to consumer needs.

Legal and insurance issues common to ridesharing companies

Dealing with insurance companies in the wake of an accident can be difficult. The potential issues multiply when there is a ridesharing company involved. There can be legal liability and coverage issues, issues of who was at fault for the accident, and whether the ridesharing company driver was "on" or "off" duty, to name a few.

At Mannion & Lowe, our attorneys have significant experience fighting insurance companies unwilling to pay policyholders, including failure to pay claims and uninsured or underinsured drivers. Whether the accident involves a commercial or personal insurance policy, our attorneys will vigorously protect the rights of policyholders and accident victims against insurance companies large and small.

Keywords: Car insurance, Uber, ridesharing, car accident.